Exhibit
10.2


 


SECURITY
AGREEMENT


 


THIS
SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) dated as
of [____], 2022 between Veroni Brands Corp., a Delaware corporation (the “Company”) (together with each other Person who
becomes a party to this Agreement by execution of a joinder in the form of Exhibit A attached hereto, which shall include all
wholly-owned or majority-owned subsidiaries of the Company acquired after the date hereof for so long as this Agreement remains in effect,
are hereinafter sometimes referred to individually as a “Debtor” and, collectively, as the “Debtors”) and [____],
in its capacity as Collateral Agent for the benefit of itself and each of the Note Holders (as hereinafter defined) (each, together with
its respective successors and assigns, a “Secured Party,” and collectively the “Secured Parties”).


 


W
I T N E S S E T H:


 


WHEREAS,
the Note Holders as from time to time parties to the Purchase Agreement (as hereafter defined) (each a “Note Holder”, and
together with their successors and assigns and each other purchaser of a Note (as defined below) and their respective successors and
assigns, individually and collectively, the “Note Holders”), pursuant to which such Note Holders will receive from the Company
certain senior secured convertible notes each made by the Company and dated as of the date hereof in an original aggregate principal
amount of $2,000,000 (all such notes, together with any promissory notes or other securities issued in exchange or substitution therefor
or replacement thereof, and as any of the same may be amended, supplemented, restated or modified and in effect from time to time, the
“Notes”);


 


WHEREAS,
the Notes are being acquired by Note Holders, and Note Holders have made certain financial accommodations to the Company pursuant to
that certain Stock Purchase Agreement, dated as of the date hereof among the Company, and the Note Holders (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”). Capitalized terms used herein
but not otherwise defined shall have the meanings set forth in the Purchase Agreement;


 


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


 


WHEREAS,
to induce Note Holders to enter into the Purchase Agreement, each Debtor will pledge and grant a security interest in all of its right,
title and interest in and to the Collateral (as hereinafter defined) as security for its Obligations for the benefit of the Secured Party,
Note Holders and their respective successors and assigns.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


“Excluded
Assets” means each of the following: (1) any lease, license or other agreement or any property subject to a capital lease, purchase
money security interest or similar arrangement, to the extent that a grant of a Lien thereon in favor of Secured Party would violate
or invalidate such lease, license, agreement or capital lease, purchase money security interest or similar arrangement or create a right
of termination in favor of any other party thereto (other than the Debtors), so long as such provision exists and so long as such lease,
license or agreement was not entered into in contemplation of circumventing the obligation to provide Collateral hereunder or in violation
of the Purchase Agreement, other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law including
the bankruptcy code, or principles of equity.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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“Lien”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


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


 


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


 


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


 


“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges
or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance
with GAAP, and (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course
of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property
or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y)
are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future
the forfeiture or sale of the property or asset subject to such Lien.


 


“Pledged
Collateral” means all Instruments and Investment Property whether or not physically delivered to the Collateral Agent according
to this Agreement.


 


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


 


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


 


“Security
Documents” means this Agreement, and any other documents securing the Liens of the Secured Party hereunder.


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


(k) All
representations, warranties and covenants of the Debtors in the Purchase Agreement, the Notes or any other documents contemplated thereby
are hereby incorporated herein by reference as though fully set forth herein.


 


(l) Subordination
Covenants. Each Debtor hereby covenants and agrees, while any amounts remain outstanding under the Note, to: (i) permit the Company,
without first obtaining the Debtor’s consent and without requiring any advance action on behalf of the Debtor, to incur debt in
the ordinary course of business to finance the Company’s ongoing business activities; and (ii) use its commercially reasonable
efforts to assist the Company in securing any such debt, including, but not limited to, signing such intercreditor or similar agreements
reasonably requested to be signed in connection with the incurrence of such debt and the subordination of the obligations of the Company
under this Agreement and the Note to any such debt. The Holder further covenants and agrees that its rights under this Agreement and
the Note shall be subordinate to any and all debt incurred by the Company in connection with the financing of the transactions contemplated
by the Purchase Agreement.


 




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


 


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


 


(b) all
Accounts;


 


(c) all
Inventory;


 


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


 


(e) all
Equipment;


 


(f) all
Documents;


 


(g) all
Contracts;


 


(h) all
Goods;


 


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


 


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


 


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


 


(l) all
Trademarks, Patents and Copyrights;


 


(m) all
books and records pertaining to the other Collateral;


 


(n) all
Software; and


 


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


 


Notwithstanding
anything to the contrary contained herein or in any Transaction Document, in no event shall the security interest granted herein or therein
attach to any Excluded Assets.


 


Section
4. Covenants; Remedies. In furtherance of
the grant of the pledge and security interest pursuant to Section 3 hereof, each Debtor hereby agrees with the Secured Party as follows
(subject to the Permitted Liens):


 




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4.1 Delivery
and Other Perfection; Maintenance, etc.


 


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


 


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


 


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


 


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


 




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


 


(f) Intellectual
Property. Each Debtor represents and warrants that the Copyrights, Patents and Trademarks listed on Schedules III, IV and V,
respectively (if any), constitute all of the registered Copyrights and all of the Patents and Trademarks now owned by such Debtor. If
such Debtor shall (i) obtain rights to any new patentable inventions, any registered Copyrights or any Patents or Trademarks, or (ii)
become entitled to the benefit of any registered Copyrights or any Patents or Trademarks or any improvement on any Patent, the provisions
of this Agreement above shall automatically apply thereto and such Debtor shall give to Secured Party prompt written notice thereof.
Each Debtor hereby authorizes Secured Party to modify this Agreement by amending Schedules III, IV and V, as applicable, to include
any such registered Copyrights or any such Patents and Trademarks. Each Debtor shall have the duty (i) to prosecute diligently any patent,
trademark, or service mark applications pending as of the date hereof or hereafter, (ii) to preserve and maintain all rights in the Copyrights,
Patents and Trademarks, to the extent material to the operations of the business of such Debtor and (iii) to ensure that the Copyrights,
Patents and Trademarks are and remain enforceable, to the extent material to the operations of the business of such Debtor. Any expenses
incurred in connection with such Debtor’s obligations under this Section 4.1(f) shall be borne by such Debtor. Except for any such
items that a Debtor reasonably believes (using prudent industry customs and practices) are no longer necessary for the on-going operations
of its business, no Debtor shall abandon any material right to file a patent, trademark or service mark application, or abandon any pending
patent, trademark or service mark application or any other Copyright, Patent or Trademark without the prior written consent of Secured
Party, which consent shall not be unreasonably withheld.


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4.5 Reserved.


 


4.6 Events
of Default, Etc. During the period during which an Event of Default shall have occurred:


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


4.9 Application
of Proceeds. The proceeds of any collection, sale or other realization of all or any part of the Collateral, and any other cash at
the time held by the Secured Party under this Agreement, shall be applied to the Obligations on a pro-rata basis based on investments
made under the Securities Purchase Agreement as detailed on Schedule 4.9.


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


Section
5. Miscellaneous.


 


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


 


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


 


5.3 Notices.
All notices, approvals, requests, demands and other communications hereunder shall be delivered or made in the manner set forth in, and
shall be effective in accordance with the terms of, the Purchase Agreement. Debtors and Collateral Agent may change their respective
notice addresses by written notice given to each other party five (5) days prior to the effectiveness of such change.


 


5.4 Amendments,
Etc. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by the Debtor sought
to be charged or benefited thereby and each of the Note Holders. Any such amendment or waiver shall be binding upon the Secured Party
and the Debtor sought to be charged or benefited thereby and their respective successors and assigns.


 


5.5 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of each of the
parties hereto, provided, that no Debtor shall assign or transfer its rights hereunder without the prior written consent of each of the
Secured Parties. Any Secured Party, including the Collateral Agent in its capacity as Collateral Agent, may assign its rights hereunder
without the consent of Debtors, in which event such assignee shall be deemed to be Secured Party and/or Collateral Agent, as applicable,
hereunder with respect to such assigned rights; provided, so long as no Event of Default has occurred and is continuing, no Secured Party
shall assign any of its rights hereunder to a competitor of any Company.


 


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


 


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


 




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


 


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


 


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


 


5.11 Collateral
Agent and Note Holder Indemnification.


 


(a) Each
Note Holder has pursuant to the Purchase Agreement designated and appointed the Collateral Agent as the administrative agent of such
Note Holder under this Agreement and the related agreements.


 


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


 




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


 


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


 


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


 


third,
to payment of principal of the Obligations;


 


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


 


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


 


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


 


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


 


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Remainder of Page Intentionally Left Blank; Signature Page Follows -


 




    	16



    	 



    

 


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


 


	DEBTOR:	 
	 	 	 
	VERONI
    BRANDS CORP., a Delaware corporation	 
	 	 	 
	By:	 	 
	Name: 	Igor Gabal	 
	Title:
    	President	 


 


Signature
Page to Security Agreement


 




    	 



    	 



    

 


	 	COLLATERAL AGENT:
	 	 	 
	 	[NAME]
	 	 	 
	 	By:	              
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Notice Address:


 


Signature
Page to Security Agreement


 




    	 



    	 



    

 


EXHIBIT
A


Form
of Joinder


Joinder
to Security Agreement


 


The
undersigned, ______________________________, hereby joins in the execution of that certain Security Agreement dated as of [____], 2022
(as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”) by Veroni Brands Corp.,
a Delaware corporation, and the Note Holders (as defined therein), and each other Person that becomes a Debtor or a Note Holder thereunder
after the date thereof and hereof and pursuant to the terms thereof, to and in favor [______], in its capacity as Collateral Agent for
Note Holders. By executing this Joinder, the undersigned hereby agrees that it is a Debtor thereunder and agrees to be bound by all of
the terms and provisions of the Security Agreement. The undersigned represents and warrants that the representations and warranties set
forth in the Security Agreement are, with respect to the undersigned, true and correct as of the date hereof.


 


The
undersigned represents and warrants to Secured Party that:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


	 	________________, a ________
	 	 
	 	By:	 
	 	 	 
	 	Title:	 
	 	FEIN:	 ______________


 




    	 



    	 



    

 


SCHEDULE
I


Jurisdictions
and Debtor’s Information


 


Veroni
Brands Corp., a Delaware corporation


 


Organization
identification number:


Chief
place of business:


Chief
executive office:


Office
where Entity keeps its books and records:


States
or jurisdictions in which Entity conducts its business:


 




    	 



    	 



    

 


SCHEDULE
II


Trade
Names


 




    	 



    	 



    

 


SCHEDULE
III


Copyrights


 




    	 



    	 



    

 


SCHEDULE
IV


Patents


 




    	 



    	 



    

 


SCHEDULE
V


Trademarks


 




    	 



    	 



    

 


SCHEDULE
VI


Depository
and Other Accounts


 


Company
Banks where company funds are held


 




    	 



    	 



    

 


SCHEDULE
VII


Commercial
Tort Claims


 




    	 



    	 



    

 


SCHEDULE
VIII


Real
Property Interests


 




    	 



    	 



    

 


SCHEDULE
IX


Debtor’s
Equipment