SECURITY
AGREEMENT


 


This
SECURITY AGREEMENT, dated as of May ____, 2017 (this “Agreement”), is among Advanced Medical Isotope Corporation,
a Delaware corporation (the “Debtor”) and each holder of the Debtor’s 7.5% Original Issue Discount Senior
Secured Convertible Debenture due twelve months following its issuance, in the original aggregate principal amount of $___________
(the “Debenture”) signatory hereto, its endorsees, transferees and assigns (collectively, the “Secured
Parties”), which Secured Parties as of the date hereof are set forth on Schedule SP attached hereto.


 


W
I T N E S S E T H:


 


WHEREAS,
pursuant to the Exchange Agreement (as defined in the Debenture), the Secured Parties have severally agreed to extend the loans
to the Debtor evidenced by the Debenture; and


 


WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the Debenture, the Debtor has agreed to execute and deliver
to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party (and also
pari passu with the holders of certain 7.5% Original Issue Discount Senior Secured Convertible Debenture issued by the Debtor
on or about May __, 2017 pursuant to a securities purchase agreement (hereinafter, referred to as “Additional Secured
Parties”)) and through the Agent (as defined in Section 18 hereof), a security interest in certain property of the Debtor
to secure the prompt payment, performance and discharge in full of all of the Debtor’s obligations under the Debenture.


 


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


 


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


 


(a)       “Collateral”
means the collateral in which the Agent on behalf of the Secured Parties is granted a security interest by this Agreement and
which shall include the following personal property of the Debtor, whether presently owned or existing or hereafter acquired or
coming into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in connection therewith:


 




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


 


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


 


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


 


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




 


 (v)         All commercial tort claims;




 


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


 


 (vii)       All investment property;




 


 (viii)      All supporting obligations; and




 


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


 


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


 


Without
limiting the generality of the foregoing, the “Collateral” shall include any shares of capital stock and/or
other equity interests of any other direct or indirect subsidiary, whether now in existence or formed in the future, of the Debtor,
and all certificates representing such shares and/or equity interests and all rights, options, warrants, stock, other securities
and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the
foregoing and all rights arising under or in connection with the such securities, including, but not limited to, all dividends,
interest and cash.


 




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


 


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


 


(c)       “Majority
in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal amount
of the Debenture at the time of such determination) of the Secured Parties.


 


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


 




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


 


(f)       “Organizational
Documents” means with respect to the Debtor, the documents by which the Debtor was organized (such as a certificate
of incorporation, certificate of limited partnership or articles of organization, and including, without limitation, any certificates
of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of the Debtor
(such as bylaws, a partnership agreement or an operating, limited liability or members agreement).


 


(g)       “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(i).


 


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


 


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


 




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3.       Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, the Debtor shall deliver or cause to
be delivered to the Agent any and all certificates and other instruments or documents representing any of the other Collateral,
in each case, together with all Necessary Endorsements.


 


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


 


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


 


(b)       The
Debtor has no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, the Debtor is the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens
(as defined in the Debenture). Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee,
bailee, warehouseman, agent or processor.


 


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


 




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


 


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


 


(f)       This
Agreement creates in favor of the Agent, on behalf of the Secured Parties, a valid security interest in the Collateral, subject
only to Permitted Liens (as defined in the Debenture) securing the payment and performance of the Obligations. Upon making the
filings described in the immediately following paragraph, all security interests created hereunder in any Collateral which may
be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected. Except for the filing of the
Uniform Commercial Code financing statements referred to in the immediately following paragraph, the recordation of the Intellectual
Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights and copyright applications in the United
States Copyright Office referred to in paragraph (mm), the execution by all applicable parties and delivery of deposit account
control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of the Debtor,
and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create, perfect or
protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing of said
financing statements, the recordation of said Intellectual Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance
of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or (iii) the
enforcement of the rights of the Agent and the Secured Parties hereunder.


 




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


 


(h)       The
execution, delivery and performance of this Agreement by the Debtor does not (i) violate any of the provisions of any Organizational
Documents of the Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable
law, rule or regulation applicable to the Debtor or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
the Debtor’s debt or otherwise) or other understanding to which the Debtor is a party or by which any property or asset
of the Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors
of the Debtor) necessary for the Debtor to enter into and perform its obligations hereunder have been obtained.


 


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


 


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


 


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


 




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


 


(m)       The
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including
Collateral hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities
of established reputation having similar properties similarly situated and in such amounts as are customarily carried under
similar circumstances by other such entities and otherwise as is prudent for entities engaged in similar businesses but in
any event sufficient to cover the full replacement cost thereof. The Debtor shall cause each insurance policy issued in
connection herewith to provide, and the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named
as lender loss payee and additional insured under each such insurance policy; (b) if such insurance be proposed to be
cancelled or materially changed for any reason whatsoever, such insurer will promptly notify the Agent and such cancellation
or change shall not be effective as to the Agent for at least thirty (30) days after receipt by the Agent of such notice,
unless the effect of such change is to extend or increase coverage under the policy; and (c) the Agent will have the right
(but no obligation) at its election to remedy any default in the payment of premiums within thirty (30) days of notice from
the insurer of such default. If no Event of Default (as defined in the Debenture) exists and if the proceeds arising out of
any claim or series of related claims do not exceed $100,000, loss payments in each instance will be applied by the
Debtor to the repair and/or replacement of property with respect to which the loss was incurred to the extent reasonably
feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable to the
Debtor; provided, however, that payments received by the Debtor after an Event of Default occurs and is
continuing or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Agent on behalf
of the Secured Parties and, if received by the Debtor, shall be held in trust for the Secured Parties and immediately paid
over to the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the related certificates, in
each case, naming the Agent as lender loss payee and additional insured shall be delivered to the Agent at least annually and
at the time any new policy of insurance is issued.


 


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


 




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


 


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


 


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


 


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


 


(s)       All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of the Debtor with respect to the
Collateral is accurate and complete in all material respects as of the date furnished.


 


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


 


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


 


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


 




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


 


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


 


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


 


(z)       At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the secured party to perfect the security interest created hereby, the Debtor shall deliver such Collateral
to the Agent.


 


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


 


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


 


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


 




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


 


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


 


(ff)
If the Debtor shall at any time hold or acquire a commercial tort claim, the Debtor shall promptly notify the Agent and other
Secured Parties in a writing signed by the Debtor of the particulars thereof and grant to the Agent, on behalf of the Secured
Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance satisfactory to the Agent.


 


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


 


(hh)
The Debtor does not currently have any direct or indirect subsidiaries. Each Debtor shall cause each subsidiary of such Debtor
formed after the date hereof to immediately become a party hereto (an “Additional Debtor”), by executing and delivering
an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the provisions hereof
applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules for, or supplements
to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements
shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions,
good standing certificates, incumbency certificates, organizational documents, financing statements and other information and
documentation as the Agent may reasonably request. Upon delivery of the foregoing to the Agent, the Additional Debtor shall be
and become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and
to the same extent as if it were an original signatory hereto and shall be deemed to have made the representations, warranties
and covenants set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all references
herein to the “Debtors” shall be deemed to include each Additional Debtor.


 




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(ii)
Without limiting the generality of the other obligations of the Debtor hereunder, the Debtor shall promptly (i) cause to be registered
at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with
respect to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office
to be duly recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.


 


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


 


(kk)
Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered
copyrights, and domain names owned by the Debtor as of the date hereof. Schedule F lists all material licenses in favor
of the Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents
and trademarks of the Debtor have been duly recorded at the United States Patent and Trademark Office and all material copyrights
of the Debtor have been duly recorded at the United States Copyright Office.


 


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


 


5.       Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership
interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests
upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement
of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to which the Debtor is subject or to which the Debtor
is party.


 


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


 


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


 


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


 




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


 


(d)       If
any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by the Debtor, or a proceeding shall be commenced by the Debtor, or by any governmental authority having
jurisdiction over the Debtor, seeking to establish the invalidity or unenforceability thereof, or the Debtor shall deny that the
Debtor has any liability or obligation purported to be created under this Agreement.


 


7.       Duty
To Hold In Trust. Upon the occurrence of any Event of Default and at any time thereafter, the Debtor shall, upon receipt of
any revenue, income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Debenture
or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Agent for the benefit of the Secured Parties and shall forthwith endorse and transfer any such
sums or instruments, or both, to the Agent for the benefit of the Secured Parties pro-rata in proportion to their respective then-currently
outstanding principal amount of Debenture for application to the satisfaction of the Obligations.


 


8.       Rights
and Remedies Upon Default.


 


(a)       Upon
the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the
right to exercise all of the remedies conferred hereunder and under the Debenture, and the Agent shall have all the rights and
remedies of a secured party under the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have the
following rights and powers:


 


(i)       The
Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall
assemble the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at the Debtor’s
premises or elsewhere, and make available to the Agent, without rent, all of the Debtor’s respective premises and facilities
for the purpose of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.


 


(ii)       Upon
notice to the Debtor by the Agent, all rights of the Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise
be authorized to receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of
the Secured Parties, any interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise
in such Agent’s discretion all voting rights pertaining thereto.Without limiting the generality of the foregoing, Agent
shall have the right (but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute
owner thereof, including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral
in connection with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the
Collateral or the Debtor or any of its direct or indirect subsidiaries.


 




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(iii)       The
Agent shall have the right to operate the business of the Debtor using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with
or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to
the Debtor or right of redemption of the Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or
other transfer of Collateral, the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which
cannot be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right
of redemption and equities of the Debtor, which are hereby waived and released.


 


(iv)       The
Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtor’s rights against such
account debtors and obligors.


 


(v)       The
Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person
or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.


 


(vi)       The
Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of the Debtor at the United
States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser
of any Collateral.


 


(b)       The
Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtor will
only be credited with payments actually made by the purchaser. In addition, the Debtor waives any and all rights that it may have
to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without
limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights
and remedies with respect thereto.


 




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(c)       For
the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, the Debtor hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to the Debtor) to use, license or sublicense
following an Event of Default, any Intellectual Property now owned or hereafter acquired by the Debtor, and wherever the same
may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout thereof.


 


9.       Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on
account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent
in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral,
and then to satisfaction of the Obligations pro rata among the Secured Parties and Additional Secured Parties (based on then-
outstanding principal amounts of Debenture at the time of any such determination), and to the payment of any other amounts required
by applicable law, after which the Secured Parties and Additional Secured Parties shall pay to the Debtor any surplus proceeds.
If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Parties and Additional Secured Parties are legally entitled, the Debtor will be liable for the deficiency, together
with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable law (the “Default Rate”),
and the reasonable fees of any attorneys employed by the Secured Parties and Additional Secured Parties to collect such deficiency.
To the extent permitted by applicable law, the Debtor waives all claims, damages and demands against the Secured Parties and Additional
Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross
negligence or willful misconduct of the Secured Parties and Additional Secured Parties as determined by a final judgment (not
subject to further appeal) of a court of competent jurisdiction.


 


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


 




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


 


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


 




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13.       Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Debenture
have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities
of the Debtor contained in this Agreement (including, without limitation, Annex A hereto) shall survive and remain operative and
in full force and effect regardless of the termination of this Agreement.


 


14.       Power
of Attorney; Further Assurances.


 


(a)       The
Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns
with full power of substitution, as the Debtor’s true and lawful attorney-in-fact, with power, in the name of the Agent
or the Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts,
money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect
of the Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the
UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv)
to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtor, at any time, or from time to time, to execute and deliver any and all documents and instruments and to
do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests
granted therein in order to effect the intent of this Agreement and the Debenture all as fully and effectually as the Debtor might
or could do, including, without limitation, the filing, in its sole discretion, of one or more financing or continuation statements
and amendments thereto, relative to any of the Collateral, which financing statements may (but need not) describe the Collateral
as “all assets” or “all personal property” or words of like import; and the Debtor hereby ratifies all
that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest
and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.
The designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents
or other documents or agreements to which the Debtor is subject or to which the Debtor is a party. Without limiting the generality
of the foregoing, after the occurrence and during the continuance of an Event of Default, each Secured Party is specifically authorized
to execute and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office and the United States Copyright Office.


 




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


 


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


 


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


 


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


 


17.       Appointment
of Agent. The Secured Parties hereby appoint Magna Equities II, LLC to act as their agent (“Agent”) for
purposes of exercising any and all rights and remedies of the Secured Parties hereunder. The Agent shall have the rights, responsibilities
and immunities set forth in Annex A hereto.


 




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18.       Miscellaneous.


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 




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


 


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


 


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


 


[SIGNATURE
PAGES FOLLOW]


 




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


 


	ADVANCED
    MEDICAL ISOTOPE CORPORATION	 
	 	 	 
	By:		 
	Name:	Michael
    Korenko	 
	Title: 	CEO	 


 


[SIGNATURE
PAGE OF HOLDERS FOLLOWS]


 




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[SIGNATURE
PAGE OF HOLDERS TO ADMD SA]


 





	 	 
	Name
    of Investing Entity:	 
	 	 
	Signature
    of Authorized Signatory of Investing entity:	 
	 	 
	Name
    of Authorized Signatory:	 
	 	 
	Title
    of Authorized Signatory:	 
	 	 
	Signature
    of Authorized Signatory of Investing entity:	 
	 	 
	Name
    of Authorized Signatory:	 
	 	 
	Title
    of Authorized Signatory:	 







 


[SIGNATURE
PAGE OF HOLDERS FOLLOWS]


 




    	23 



    	 



    

 


ANNEX
A


 to




 SECURITY




AGREEMENT


 


THE
AGENT


 


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


 


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


 


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


 




    	 	 	 



    	 



    

 


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


 


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


 




    	 	 	 



    	 



    

 


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


 


 7.        Resignation by the Agent.




 


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


 


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


 


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


 


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