Exhibit
10.04


 


SECURITY
AGREEMENT


 


This
SECURITY AGREEMENT (the “Security Agreement”) dated as of August 8, 2022, is executed by and between
LD Micro, Inc., a Delaware corporation (the “Debtor”), and [ATW
OPPORTUNITIES MASTER FUND II, LP] (the “Secured Party”).


 


R
E C I T A L S:


 


WHEREAS,
pursuant to a Senior Secured Revolving Credit Facility Agreement dated as of even date herewith (the “Credit Agreement”)
by and between SRAX, Inc., a Delaware corporation (the “Company”), additional Credit Parties, and the Secured
Party, the Company desires to borrow funds and obtain financial accommodations from Secured Party (such financial accommodations hereinafter
referred to as the “Loan”); and


 


WHEREAS,
in order to induce Secured Party to enter into the Loan with the Company, the Debtor, a Subsidiary of the Company, has entered into and
executed a Guaranty Agreement dated of even date herewith in favor of Secured Party (the “Guaranty Agreement”);
and


 


WHEREAS,
in order to induce the Secured Party to make the Loan, and to secure Debtor’s liabilities and obligations under the Guaranty Agreement,
Debtor has agreed to execute and deliver to the Secured Party this Agreement for the benefit of the Secured Party;


 


NOW,
THEREFORE, in consideration of the credit extended now and in the future by Secured Party to the Company and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor and Secured Party hereby agree as follows:


 


A
G R E E M E N T S:


 


	1	DEFINITIONS.


 


1.1 Defined
Terms. Capitalized terms used but not otherwise defined in this Security Agreement (including the Recitals) shall have the meanings
ascribed to them in the Credit Agreement. For the purposes of this Security Agreement, the following capitalized words and phrases shall
have the meanings set forth below.


 


(a) “Capital
Securities” shall mean, with respect to any Person, all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the date
hereof, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership
interests in a partnership or any other equivalent of such ownership interest.


 


(b) “Collateral”
shall have the meaning set forth in Section 2.1 hereof.


 




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(c) “Obligor”
shall mean, collectively, the Debtor, or any other party liable with respect to the Obligations.


 


(d) “Organizational
Identification Number” means, with respect to Debtor, the organizational identification number assigned to Debtor by the
applicable governmental unit or agency of the jurisdiction of organization of Debtor, if any.


 


(e) “Taxes”
shall mean any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and any and
all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing.


 


(f) “Unmatured
Event of Default” shall mean any event which, with the giving of notice, the passage of time or both, would constitute
an Event of Default.


 


1.2 Other
Terms Defined in UCC. All other capitalized words and phrases used herein and not otherwise specifically defined herein or in the
Credit Agreement shall have the respective meanings assigned to such terms in the UCC, to the extent the same are used or defined therein.


 


1.3 Other
Interpretive Provisions.


 


(a) The
meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. Whenever the context so requires,
the neuter gender includes the masculine and feminine, the single number includes the plural, and vice versa.


 


(b) Section
and Schedule references are to this Security Agreement unless otherwise specified. The words “hereof”, “herein”
and “hereunder” and words of similar import when used in this Security Agreement shall refer to this Security Agreement as
a whole and not to any particular provision of this Security Agreement


 


(c) The
term “including” (or words of similar import) is not limiting, and means “including, without limitation”.


 


(d) In
the computation of periods of time from a specified date to a later specified date, the word “from” means “from and
including”; the words “to” and “until” each mean “to but excluding”, and the word “through”
means “to and including”.


 


(e) Unless
otherwise expressly provided herein: (i) references to agreements (including this Security Agreement and the other Loan Documents) and
other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications
thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms of
any Loan Document; and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions
amending, replacing, supplementing or interpreting such statute or regulation.


 




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(f) To
the extent any of the provisions of the other Loan Documents are inconsistent with the terms of this Security Agreement, the provisions
of this Security Agreement shall govern.


 


(g) This
Security Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.


 


	2	SECURITY
    FOR THE OBLIGATIONS.


 


2.1 Security
for Obligations. As security for the payment and performance of the Obligations, Debtor does hereby pledge, assign, transfer, deliver
and grant to Secured Party, for its own benefit and as agent for its Affiliates, a continuing and unconditional first priority security
interest in and to any and all property of Debtor, of any kind or description, tangible or intangible, wheresoever located and whether
now existing or hereafter arising or acquired, including the following (all of which property for Debtor, along with the products and
proceeds therefrom, are individually and collectively referred to as the “Collateral”):


 


(a) all
property of, or for the account of, Debtor now or hereafter coming into the possession, control or custody of, or in transit to, Secured
Party or any agent or bailee for Secured Party or any parent, affiliate or subsidiary of Secured Party or any participant with Secured
Party in the Obligations (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise), including all cash,
earnings, dividends, interest, or other rights in connection therewith and the products and proceeds therefrom, including the proceeds
of insurance thereon; and


 


(b) the
additional property of Debtor, whether now existing or hereafter arising or acquired, and wherever now or hereafter located, together
with all additions and accessions thereto, substitutions, betterments and replacements therefor, products and Proceeds therefrom, and
all of Debtor’s books and records and recorded data relating thereto (regardless of the medium of recording or storage), together
with all of Debtor’s right, title and interest in and to all computer software required to utilize, create, maintain and process
any such records or data on electronic media, identified and set forth as follows:


 


(i) All
Accounts and all goods whose sale, lease or other disposition by Debtor has given rise to Accounts and have been returned to, or repossessed
or stopped in transit by Debtor, or rejected or refused by any Customer;


 


(ii) All
Inventory, including raw materials, work-in-process and finished goods;


 


(iii) All
goods (other than Inventory), including embedded software, Equipment, vehicles, furniture and Fixtures;


 




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(iv) All
Software and computer programs;


 


(v) All
Securities, Investment Property, Financial Assets and Deposit Accounts, and all funds at any time deposited therewith, and all funds
and amounts reserved or held back by any Payment Processing Companies;


 


(vi) All
As-Extracted Collateral, Commodity Accounts, Commodity Contracts, and Farm Products;


 


(vii) All
Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of Credit Rights, all proceeds of letters of credit, Health-Care-Insurance
Receivables, Supporting Obligations, notes secured by real estate, Commercial Tort Claims and General Intangibles, including Payment
Intangibles; and


 


(viii) All
real estate property owned by Debtor and the interest of Debtor in fixtures related to such real property;


 


(ix) All
Proceeds (whether Cash Proceeds or Non-cash Proceeds) of the foregoing property, including all insurance policies and proceeds of insurance
payable by reason of loss or damage to the foregoing property, including unearned premiums, and of eminent domain or condemnation awards.


 


2.2 Possession
and Transfer of Collateral. Until an Event of Default has occurred, but subject to Secured Party’s rights under the Credit
Agreement Debtor shall be entitled to possession and use of the Collateral (other than Instruments or Documents (including Tangible Chattel
Paper and Investment Property consisting of certificated securities) and other Collateral required to be delivered to Secured Party pursuant
to this Section 2). The cancellation or surrender of any promissory note evidencing an Obligation, upon payment or otherwise,
shall not affect the right of Secured Party to retain the Collateral for any other of the Obligations, except upon payment in full of
the Obligations. Debtor shall not sell, assign (by operation of law or otherwise), license, lease or otherwise dispose of, or grant any
option with respect to any of the Collateral, except as permitted pursuant to the Credit Agreement.


 


2.3 Financing
Statements. Debtor authorizes Secured Party to prepare and file such financing statements, amendments and other documents and do
such acts as Secured Party deems necessary in order to establish and maintain valid, attached and perfected, first priority security
interests in the Collateral in favor of Secured Party, for its own benefit and as agent for its Affiliates, free and clear of all Liens
and claims and rights of third parties whatsoever, except Permitted Liens. Debtor hereby irrevocably authorizes Secured Party at any
time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto that: (a) indicate the
Collateral: (i) is comprised of all assets of Debtor (or words of similar effect), regardless of whether any particular asset comprising
a part of the Collateral falls within the scope of Article 9 of the UCC of the jurisdiction wherein such financing statement or amendment
is filed; or (ii) as being of an equal or lesser scope or within greater detail as the grant of the security interest set forth herein;
and (b) contain any other information required by Section 5 of Article 9 of the UCC of the jurisdiction wherein such financing statement
or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including: (A) whether
Debtor is an organization, the type of organization and any Organizational Identification Number issued to Debtor; and (B) in the case
of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient
description of the real property to which the Collateral relates. Debtor agrees to furnish any such information to Secured Party promptly
upon request. In addition, Debtor shall make appropriate entries on its books and records disclosing the security interests of Secured
Party, for its own benefit and as agent for its Affiliates, in the Collateral. Debtor hereby agrees that a photogenic or other reproduction
of this Security Agreement is sufficient for filing as a financing statement and Debtor authorizes Secured Party to file this Security
Agreement as a financing statement in any jurisdiction.


 




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2.4 Preservation
of the Collateral. Secured Party may, but is not required to, take such actions from time to time as Secured Party deems appropriate
to maintain or protect the Collateral. Secured Party shall have exercised reasonable care in the custody and preservation of the Collateral
if Secured Party takes such action as Debtor shall reasonably request in writing which is not inconsistent with Secured Party’s
status as a secured party, but the failure of Secured Party to comply with any such request shall not be deemed a failure to exercise
reasonable care; provided, however, Secured Party’s responsibility for the safekeeping of the Collateral shall: (i)
be deemed reasonable if such Collateral is accorded treatment substantially equal to that which Secured Party accords its own property;
and (ii) not extend to matters beyond the control of Secured Party, including acts of God, war, insurrection, riot or governmental actions.
In addition, any failure of Secured Party to preserve or protect any rights with respect to the Collateral against prior or third parties,
or to do any act with respect to preservation of the Collateral, not so requested by Debtor, shall not be deemed a failure to exercise
reasonable care in the custody or preservation of the Collateral. Debtor shall have the sole responsibility for taking such action as
may be necessary, from time to time, to preserve all rights of Debtor and Secured Party in the applicable Collateral against prior or
third parties.


 


2.5 Other
Actions as to any and all Collateral. Debtor further agrees to take any other action reasonably requested by Secured Party to ensure
the attachment, perfection and first priority of, and the ability of Secured Party to enforce, the security interest of Secured Party,
for its own benefit and as agent for its Affiliates, in any and all of the Collateral, including: (i) causing Secured Party’s name
to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection
or priority of, or ability of the bank to enforce, the security interest of Secured Party, for its own benefit and as agent for its Affiliates,
in such Collateral; (ii) complying with any provision of any statute, regulation or treaty of the United States as to any material portion
of the Collateral as soon as possible but not more than forty-five (45) days after such request if compliance with such provision is
a condition to attachment, perfection or priority of, or ability of Secured Party to enforce, the security interest of Secured Party,
for its own benefit and as agent for its Affiliates, in such Collateral; (iii) obtaining governmental and other third party consents
and approvals, including, without limitation, any consent of any licensor, lessor or other Person with authority or control over or an
interest in any material portion of the Collateral as soon as possible but not more than forty-five (45) days after such request; (iv)
obtaining waivers from mortgagees and landlords in form and substance reasonably satisfactory to Secured Party which affect any material
portion of the Collateral as soon as possible but not more than forty-five (45) days after such request; and (v) taking all actions required
by the UCC in effect from time to time or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable
in any foreign jurisdiction. Debtor further agrees to indemnify and hold Secured Party harmless against claims of any Persons not a party
to this Security Agreement concerning disputes arising over the Collateral, except to the extent resulting from the gross negligence
or willful misconduct of Secured Party or its Affiliates.


 


2.6 Collateral
in the Possession of a Warehouseman or Bailee. If any material portion of the Collateral at any time is in the possession of a warehouseman
or bailee, Debtor shall promptly notify Secured Party thereof, and, as soon as possible, but not more than forty-five (45) days later,
shall obtain a Collateral Access Agreement in form and substance reasonably satisfactory to Secured Party from such warehouseman or bailee.


 




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2.7 Letter-of-Credit
Rights. If Debtor at any time is a beneficiary under a letter of credit now or hereafter issued in favor of Debtor, Debtor shall
promptly notify Secured Party thereof and, at the request and option of Secured Party, Debtor shall, pursuant to an agreement in form
and substance reasonably satisfactory to Secured Party, either: (i) arrange for the issuer and any confirmer of such letter of credit
to consent to an assignment to Secured Party, for its own benefit and as agent for its Affiliates, of the proceeds of any drawing under
the letter of credit; or (ii) arrange for Secured Party, for its own benefit and as agent for its Affiliates, to become the transferee
beneficiary of the letter of credit, with Secured Party agreeing, in each case, that the proceeds of any drawing under the letter to
credit are to be applied as provided in the Credit Agreement.


 


2.8 Commercial
Tort Claims. If Debtor shall at any time hold or acquire a Commercial Tort Claim, Debtor shall promptly notify Secured Party in writing
signed by Debtor of the details thereof and grant to Secured Party, for its own benefit and as agent for its Affiliates, in such written
notice or other written instrument, a security interest therein and in the proceeds thereof, all upon the terms of this Security Agreement,
in each case in form and substance reasonably satisfactory to Secured Party, and shall execute any amendments hereto deemed reasonably
necessary by Secured Party to perfect the security interest of Secured Party, for its own benefit and as agent for its Affiliates, in
such Commercial Tort Claim.


 


2.9 Electronic
Chattel Paper and Transferable Records. If Debtor at any time holds or acquires an interest in any electronic chattel paper or any
“transferable record”, as that term is defined in Section 201 of the federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, Debtor shall promptly
notify Secured Party thereof and, at the request of Secured Party, shall take such action as Secured Party may reasonably request to
vest in Secured Party control under Section 9-105 of the UCC of such electronic chattel paper or control under Section 201 of the federal
Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act,
as so in effect in such jurisdiction, of such transferable record. Secured Party agrees with Debtor that Secured Party will arrange,
pursuant to procedures reasonably satisfactory to Secured Party and so long as such procedures will not result in Secured Party’s
loss of control, for Debtor to make alterations to the electronic chattel paper or transferable record permitted under Section 9-105
of the UCC or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act, for a party in control to make without loss of control.


 


2.10 Additional
Requirements on Collateral. Debtor shall fully cooperate with Secured Party to obtain and keep in effect one or more control agreements
in Deposit Accounts, Electronic Chattel Paper, Investment Property and Letter-of-Credit Rights Collateral. Such control agreements shall
only be required if, in the reasonable discretion of the Secured Party, the nature of the Collateral requires any such control agreements
in order for the Secured Party to perfect its security interests in any Collateral as granted hereunder, and in such event, Debtor shall
promptly provide any such control agreements upon request from the Secured Party. In addition, Debtor, at the Debtor’s expense,
shall promptly: (A) execute all notices of security interest for each relevant type of Software and other General Intangibles in forms
suitable for filing with any United States or foreign office handling the registration or filing of patents, trademarks, copyrights and
other intellectual property and any successor office or agency thereto; and (B) take all commercially reasonable steps in any hearing,
suit, action, or other proceeding before any such office or any similar office or agency in any other country or any political subdivision
thereof, to diligently prosecute or maintain, as applicable, each application and registration of any Software, General Intangibles or
any other intellectual property rights and assets that are part of the Collateral, including filing of renewals, affidavits of use, affidavits
of incontestability and opposition, interference and cancellation proceedings.


 




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	3	REPRESENTATIONS
    AND WARRANTIES.


 


Debtor
makes the following representations and warranties to Secured Party:


 


3.1 Debtor
Organization and Name. Debtor is a corporation, limited liability company, or other legally recognized form of entity, as applicable,
duly organized, existing and in good standing under the laws of its State of organization, with full and adequate power to carry on and
conduct its business as presently conducted. Debtor is duly licensed or qualified in all foreign jurisdictions wherein the nature of
its activities requires such qualification or licensing. Debtor’s Organizational Identification Number is set forth in the Credit
Agreement. The exact legal name of Debtor is as set forth in the first paragraph of this Security Agreement, and Debtor does not currently
conduct, nor has it during the last five (5) years conducted, business under any other name or trade name.


 


3.2 Authorization.
Debtor has full right, power and authority to enter into this Security Agreement and to perform all of its duties and obligations under
this Security Agreement. The execution and delivery of this Security Agreement and the other Loan Documents will not, nor will the observance
or performance of any of the matters and things herein or therein set forth, violate or contravene any provision of law or of the articles
of incorporation, by-laws, operating agreement or other governing documents, as applicable, of Debtor. All necessary and appropriate
action has been taken on the part of Debtor to authorize the execution and delivery of this Security Agreement.


 


3.3 Validity
and Binding Nature. This Security Agreement is the legal, valid and binding obligation of Debtor, enforceable against Debtor in accordance
with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally
and to general principles of equity.


 


3.4 Consent;
Absence of Breach. The execution, delivery and performance of this Security Agreement and any other documents or instruments to be
executed and delivered by Debtor in connection herewith, do not and will not: (a) require any consent, approval, authorization, or filings
with, notice to or other act by or in respect of, any governmental authority or any other Person (other than filings or notices pursuant
to federal or state securities laws or other than any consent or approval which has been obtained and is in full force and effect); (b)
conflict with: (i) any provision of law or any applicable regulation, order, writ, injunction or decree of any court or governmental
authority; (ii) the articles of incorporation, bylaws, operating agreement, or other organic or governance document applicable to Debtor;
or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon Debtor or any
of its properties or assets; or (c) require, or result in, the creation or imposition of any Lien on any asset of Debtor, other than
Liens in favor of Secured Party created pursuant to this Security Agreement and Permitted Liens.


 


3.5 Ownership
of Collateral; Liens. Debtor is the sole owner of all the Collateral applicable to Debtor, free and clear of all Liens, charges and
claims (including infringement claims with respect to patents, trademarks, service marks, copyrights and other intellectual property
rights), other than Permitted Liens.


 


3.6 Adverse
Circumstances. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or threatened
litigation or proceeding or basis therefor) exists which: (i) would have a Material Adverse Effect upon Debtor; or (ii) would constitute
an Event of Default or an Unmatured Event of Default.


 


3.7 Security
Interest. This Security Agreement creates a valid security interest in favor of Secured Party in the Collateral and, when properly
perfected by filing in the appropriate jurisdictions, or by possession or control of such Collateral by Secured Party or delivery of
such Collateral to Secured Party, shall constitute a valid, perfected, first-priority security interest in such Collateral.


 




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3.8 Place
of Business. The principal place of business and books and records of Debtor is set forth in the preamble to this Security Agreement,
and the location of all Collateral, if other than at such principal place of business, is as set forth on Schedule 3.8
attached hereto and made a part hereof, and Debtor shall promptly notify Secured Party of any change in such locations. Debtor will not
remove or permit the Collateral to be removed from such locations without the prior written consent of Secured Party, except as permitted
pursuant to the Credit Agreement.


 


3.9 Complete
Information. This Security Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts,
and other materials and information heretofore or contemporaneously herewith furnished in writing by Debtor to Secured Party for purposes
of, or in connection with, this Security Agreement and the transactions contemplated hereby is, and all written information hereafter
furnished by or on behalf of Debtor to Secured Party pursuant hereto or in connection herewith will be, true and accurate in every material
respect on the date as of which such information is dated or certified, and none of such information is or will be incomplete by omitting
to state any material fact necessary to make such information not misleading in light of the circumstances under which made (it being
recognized by Secured Party that any projections and forecasts provided by Debtor are based on good faith estimates and assumptions believed
by Debtor to be reasonable as of the date of the applicable projections or assumptions and that actual results during the period or periods
covered by any such projections and forecasts may differ from projected or forecasted results).


 


	4	REMEDIES.


 


Upon
the occurrence of any default in the payment or performance of any of the covenants, conditions and agreements contained in this Security
Agreement or any other Event of Default, including any Event of Default under the Guaranty Agreement, Secured Party shall have all rights,
powers and remedies set forth in this Security Agreement or the other Loan Documents or in any other written agreement or instrument
relating to any of the Obligations or any security therefor, as a secured party under the UCC or as otherwise provided at law or in equity.
Debtor hereby waives any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in connection with
the enforcement of Secured Party’s rights under the Loan Documents, and hereby consents to, and waives notice of release, with
or without consideration, of any Collateral, notwithstanding anything contained herein or in the Loan Documents to the contrary. In addition
to the foregoing:


 


4.1 Possession
and Assembly of Collateral. Secured Party may, without notice, demand or the initiation of legal process of any kind, take possession
of any or all of the Collateral (in addition to Collateral of which Secured Party already has possession), wherever it may be found,
and for that purpose may pursue the same wherever it may be found, and may at any time enter into any of Debtor’s premises where
any of the Collateral may be or is supposed to be, and search for, take possession of, remove, keep and store any of the Collateral until
the same shall be sold or otherwise disposed of and Secured Party shall have the right to store and conduct a sale of the same in any
of Debtor’s premises without cost to Secured Party. At Secured Party’s request, Debtor will, at Debtor’s sole expense,
assemble the Collateral and make it available to Secured Party at a place or places to be designated by Secured Party which is reasonably
convenient to Secured Party and Debtor.


 




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4.2 Sale
of Collateral. Secured Party may sell any or all of the Collateral at public or private sale, upon such terms and conditions as Secured
Party may deem proper, and Secured Party may purchase any or all of the Collateral at any such sale. Debtor acknowledges that Secured
Party may be unable to effect a public sale of all or any portion of the Collateral because of certain legal and/or practical restrictions
and provisions which may be applicable to the Collateral and, therefore, may be compelled to resort to one or more private sales to a
restricted group of offerees and purchasers. Debtor consents to any such private sale so made even though at places and upon terms less
favorable than if the Collateral were sold at public sale. Secured Party shall have no obligation to clean-up or otherwise prepare the
Collateral for sale. Secured Party may apply the net proceeds, after deducting all costs, expenses, attorneys’ and paralegals’
fees incurred or paid at any time in the collection, protection and sale of the Collateral and the Obligations, to the payment of the
Obligations, returning the excess proceeds, if any, to Debtor. Debtor shall remain liable for any amount remaining unpaid after such
application, with interest at the Default Rate. Any notification of intended disposition of the Collateral required by law shall be conclusively
deemed reasonably and properly given if given by Secured Party at least ten (10) calendar days before the date of such disposition. Debtor
hereby confirms, approves and ratifies all commercially reasonable acts and deeds of Secured Party relating to the foregoing, and each
part thereof, and expressly waives any and all claims of any nature, kind or description which it has or may hereafter have against Secured
Party or its representatives, by reason of taking, selling or collecting any portion of the Collateral in a commercially reasonable manner.
Debtor consents to releases of the Collateral at any time (including prior to default) and to sales of the Collateral in groups, parcels
or portions, or as an entirety, as Secured Party shall deem appropriate. Debtor expressly absolves Secured Party from any loss or decline
in market value of any Collateral by reason of delay in the enforcement or assertion or non-enforcement of any rights or remedies under
this Security Agreement.


 


4.3 Standards
for Exercising Remedies. All actions taken by Secured Party will be required to be exercised in a commercially reasonable manner.
Debtor acknowledges and agrees that it is not commercially unreasonable for Secured Party: (i) to incur expenses deemed necessary by
Secured Party to prepare Collateral for disposition or otherwise to complete raw material or work-in-process into finished goods or other
finished products for disposition; (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain
or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral
to be collected or disposed of; (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral
or to remove liens or encumbrances on or any adverse claims against Collateral; (iv) to exercise collection remedies against Customers
and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists; (v) to
advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized
nature; (vi) to contact other Persons, whether or not in the same business as Debtor, for expressions of interest in acquiring all or
any portion of the Collateral; (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether
or not the Collateral is of a specialized nature; (viii) to dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers
of assets; (ix) to dispose of assets in wholesale rather than retail markets; (x) to disclaim disposition warranties, including any warranties
of title; (xi) to purchase insurance or credit enhancements to insure Secured Party against risks of loss, collection or disposition
of Collateral or to provide to Secured Party a guaranteed return from the collection or disposition of Collateral; or (xii) to the extent
deemed appropriate by Secured Party, to obtain the services of other brokers, investment bankers, consultants and other professionals
to assist Secured Party in the collection or disposition of any of the Collateral. Debtor acknowledges that the purpose of this section
is to provide non-exhaustive indications of what actions or omissions by Secured Party would not be commercially unreasonable in Secured
Party’s exercise of remedies against the Collateral and that other actions or omissions by Secured Party shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without limitation upon the foregoing, nothing contained in this
Section shall be construed to grant any rights to Debtor or to impose any duties on Secured Party that would not have been granted or
imposed by this Security Agreement or by applicable law in the absence of this Section.


 




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4.4 UCC
and Offset Rights. Secured Party may exercise, from time to time, any and all rights and remedies available to it under the UCC or
under any other applicable law in addition to, and not in lieu of, any rights and remedies expressly granted in this Security Agreement
or in any other agreements between any Obligor and Secured Party, and may, without demand or notice of any kind, appropriate and apply
toward the payment of such of the Obligations, whether matured or unmatured, including costs of collection and attorneys’ and paralegals’
fees and costs, and in such order of application as Secured Party may, from time to time, elect, any indebtedness of Secured Party to
any Obligor, however created or arising, including balances, credits, deposits, accounts or moneys of such Obligor in the possession,
control or custody of, or in transit to Secured Party. Debtor, on behalf of itself and any Obligor, hereby waives the benefit of any
law that would otherwise restrict or limit Secured Party in the exercise of its right, which is hereby acknowledged, to appropriate at
any time hereafter any such indebtedness owing from Secured Party to any Obligor.


 


4.5 Additional
Remedies. Upon the occurrence of an Event of Default, Secured Party shall have the right and power to:


 


(a) instruct
Debtor, at its own expense, to notify any parties obligated on any of the Collateral, including any Customers and Payment Processing
Companies, to make payment directly to Secured Party of any amounts due or to become due thereunder, or Secured Party may directly notify
such obligors of the security interest of Secured Party, and/or of the assignment to Secured Party of the Collateral and direct such
obligors to make payment to Secured Party of any amounts due or to become due with respect thereto, and thereafter, collect any such
amounts due on the Collateral directly from such Persons obligated thereon;


 


(b) enforce
collection of any of the Collateral, including any Accounts, by suit or otherwise, or make any compromise or settlement with respect
to any of the Collateral, or surrender, release or exchange all or any part thereof, or compromise, extend or renew for any period (whether
or not longer than the original period) any indebtedness thereunder;


 


(c) take
possession or control of any proceeds and products of any of the Collateral, including the proceeds of insurance thereon;


 




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(d) extend,
renew or modify for one or more periods (whether or not longer than the original period) the Obligations or any obligation of any nature
of any other obligor with respect to the Obligations;


 


(e) grant
releases, compromises or indulgences with respect to the Obligations, any extension or renewal of any of the Obligations, any security
therefor, or to any other obligor with respect to the Obligations;


 


(f) transfer
the whole or any part of Capital Securities which may constitute Collateral into the name of Secured Party or Secured Party’s nominee
without disclosing, if Secured Party so desires, that such Capital Securities so transferred are subject to the security interest of
Secured Party, and any corporation, association, or any of the managers or trustees of any trust issuing any of such Capital Securities,
or any transfer agent, shall not be bound to inquire, in the event that Secured Party or such nominee makes any further transfer of such
Capital Securities, or any portion thereof, as to whether Secured Party or such nominee has the right to make such further transfer,
and shall not be liable for transferring the same;


 


(g) vote
the Collateral;


 


(h) make
an election with respect to the Collateral under Section 1111 of the Bankruptcy Code or take action under Section 364 or any other section
of Bankruptcy Code; provided, however, that any such action of Secured Party as set forth herein shall not, in any manner
whatsoever, impair or affect the liability of Debtor hereunder, nor prejudice, waive, nor be construed to impair, affect, prejudice or
waive Secured Party’s rights and remedies at law, in equity or by statute, nor release, discharge, nor be construed to release
or discharge, Debtor or any other Person liable to Secured Party for the Obligations; and


 


(i) at
any time, and from time to time, accept additions to, releases, reductions, exchanges or substitution of the Collateral, without in any
way altering, impairing, diminishing or affecting the provisions of this Security Agreement, the Loan Documents, or any of the other
Obligations, or Secured Party’s rights hereunder, under the Obligations.


 


Debtor
hereby ratifies and confirms whatever Secured Party may do with respect to the Collateral and agrees that Secured Party shall not be
liable for any error of judgment or mistakes of fact or law with respect to actions taken in connection with the Collateral.


 


4.6 Attorney-in-Fact.
Debtor hereby irrevocably makes, constitutes and appoints Secured Party (and any officer of Secured Party or any Person designated by
Secured Party for that purpose) as Debtor’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in Debtor’s name,
place and stead, with full power of substitution, to: (i) take such actions as are permitted in this Security Agreement; (ii) execute
such financing statements and other documents and to do such other acts as Secured Party may require to perfect and preserve Secured
Party’s security interest in, and to enforce such interests in the Collateral; and (iii) upon the occurrence of an Event of Default,
carry out any remedy provided for in this Security Agreement, the Credit Agreement or through law or equity, including endorsing Debtor’s
name to checks, drafts, instruments and other items of payment, and proceeds of the Collateral, executing change of address forms with
the postmaster of the United States Post Office serving the address of Debtor, changing the address of Debtor to that of Secured Party,
opening all envelopes addressed to Debtor and applying any payments contained therein to the Obligations, and changing any merchant accounts
or instructions to Payment Processing Companies regarding any credit/debit card payments from Customers. Debtor hereby acknowledges that
the constitution and appointment of such proxy and attorney-in-fact are coupled with an interest and are irrevocable. Debtor hereby ratifies
and confirms all that such attorney-in-fact may do or cause to be done by virtue of any provision of this Security Agreement.


 




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4.7 No
Marshaling. Secured Party shall not be required to marshal any present or future collateral security (including this Security Agreement
and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order. To the extent that it lawfully may, Debtor hereby agrees that it will not invoke
any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Secured Party’s rights
under this Security Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations
is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully
may, Debtor hereby irrevocably waives the benefits of all such laws.


 


4.8 No
Waiver. No Event of Default shall be waived by Secured Party except in writing. No failure or delay on the part of Secured Party
in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same or any other right at any other
time; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy hereunder. There shall be no obligation on the part of Secured Party to exercise any remedy
available to Secured Party in any order. The remedies provided for herein are cumulative and not exclusive of any remedies provided at
law or in equity. Debtor agrees that in the event that Debtor fails to perform, observe or discharge any of its Obligations or liabilities
under this Security Agreement or any other agreements with Secured Party, no remedy of law will provide adequate relief to Secured Party,
and further agrees that Secured Party shall be entitled to temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.


 


4.9 Application
of Proceeds. Secured Party will, within three (3) Business Days after receipt of cash or solvent credits from collection of items
of payment, proceeds of Collateral or any other source, apply the whole or any part thereof against the Obligations secured hereby. Secured
Party shall further have the exclusive right to determine how, when and what application of such payments and such credits shall be made
on the Obligations, and such determination shall be conclusive upon Debtor. Any proceeds of any disposition by Secured Party of all or
any part of the Collateral may be first applied by Secured Party to the payment of expenses incurred by Secured Party in connection with
the Collateral, including reasonable attorneys’ fees and legal expenses and costs as provided for in Section 5.13 hereof.


 




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	5	MISCELLANEOUS.


 


5.1 Entire
Agreement. This Security Agreement and the other Loan Documents: (i) are valid, binding and enforceable against Debtor and Secured
Party in accordance with their respective provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire
agreement between the parties with respect to the subject matter hereof and thereof; and (iii) are the final expression of the intentions
of Debtor, the Company and Secured Party. No promises, either expressed or implied, exist between any Debtor and Secured Party, unless
contained herein or therein. This Security Agreement, together with the other Loan Documents, supersedes all negotiations, representations,
warranties, commitments, term sheets, discussions, negotiations, offers or contracts (of any kind or nature, whether oral or written)
prior to or contemporaneous with the execution hereof with respect to any matter, directly or indirectly related to the terms of this
Security Agreement and the other Loan Documents. This Security Agreement and the other Loan Documents are the result of negotiations
between Secured Party and Debtor and have been reviewed (or have had the opportunity to be reviewed) by counsel to all such parties,
and are the products of all parties. Accordingly, this Security Agreement and the other Loan Documents shall not be construed more strictly
against Secured Party merely because of Secured Party’s involvement in their preparation.


 


5.2 Amendments;
Waivers. No delay on the part of Secured Party in the exercise of any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise by Secured Party of any right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this
Security Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by
Secured Party, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.


 


5.3 WAIVER
OF DEFENSES. DEBTOR WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH DEBTOR MAY NOW HAVE OR
HEREAFTER MAY HAVE TO ANY ACTION BY SECURED PARTY IN ENFORCING THIS SECURITY AGREEMENT. PROVIDED SECURED PARTY ACTS IN GOOD FAITH, DEBTOR
RATIFIES AND CONFIRMS WHATEVER SECURED PARTY MAY DO PURSUANT TO THE TERMS OF THIS SECURITY AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR SECURED PARTY GRANTING ANY FINANCIAL ACCOMMODATION TO DEBTOR.


 


5.4 Reserved.


 




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5.5 WAIVER
OF JURY TRIAL. DEBTOR AND SECURED PARTY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS SECURITY AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING
RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH SECURED PARTY AND
DEBTOR ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY GRANTING ANY FINANCIAL ACCOMMODATION TO DEBTOR.


 


5.6 Assignability.
Secured Party, without consent from or notice to anyone, may at any time assign Secured Party’s rights in this Security Agreement,
the other Loan Documents, the Obligations, or any part thereof and transfer Secured Party’s rights in any or all of the Collateral,
and Secured Party thereafter shall be relieved from all liability with respect to such Collateral. This Security Agreement shall be binding
upon Secured Party and Debtor and their respective legal representatives and successors. All references herein to any Debtor shall be
deemed to include any successors, whether immediate or remote. In the case of a joint venture or partnership, the term “Debtor”
shall be deemed to include all joint venturers or partners thereof, who shall be jointly and severally liable hereunder.


 


5.7 Binding
Effect. This Security Agreement shall become effective upon execution by Debtor and Secured Party, and shall bind the Debtor and
Secured Party, and their respective successors and permitted assigns.


 


5.8 Governing
Law/Venue. This Agreement shall be delivered and accepted in, and shall be deemed to be contracts made under and governed by, the
internal laws of the State of Delaware, and for all purposes shall be construed in accordance with the laws of the State of Delaware,
without giving effect to the choice of law provisions of such State. The governing law provisions of this Section 5.8 are a material
inducement for Secured Party to enter into this Agreement, and the Debtor hereby agrees, acknowledges and understands that the Secured
Party would not have entered into this Agreement, nor made or provided the Loans, without the full agreement and consent of the Debtor,
with full knowledge and understanding, this Agreement shall be governed by the internal laws of the State of Delaware, and for all purposes
shall be construed in accordance with the laws of the State of Delaware, without giving effect to the choice of law provisions. In this
regard, Debtor hereby acknowledges that it has reviewed this Agreement and specifically, this Section 5.8, with competent counsel selected
by the Debtor and fully understands the choice of law provisions set forth in this Section. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement shall be commenced exclusively
in the state and federal courts sitting in the City of New York. Each party 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.


 




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5.9 Enforceability.
Wherever possible, each provision of this Security Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Security Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision
shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating
the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.


 


5.10 Time
of Essence. Time is of the essence in making payments of all amounts due Secured Party under the Loan Documents and in the performance
and observance by Debtor of each covenant, agreement, provision and term of this Security Agreement and the other Loan Documents.


 


5.11 Counterparts;
Facsimile Signatures. This Security Agreement may be executed in any number of counterparts and by the different parties hereto on
separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute
but one and the same Security Agreement. Receipt of an executed signature page to this Security Agreement by facsimile or other electronic
transmission shall constitute effective delivery thereof. Electronic records of executed Loan Documents maintained by Secured Party shall
be deemed to be originals thereof.


 


5.12 Notices.
Except as otherwise provided herein, Debtor waives all notices and demands in connection with the enforcement of Secured Party’s
rights hereunder. All notices, requests, demands and other communications provided for hereunder shall be made in accordance with the
terms of the Credit Agreement, and Debtor agrees and acknowledges that notice to Debtor may be sent and delivered to the Company, as
required under the Credit Agreement, and such notice to the Company shall be deemed valid and effective notice to Debtor hereunder.


 


5.13 Costs,
Fees and Expenses. Debtor shall pay or reimburse Secured Party for all reasonable costs, fees and expenses incurred by Secured Party
or for which Secured Party becomes obligated in connection with the enforcement of this Security Agreement, including search fees, costs
and expenses and attorneys’ fees, costs and time charges of counsel to Secured Party and all taxes payable in connection with this
Security Agreement. In furtherance of the foregoing, Debtor shall pay any and all stamp and other taxes, UCC search fees, filing fees
and other costs and expenses in connection with the execution and delivery of this Security Agreement and the other Loan Documents to
be delivered hereunder, and agrees to save and hold Secured Party harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such costs and expenses. That portion of the Obligations consisting of costs, expenses
or advances to be reimbursed by Debtor to Secured Party pursuant to this Security Agreement or the other Loan Documents which are not
paid on or prior to the date hereof shall be payable by Debtor to Secured Party on demand. If at any time or times hereafter Secured
Party: (a) employs counsel for advice or other representation: (i) with respect to this Security Agreement or the other Loan Documents;
(ii) to represent Secured Party in any litigation, contest, dispute, suit or proceeding or to commence, defend, or intervene or to take
any other action in or with respect to any litigation, contest, dispute, suit, or proceeding (whether instituted by Secured Party, Debtor,
or any other Person) in any way or respect relating to this Security Agreement; or (iii) to enforce any rights of Secured Party against
Debtor or any other Person under of this Security Agreement; (b) takes any action to protect, collect, sell, liquidate, or otherwise
dispose of any of the Collateral; and/or (c) attempts to or enforces any of Secured Party’s rights or remedies under this Security
Agreement, the costs and expenses incurred by Secured Party in any manner or way with respect to the foregoing, shall be part of the
Obligations, payable by Debtor to Secured Party on demand.


 




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5.14 Termination.
This Security Agreement and the Liens and security interests granted hereunder shall not terminate until the termination of the Credit
Agreement and the commitments to make Loans thereunder and the full and complete performance and satisfaction and payment in full of
all the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).
Upon termination of this Security Agreement, Secured Party shall also deliver to Debtor (at the sole expense of Debtor) such UCC termination
statements, certificates for terminating the liens on the Motor Vehicles (if any) and such other documentation, without recourse, warranty
or representation whatsoever, as shall be reasonably requested by Debtor to effect the termination and release of the Liens and security
interests in favor of Secured Party affecting the Collateral; provided, however, to the extent any such terminations or releases require
Secured Party to expend any sums in terminating or releasing any such Liens, Secured Party may refrain from terminating or releasing
such Liens unless and until Debtor pays to Secured Party the estimated cost, as reasonably determined by Secured Party, of effectuating
such terminations or releases.


 


5.15 Reinstatement.
This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against
Debtor for liquidation or reorganization, should Debtor become insolvent or make an assignment for the benefit of any creditor or creditors
or should a receiver or trustee be appointed for all or any significant part of Debtor’s assets, and shall continue to be effective
or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether
as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall
be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.


 


5.16 Increase
in Obligations. It is the intent of the parties to secure payment of the Obligations, as the amount of such Obligations may
increase from time to time in accordance with the terms and provisions of the Loan Documents, and all of the Obligations, as so
increased from time to time, shall be and are secured hereby. Upon the execution hereof, Debtor shall pay any and all documentary
stamp taxes and/or other charges required to be paid in connection with the execution and enforcement of the Loan Documents, and if,
as and to the extent the Obligations are increased from time to time in accordance with the terms and provisions of the Loan
Documents, then Debtor shall immediately pay any additional documentary stamp taxes or other charges in connection
therewith.


 


[Signatures
on the following page]


 




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IN
WITNESS WHEREOF, Debtor and Secured Party have executed this Security Agreement as of the date first above written.


 


	Debtor:	 
	 	 
	LD
    Micro, Inc.	 
	 	 	 
	By:	 	 
	Name:	[●]	 
	Title:	[●]	 


 


	STATE
    OF ____________________________	 	)	 
	 	 	)	SS.
	COUNTY
    OF  ____________________________	 	)	 


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that [●], [●] of LD
Micro, Inc., a _______________ corporation, who is personally known to me to be the same person whose name is subscribed to the foregoing,
appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary
act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 


	 	 
	 	Notary
    Public
	 	 
	 	My
    Commission Expires:
	 	 
	 	


 




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IN
WITNESS WHEREOF, Debtor and Secured Party have executed this Security Agreement as of the date first above written.


 


	 	Agreed
    and accepted:
	 	 
	 	Secured
    Party:
	 	 
	 	[ATW
    OPPORTUNITIES MASTER FUND II, LP]
	 	 	 
	 	By:	 
	 	Its:	General
    Partner
	 	By:	 


 




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Schedule
3.8 


 


Collateral
Locations/Places of Business


 




    	19