SECURITY
AGREEMENT


(PFI
General — Intellectual Property Collateral)


 


THIS
SECURITY AGREEMENT (“this Agreement” or “Security Agreement”) is entered into on November 15, 2017 (“Effective
Date”) by and between MagneGas Corporation, a Delaware corporation (“Debtor”), as borrower and debtor, with
and for the benefit of Point Financial, Inc., an Arizona corporation (“Lessor”), its transferees, and assigns, as
lessor and secured party. (The Lessor and each subsequent transferee of or of any interest in the Lease Agreement described below,
whether taking by endorsement or otherwise, are herein successively called “Secured Party.” Debtor and Secured Party
are referenced collectively as the “Parties” and individually as a “Party”.)


 


RECITALS:


 


	A.	 	Secured
    Party has provided financial accommodations to Debtor in the form of a lease of personalty evidenced by that Equipment Lease
    Agreement of even date herewith (the “Lease Agreement”) by and between Secured Party, as lessor, and Debtor, as
    lessee. To secure payment of the Lease Agreement and performance of all of Debtor’s promises and undertakings in connection
    therewith, Debtor has agreed to grant first and prior blanket lien and security interests in favor of Secured Party on all
    of Debtor’s personal property, whether now owned or hereafter acquired.
	 	 	 
	B.	 	To
    secure the Lease Agreement, among other things Secured Party has required that Debtor enter into this Security Agreement regarding
    Collateral in the nature of intellectual property, as more fully described herein.
	 	 	 
	C.	 	Upon
    the Effective Date of this Agreement, (i) Debtor will be indebted to Secured Party, (ii) value will have been given to or
    for the benefit of Debtor under the Lease Agreement, and (iii) Debtor will have rights in the Collateral described below.


 


NOW,
THEREFORE, in consideration of the following mutual agreements and other valuable consideration, the receipt and sufficiency of
which are acknowledged, and intending to be legally bound, the Parties agree as follows:


 


AGREEMENTS:


 


1.
Certain Defined Terms.


 


1.1
“Collateral” as defined for purposes of this Agreement collectively includes all items/categories of personal
property set forth in paragraph 2 below, including the items more specifically described in the attached Schedule 1 (if any).


 


1.2
“Obligations” has the meaning set forth in paragraph 4 below.


 


1.3
References to the “UCC” mean the provisions of the Uniform Commercial Code in effect in Arizona (the “State”).


 


1.4
Defined or referenced terms which are capitalized and identified by a following asterisk (e.g., Accounts* as first used in Section
2, below) upon their first use herein shall have the respective meanings ascribed in the UCC unless the specific context indicates
differently.


 


1.5
Other defined terms have the respective meanings ascribed in this Agreement, and such terms when defined are indicated by parentheses
and bold print (e.g., “Collateral” as defined in Section 1.1, above).


 


1.6
As used hereinafter, “Debtor” shall mean, severally and collectively, MagneGas Corporation, a Delaware corporation,
and each of its subsidiaries, whether now existing or hereafter established, and whether or not that subsidiary has signed a counterpart
of this Agreement, and each of its affiliates that has signed a counterpart of this Agreement, whether now existing or hereafter
established.


 




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2.
Collateral Covered by Agreement. This
Security Agreement pertains to the following “COLLATERAL”: (i) Debtor’s interests and rights to (a) all domestic
and foreign patents, patent applications, patent rights, patent licenses (including any United States Patent and Trademark Office
(“PTO”) application or registration number and file jacket number and assigned date), all related fees, income and
royalties, rights to sue for any infringement thereof, and all reissues, divisions, continuations, renewals, extensions and continuations-in-art
thereof; (b) all state (common law or otherwise), federal or foreign trademarks, service marks, collective membership marks, slogans,
trade names, all applications therefor (excluding however any application to register any such item prior to the filing under
applicable law of a verified statement of use or its equivalent for the same, if the creation of a security interest therein would
void or invalidate the same), all rights thereto and licenses thereof and all related income and royalties, all whether or not
registered (but including any PTO application or registration number and file jacket number and assigned date), and all fees,
goodwill of any business associated therewith or symbolized thereby, rights to sue for infringement or unconsented use thereof,
and all reissues, extensions and renewals thereof; (c) all registered copyrights and copyright registrations or applications (identified,
if possible, by title, author and any United States Copyright Office (“USCO”) registration number and assigned date),
all present and future copyrights that are not registered but are entitled to be, any derivative works, all copyrightable or copyrighted
materials, works, manuscripts, documents, tapes, disks or discs, storage media, computer programs and source or object codes,
Software*, computer databases, flow diagrams, all tangible property evidencing the same; (d) all industrial designs, trade secrets,
know-how, technology, information and processes and all other forms of intellectual and industrial property; (e) all Collateral
described in the attached Schedule 1; (f) all General Intangibles* in any way related thereto to any of (a), (b) (c); and (e);
(ii) all records, writings, papers, and data kept or relating to any part or component of the Collateral, in all forms (written,
photographic, microfilm, microfiche, electronic or otherwise, and the computer software and other media, together with its related
hardware and equipment, as may be required to utilize, create, maintain, process and retrieve the same); (iii) all accessions,
substitutions and additions thereto, and all Supporting Obligations*, cash and non-cash Proceeds* thereof, or royalties therefrom.
Notwithstanding anything contained in this Agreement to the contrary, the term “Collateral” shall not include any
United States intent-to-use trademark applications to the extent that the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark applications under applicable federal law, provided that upon submission
and acceptance by the United States Patent and Trademark Office of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a)
(or any successor provision), such intent-to-use trademark application shall be considered Collateral. If the Debtor obtains rights
in or to any new or subsequent (a) United States copyright registrations or applications therefor, (b) patentable inventions or
patent application or patent for any reissue, division or continuation of any patent, (c) trademarks or trademark renewals or
extensions of any trademark registration, or (d) other “Collateral” as defined and described herein, after the date
of this Agreement, the same shall be included in the Collateral and the provisions of this Agreement will be applicable to the
same as after-acquired Collateral. Debtor will provide written notice to Secured Party with respect to any such new or subsequent
Collateral within thirty (30) days after Debtor obtains such rights.


 


3.
Grant of Security Interest. For valuable
consideration, Debtor grants and collaterally assigns to Secured Party a security interest in the Collateral to secure all Obligations.


 


4.
Obligations Secured. This Security Agreement
and the security interests granted hereby secure all of the following: (i) payment of all indebtedness, obligations and liabilities
evidenced by or arising under the Lease Agreement and the other “Transaction Documents” (as defined in the
Lease Agreement), (ii) performance of all provisions, covenants, terms and conditions under this Agreement or the other Transaction
Documents, (iii) all rents, payments, fees, costs and expenses owed under the Lease Agreement, or the Transaction Documents, and
(iv) all extensions, renewals, modifications, amendments and replacements of the same (collectively, “Obligations”).


 


5.
Performance under Transaction Documents and
Perfection of Security Interest(s).


 


5.1
Debtor agrees to perform timely and fully all of its Obligations and to keep all promises to and agreements with Secured Party
under all of the Transaction Documents.


 


5.2
Debtor irrevocably authorizes Secured Party to complete, file or record one or more financing statements or amendments thereto
or continuations thereof pursuant to the UCC covering all Collateral under this Security Agreement. Debtor also authorizes, and
will cooperate with, Secured Party to make any and all filings or recordings with USCO and PTO that Secured Party deems necessary
or advisable. Debtor will pay or reimburse the cost of filing the same in all public offices whenever and wherever such filing
is deemed necessary by Secured Party. Debtor will cooperate with and reasonably assist Secured Party in obtaining acknowledgments
from third parties holding Collateral of Secured Party’s beneficial lien and interest therein. Debtor, upon written request,
will promptly furnish any information pertinent thereto to Secured Party.


 




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5.3
Debtor agrees further to take or permits Secured Party to take the following actions with respect to specific Collateral:


 


5.3.1
Collateral Held by Bailee/Escrow Agents(s). If any Collateral is or comes into the possession of a bailee or escrow agent
in excess of $100,000, Debtor will use commercially reasonable efforts to promptly obtain an acknowledgment from the bailee/escrow
agent reasonably acceptable to Secured Party that such bailee/escrow agent holds the Collateral for the benefit of Secured Party
pursuant to this Agreement and will recognize the security interest of and act upon instructions from Secured Party without further
action or consent by Debtor.


 


5.3.2
Commercial Tort Claim(s).  If Debtor now has or at any time acquires or has arise a Commercial Tort Claim* in excess of
$100,000 on account of any infringement or unauthorized use of any of the Collateral, Debtor will promptly notify Secured Party
of the same, in an authenticated writing reasonably acceptable to Secured Party, setting out the nature of such Claim in sufficient
detail to identify the same, and grant to Secured Party in that writing a security interest therein and all Proceeds thereof,
incorporating the terms of this Agreement by reference.


 


5.3.3
Patents and Trademarks. Concurrently herewith Debtor is also executing and delivering to Secured Party a Patent Assignment
and a Trademark Assignment pursuant to which Debtor is collaterally assigning to Secured Party any Collateral consisting of patents
and patent rights and trademarks, service marks and trademark and service mark rights, together with the goodwill appurtenant
thereto.


 


5.3.4
Other Actions as to Collateral. Debtor agrees with Secured Party to take or permit any other action requested by Secured
Party in writing to insure the attachment, perfection and first lien priority status of, and the unhindered ability of Secured
Party to enforce the security interests, rights and remedies in any of the Collateral pursuant to this Agreement or applicable
law (collectively, “Enforcement”), including (i) completing, executing, delivering and filing where appropriate, financing
statements, amendments thereto and continuations thereof to the extent deemed necessary or advisable by Secured Party, (ii) complying
in all material respects with any applicable provision of any law, rule, regulation or any treaty of the United States as to any
Collateral if such compliance is a condition to Enforcement, (iii) obtaining governmental and other third-party consents and approvals,
including that of any licensor, lessor or other person obligated on the Collateral or on account of the Loan, (iv) obtaining waivers
from landlords or other secured parties in form reasonably acceptable to Secured Party upon written request from Secured Party,
and (v) taking any and all actions required by earlier version of the Uniform Commercial Code or by any other applicable law of
the State, any other state, the federal government or any foreign government.


 


6.
Relation to Other Transaction Documents.
Nothing in those other Transaction Documents will derogate from or diminish any of the rights and remedies of Secured Party in
this Agreement. Any non-cured “Event of Default” under any other Transaction Document will, at Secured Party’s
election, constitute an actionable non-cured Event of Default under this Security Agreement.


 


7.
Warranties and Covenants of Debtor. Debtor
expressly warrants and covenants:


 


7.1
Except for Permitted Liens (as that term is defined on Schedule 2 to the Security Agreement (PFI General - All-Inclusive Security
Interest Covering Personal Property) executed of even date herewith between Debtor and Secured Party, (the “General Security
Agreement”) and except as set forth on Schedule 1 hereof, Debtor owns, or to the extent that this Security Agreement extends
to Collateral acquired after the Effective Date will own, or has or will have rights in the Collateral free from any adverse lien,
security interest or other encumbrance. Debtor will defend the Collateral against all claims and demands of all persons at any
time claiming the same or any interest therein.


 


7.2
The Collateral does not include any Consumer Goods*.


 


7.3
Debtor’s full and correct legal name is that used in this Agreement. Debtor is organized as a corporation under the laws
of the State of Delaware, and if and as a “registered organization*” its registration/identification number is 4074115.
Debtor’s current address for notices and principal place of business, or if Debtor has more than one place of business,
its chief executive office, is that stated below for Notices. Debtor has the organizational power, authority and legal right to
grant all security interests and otherwise enter into and perform under this Agreement and all other Transaction Documents, and
has duly authorized the same.


 




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7.4
Debtor will not change its legal name, its place(s) of business, its chief executive office location, its address for notice or
its registered organization number without first (i) notifying Secured Party at least fifteen (15) days in advance of any such
proposed change, and (ii) confirming any such change upon occurrence by notice to Secured Party. Debtor may not change its type
of organization, jurisdiction of organization or organization legal structure unless (a) Debtor has provided at least five (5)
days’ prior written notice to Secured Party or (b) such change is in connection with Borrower’s initial public offering
of common stock.


 


7.5
[Reserved]


 


7.6
Debtor will notify Secured Party of any changes in location of the Collateral, outside the ordinary course of business, within
ten (10) days of any such change, and will not sell, lease, license, further encumber, destroy or remove the Collateral, outside
the ordinary course of business, without prior notice to and the written consent of Secured Party; provided, however,
that Debtor shall be permitted to sell, lease, license, further encumber, destroy and/or remove the Collateral without prior notice
to and without consent of Secured Party if and to the extent expressly permitted pursuant to the terms of the Lease Agreement.


 


7.7
Debtor will pay timely all taxes and levies against the Collateral before delinquency; provided that the failure to make
any such payments shall not constitute a breach of this covenant unless the aggregate amount of such payments could reasonably
be expected to exceed $100,000.


 


7.8
Debtor will not permit or allow any other lien, security interest or encumbrance whatsoever upon the Collateral, except for Permitted
Liens and liens arising by operation of law to secure obligations not yet due and payable, and will not permit the Collateral
to be garnished, attached or replevied unless the execution or other enforcement of the liens related to such garnishment, attachment,
or replevin is effectively stayed and claims secured thereby are actively contested in good faith by appropriate proceedings.


 


7.9
Secured Party may examine and inspect the Collateral at any time during normal business hours and upon reasonable notice, wherever
located.


 


7.10
Debtor will not use the Collateral or let it be used in violation of any applicable statutes, regulations, rules or ordinances,
except to the extent that any such violation could not reasonably be executed to have a material adverse effect on the ability
of Lessee to fulfill its obligations under the Lease Agreement.


 


7.11
No third-party financing statement or comparable assignment or memorandum covering the Collateral is on file in any state or local
public office or with USCO or PTO, except for Permitted Liens.


 


7.12
[Reserved].


 


7.13
Debtor will permit Secured Party to inspect and examine Debtor’s books regarding the Collateral at any reasonable time during
normal business hours and upon at least five (5) business days prior written notice to ascertain and verify actions taken or amounts
due regarding the Collateral and the Obligations.


 


7.14
Debtor will refrain from any actions or communications which would impair, diminish, or threaten to affect the continued and future
value of the Collateral, but excluding any actions or communications that are permitted pursuant to the Lease Agreement and except
to the extent that any such actions or communications could not reasonably be expected to have a material adverse effect on the
ability of Lessee to fulfill its obligations under the Lease Agreement.


 


8.
Performance by Secured Party. At its option,
Secured Party may discharge taxes, levies, liens or other encumbrances at any time placed on the Collateral, and pay for the maintenance
and preservation of the Collateral should Debtor fail to do so. Debtor agrees to reimburse Secured Party on demand the reasonable,
actual amount for any payment so made and until such reimbursement the amount paid by Secured Party will be added to the Obligations
and bear interest at an interest rate of fifteen percent (15%) per annum until paid.


 




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9.
Default and Remedies.


 


9.1
A non-cured “Event of Default” under this Security Agreement will occur upon the occurrence and during the continuance
of a non-cured Event of Default under the Lease Agreement which continues for a period of thirty (30) days after the receipt by
Debtor of written notice from Secured Party; provided, that, if such default is curable and does not involve solely the payment
of money, then, so long as Debtor is diligently pursuing such cure, Debtor shall have an additional thirty (30) days within which
to effect such cure (not to exceed sixty (60) days, in the aggregate for such cure period). Upon and after any such non-cured
Event of Default, Secured Party may, at its option and sole discretion, do any one or more, or any combination or all, of the
following:


 


9.1.1
Declare the entire amount of the Obligations then outstanding due and payable at once;


 


9.1.2
Exercise any, all, or any combination of the rights and remedies of a secured party under the UCC or other applicable law, including
the right to enter any place of business of the Debtor, without legal process, and take possession of and remove, or store and
protect at the place of business, and thereafter administer, account for, and collect, the Collateral;


 


9.1.3
Require Debtor to assemble and relinquish any Collateral, and to make it available at the place designated by Secured Party;


 


9.1.4
Commence proceedings for foreclosure of this Security Agreement in the manner provided by law for the foreclosure of a real property
mortgage; and


 


9.1.5
As secured party in possession of the Collateral, carry on the business of Debtor as a going concern.


 


9.2
Any requirement of reasonable notice of any disposition of the Collateral will be satisfied if such notice is mailed to the address
of the Debtor designated herein at least thirty (30) days before the time of such disposition. Secured Party may dispose of Collateral
without giving any warranty, express or implied, and warranties of title or otherwise may be disclaimed in any such disposition.
In any disposition upon credit, Debtor will receive the benefit only of payments actually made by a purchaser and received by
Secured Party. Secured Party may acquire Collateral by credit bid(s) at any disposition permitted under the UCC. Secured Party
may, but has no duty to, notify and collect from any Account Debtors or other Obligors.


 


10.
Nonexclusive Remedies. The remedies conferred
by this Agreement are nonexclusive and cumulative of any other remedies now available or subsequently existing at law, in equity
or by statute, regulation, rule or otherwise.


 


11.
Reservation of Rights. No delay or forbearance
by or on behalf of Secured Party in exercising any right, remedy, power or privilege under this Security Agreement (“Lender’s
Rights”) will operate as a waiver of any such Lender’s Rights, nor shall any exercise or non-exercise of any particular
Lender’s Right preclude any other or further exercise of Lender’s Rights pertaining to any current or subsequent default
by Debtor. The taking of this Security Agreement will not waive or impair any other security that Secured Party may have or hereafter
acquire for the payment of the Obligations nor will the taking of any such additional security waive or impair this Security Agreement.
Secured Party may resort to any security it may have and apply proceeds of the Collateral in any order it may deem proper.


 


12.
Expenses, Fees and Costs. If any Event
of Default occurs, or Secured Party otherwise acts to protect its security interest in the Collateral pursuant to the terms of
this Agreement, Debtor promises to pay all of the following costs and fees if incurred by or on behalf of Secured Party: (i) all
reasonable expenses of retaking, holding, preparing for sale and selling of the Collateral, (ii) reasonable attorneys’ fees,
(iii) all reasonable costs and expenses of collection, enforcement, interpretation or any foreclosure, whether or not suit is
filed, and (iv) all costs of suit, each of which are to be determined by a court and not by a jury. “Suit” includes
proceedings in courts of original, appellate and bankruptcy jurisdiction.


 




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13.
Waivers. No waiver under this Agreement
is valid unless it is in writing and signed by the Party giving the waiver. A waiver of a particular matter or remedy does not
waive a subsequent or similar matter or remedy. No waiver will excuse a Party from payment or the performance of its other obligations
under this Agreement.


 


14.
Attachment and Choice of Law. The Lease
Agreement has been materially negotiated in the State and has been made and delivered in the State. All parties irrevocably consent
and agree that the law of the State has attached to the Lease Agreement, this Security Agreement, and all Transaction Documents
for all purposes of interpretation and enforcement thereof and this Security Agreement is governed by the laws of the State. The
parties consent and submit to the nonexclusive jurisdiction of the courts of the State and the United States District Court for
the District including the State, and to venue in Maricopa County, Arizona, concerning any action arising under the Loan, the
Note, this Security Agreement, and any other Transaction Document, and the parties further waive any claim of forum non-conveniens
or equivalent to such venue.


 


15.
Construction. Captions and headings are
for convenience and reference only and do not define, limit or affect the contents of this Security Agreement. References to “paragraphs”
or “sections” refer to this Security Agreement unless stated otherwise. The terms “include” or “including”
mean “without limitation by reason of enumeration.” All grammatical usage will be deemed to refer to the masculine,
feminine, neuter, singular or plural as the context and identity of any person(s) may require.


 


16.
Severability and Interpretation. The invalidity
or unenforceability of any provision of this Security Agreement does not affect the other remaining provisions. This Security
Agreement will be construed as if it excluded any invalid or unenforceable provision, which will be severed from this Security
Agreement. Whenever possible, this Security Agreement will be interpreted so as to be valid under applicable law, and will not
be construed strictly in favor of or against any particular party, including any party who drafted or prepared this Security Agreement,
but instead according to its plain meaning to give effect to its intended purposes.


 


17.
Financing Statement. If filed or recorded,
this Security Agreement will also be deemed to be a Financing Statement; a collateral assignment, grant or conveyance; and notice
of assignment, mortgage or hypothecation.


 


18.
Notices. Except as otherwise required
by law, all notices under this Agreement will be in writing. Notices are deemed given and received (a) when personally delivered,
(b) when received by facsimile or by overnight courier service, or (c) on the fourth Business Day after mailing by certified/registered
U.S. Mail, return receipt requested. Notices will be addressed as follows:


 


	 	To
    Debtor:	MagneGas
    Corporation
	 	 	Attn:
    Chief Financial Officer
	 	 	11885
    44th Street North
	 	 	Clearwater,
    Florida 33762
	 	 	 
	 	To
    Secured Party:	Point
    Financial, Inc.
	 	 	Attn:
    President
	 	 	3318
    East Kachina Drive
	 	 	Phoenix,
    AZ  85044


 


(or
at any other address designated in a notice given by a Party to change its address). Rejection or refusal to accept, or the inability
to deliver because of change in address as to which no notification has been given, will be deemed to constitute receipt if given
as provided above.


 




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19.
Waiver of Jury Trial. Any lawsuit concerning
this Agreement will be tried by the court, AND THE PARTIES EACH IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHTS TO ANY TRIAL BY A JURY
(ADVISORY OR OTHERWISE).


 


20.
Modification. This Agreement may be amended
only by a written document signed by all the Parties.


 


21.
Time.  TIME IS OF THE ESSENCE FOR THE
PERFORMANCE OF EACH PROVISION OF THIS AGREEMENT. If this Agreement requires any action to be performed on a date which is not
a “Business Day” (a Saturday, Sunday or a state or federal legal holiday), such action will be validly performed on
the next succeeding Business Day.


 


22.
Parties Bound. “Debtor” includes
the undersigned (individually or collectively) and all successors, assigns and personal or legal representatives, jointly and
severally. “Secured Party” means such Party and its successors and assigns. Neither Party may assign this Security
Agreement or any other Transaction Document except in connection with an assignment of the Lease Agreement, and as provided in
the Lease Agreement.


 


23.
No Third Party Beneficiary. This Agreement
is solely for the benefit of the Parties (and any successors and permitted assigns) and does not confer any rights or remedies
on any other persons.


 


24.
Counterparts. This Agreement may be executed
in identical counterparts, each of which upon execution shall be deemed an original, but all of which together will constitute
one document. Partially executed signature or acknowledgment pages of any one counterpart may be combined with any other partially
executed counterpart to constitute a fully executed original Agreement. Facsimiles of executed signature pages are effective as
original signatures.


 


25.
Incorporation of Recitals and Exhibits. The
Recitals and all attached Exhibits and Schedules are incorporated as part of this Agreement.


 


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remainder of this page is left intentionally blank]


 




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


 


	DEBTOR:	SECURED
    PARTY:
	 	 
	MagneGas
    Corporation,	Point
    Financial, Inc.,
	a
    Delaware corporation	an
    Arizona corporation


 


	 	 	 
	Ermanno
    Santilli, CEO	 	Michael
    J. O’Malley, President


 


***Signature
Page to IP Security Agreement***


 




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SCHEDULE
1 TO INTELLECTUAL PROPERTY SECURITY AGREEMENT


 





COLLATERAL
DESCRIBED AS:


 


1.
Debtor Intellectual Property