SECURITY
AGREEMENT


 


This
SECURITY AGREEMENT (this “Agreement”), dated as of March 13, 2013, is made by and between BeesFree, Inc., a
Nevada corporation (the “Company”), and BeesFree USA, Inc., a Delaware corporation and the Company’s wholly-owned
subsidiary (“BeesFree DE”, the Company and BeesFree DE, as the context dictates, collectively, the “Grantor”),
and those signatories hereto who are holders of certain notes described below in the aggregate principal amount of up to $2,520,000
(the “Noteholders”), to be issued by the Company from time to time on and after the date hereof, as well as their
endorsees, transferees and assigns all upon terms set forth in that certain Securities Purchase Agreement, dated March 13, 2013
(the “Purchase Agreement”).


 


WITNESSETH:


 


WHEREAS,
from time to time on and after the date hereof, the Company may issue up to $2,520,000 of its 15% senior secured convertible
notes (as each may be at any time amended, extended, restated, renewed or modified, each a “Note,” and collectively,
the “Notes”) to subscribers for units offered by the Company upon the terms set forth in the Purchase Agreement;


 


WHEREAS,
pursuant to the terms of the Purchase Agreement, each purchaser of Notes has become a Noteholder and has agreed that in an Event
of Default (as defined in the Notes) the Requisite Holders (as defined herein) shall be required to appoint and authorize a collateral
agent (the “Collateral Agent”) to act for the benefit of the Noteholders prior to taking any actions to declare the
Notes due and payable or to foreclose on any Collateral securing the Notes: and


 


WHEREAS,
it is a condition precedent to the obligation of each of the Noteholders to purchase a Note that the Grantor shall have granted
the Noteholders a security interest in the Collateral (as hereinafter defined) as contemplated by this Agreement; and


 


WHEREAS,
the Grantor expects to realize direct and indirect benefits as a result of the sale of the Notes to the Noteholders and desires
to grant the Noteholders a security interest in the Collateral as contemplated by this Agreement.


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and adequacy of which hereby is acknowledged, the parties agree
as follows:


 


ARTICLE I
– DEFINITIONS


 


1.1           This
Agreement is the Security Agreement referred to in the Purchase Agreement and the Notes. As used in this Agreement, the following
terms shall have the meanings respectively set forth below:


 


“Agreement”
means this Security Agreement, and any extensions, modifications, renewals, restatements, supplements or amendments hereof.


 




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“Bankruptcy
Code” means Chapter 11 of Title 11 of the United States Code, as amended from time to time, and any successor statute and
all rules and regulations promulgated thereunder.


 


“Collateral”
means substantially all of the Grantor’s now owned or hereafter acquired right, title and interest in and to the General
Assets, the Trademarks, the Patents and the Licenses. Without limiting the generality
of the foregoing, “Collateral” shall include any shares of capital stock and/or other equity interests of any other
direct or indirect subsidiary of the Grantor that is obtained or acquired in the future, and, in each case, all certificates representing
such shares and/or equity interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests
that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights
arising under or in connection with the foregoing securities, including, but not limited to, all dividends, interest and cash.


 


“General
Assets” shall have the meaning set forth in Section 2.1 hereof.


 


“Investment
Collateral” shall have the meaning set forth in Section 7.1 hereof.


 


“Licenses”
shall have the meaning set forth in Section 2.4 hereof.


 


“Patents”
shall have the meanings set forth in Section 2.3 hereof.


 


“Requisite
Holders” means, at any time of determination, a majority (i.e., at least 50.1%) of
the aggregate principal amount of outstanding Notes.


 


“Secured
Obligations” means any and all present and future obligations of the Grantor arising under or relating to the Notes or this
Agreement, whether due or to become due, matured or unmatured, or liquidated or unliquidated, including interest that accrues
after the commencement of any bankruptcy or insolvency proceeding by or against the Grantor. For the avoidance of doubt, the Secured
Obligations shall include the obligations of the Grantor to pay the fees and expenses of the Collateral Agent, if any, and to
provide indemnity to the Collateral Agent pursuant to Article XIII hereof.


 


“Trademarks”
shall have the meanings set forth in Section 2.2 hereof.


 


ARTICLE II
–SECURITY INTERESTS


 


2.1           Grant
of Security Interest in General Assets. To secure the complete and timely payment, performance and satisfaction of all of
the Secured Obligations, the Grantor hereby grants to the Noteholders, a first lien and security interest over all other security
interests with power of sale to the fullest extent permitted by applicable law, in all of the Grantor’s right, title and
interest in and to the Grantor’s now owned or otherwise existing and hereafter acquired or arising:


 




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(a)         accounts,
contract rights and all other forms of obligations owing to the Grantor arising out of the sale or lease of goods or the rendition
of services by the Grantor, irrespective of whether earned by performance, and any and all credit insurance, guarantees or security
therefor;


 


(b)         books
and records, including ledgers; records indicating, summarizing or evidencing the Grantor’s properties or assets or liabilities;
all information relating to the Grantor’s business operations or financial condition; and all other computer programs, disk
or tape files, printouts, runs or other computer prepared information;


 


(c)         deposit
accounts (as that term is defined from time to time in the Uniform Commercial Code as in effect in the State of New York);


 


(d)         all
of the Grantor’s general intangibles and other personal property (including contract rights, rights arising under common
law, statutes or regulations, chooses or things in action, commercial tort claims, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists, computer programs, information contained in computer disks or
tapes, literature, reports, catalogs, insurance premium rebates, tax refunds and tax refund claims);


 


(e)         goods
(as that term is defined from time to time in the Uniform Commercial Code as in effect in the State of New York), including (i)
all inventory, including equipment held for lease, whether raw materials, in process or finished, all material or equipment usable
in processing the same and all documents of title covering any inventory, (ii) all equipment employed in connection with the Grantor’s
business, together with all present and future additions, attachments and accessions thereto and all substitutions therefor and
replacements thereof, and (iii) all vehicles;


 


(f)          instruments
and other investment property (as such terms are defined from time to time in the Uniform Commercial Code as in effect in the
State of New York);


 


(g)         negotiable
collateral, including all of the Grantor’s right, title and interest with respect to any letters of credit, letter of credit
rights, instruments, drafts, documents and chattel paper (as each term is defined from time to time in the Uniform Commercial
Code as in effect in the State of New York), and any and all supporting obligations in respect thereof;


 


(h)        all
parcels of real property and the related improvements thereto (whether as owner, lessee or otherwise);


 


(i)          money
or other assets of the Grantor that now or hereafter come into the possession, custody or control of the Grantor;


 


(j)          the
proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or
all of the foregoing, and any and all of the foregoing, or other tangible or intangible property resulting from the sale, exchange,
collection or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof;
and


 




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(k)          all
of the Grantor’s right, title and market in and to any shares of capital stock of any of its subsidiaries and the certificates
representing any such shares.


 


All of the
items described in clauses (a)-(k) in this Section 2.1 are hereinafter individually and/or collectively referred to as the “General
Assets.”


 


2.2           Grant
of Security Interest in Trademarks. To secure the complete and timely payment, performance and satisfaction of all of the
Secured Obligations, the Grantor hereby grants to the Noteholders, a security interest as and by way of a first lien and security
interest having priority over all other security interests, including with power of sale to the fullest extent permitted by applicable
law, in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or otherwise existing and
hereafter acquired or arising: (a) trademarks, trade names, registered trademarks, trademark applications, service marks, registered
service marks and service mark applications and (b) all renewals thereof, all income, royalties, damages and payments now and
hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered
into in connection therewith and damages and payments for past or future infringements or dilutions thereof, the right to sue
for past, present and future infringements and dilutions thereof, the goodwill of the Grantor’s business symbolized by the
foregoing and connected therewith and all of the Grantor’s rights corresponding thereto throughout the world (all of the
foregoing items described in the foregoing clauses (a) and (b) in this Section 2.2, are hereinafter individually and/or collectively
referred to as the “Trademarks”); and (c) all proceeds of any and all of the foregoing, including, without limitation,
license royalties and proceeds of the infringement suits.


 


2.3           Grant
of Security Interest in Patents. To secure the complete and timely payment, performance and satisfaction of all of the Secured
Obligations, the Grantor hereby grants to the Noteholders, a security interest as and by way of a first lien and security interest
having priority over all of other security interests, including with power of sale to the fullest extent permitted by applicable
law, in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or otherwise existing and
hereafter acquired or arising: (a) patents and patent applications and (b) all renewals thereof, all income, royalties, damages
and payments now and hereafter due and/or payable under and with respect to thereto, including, without limitation, payments under
all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof,
the right to sue for past, present and future infringements and dilutions thereof, the goodwill of the Grantor’s business
symbolized by the foregoing and connected therewith and all of the Grantor’s rights corresponding thereto throughout the
world (all of the foregoing items described in the foregoing clauses (a) and (b) in this Section 2.3, are hereinafter individually
and/or collectively referred to as the “Patents”); and (c) all proceeds of any and all of the foregoing, including
license royalties and proceeds of the infringement suits.


 




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2.4           Grant
of Security Interest in Trademark and Patent Licenses. To secure the complete and timely payment, performance and satisfaction
of all of the Secured Obligations, the Grantor hereby grants to the Noteholders, a security interest, as and by way of a first
lien and security interest having priority over all of other security interests, including with power of sale to the fullest extent
permitted by applicable law, in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or
otherwise existing and hereafter acquired or arising: rights under or interests in any license agreements with any other party,
whether the Grantor is a licensee or licensor under any such license agreement, and the right to use the foregoing in connection
with the enforcement of the Noteholders’ rights under the Notes, including the right to prepare for sale and sell any and
all inventory now or hereafter owned by the Grantor and now or hereafter covered by such licenses (all of the foregoing are hereinafter
referred to collectively as the “Licenses”). Notwithstanding the foregoing provisions of this Section 2.4, the Licenses
shall not include any license agreement in effect as of the date hereof that by its terms expressly prohibits the grant of the
security contemplated by this Agreement; provided, however, that upon the termination of such prohibitions for any
reason whatsoever, the provisions of this Section 2.4 shall be deemed to apply thereto automatically.


 


2.5           Title;
Other Liens. Except for the security interest granted to the Noteholders pursuant to this Agreement, the Grantor owns each
of the General Assets, Trademarks, Patents and Licenses free and clear of any and all liens, claims or security or adverse interests
to all or any of the Trademarks, Patents and Licenses free and clear of any and all liens, claims or security or adverse interests
to all or any of the Trademarks, Patents and Licenses on file or of record in any public office, except as such as have been filed
in favor of the Noteholders pursuant to this Agreement.


 


ARTICLE III
– FURTHER ASSURANCES


 


3.1           At
any time and from time to time at the request of the Requisite Holders, or if a Collateral Agent has been appointed as provided
herein, the Collateral Agent, the Grantor shall execute and deliver to the Requisite Holders or Collateral Agent, as applicable,
all such financing statements and other instruments and documents in form and substance satisfactory to the Requisite Holders
or Collateral Agent, as applicable, as shall be necessary or desirable to fully perfect, when filed and/or recorded, the security
interest in the Collateral granted to the Noteholders pursuant to Article II of this Agreement. The Grantor hereby authorizes
the Requisite Holders or Collateral Agent, as applicable, without notice to the Grantor, to file any financing statement and amendments
thereof or continuations thereof, naming the Grantor as debtor and the Noteholders as the creditor. At any time and from time
to time, the Requisite Holders or Collateral Agent, as applicable, shall be entitled to file and/or record any or all such financing
statements, instruments and documents held by it, and any or all such further financing statements, documents and instruments,
and to take all such other actions, as the Requisite Holders or Collateral Agent, as applicable, may deem appropriate to perfect
and to maintain perfected the security interest granted to it for the benefit of the Noteholders in Article II of this
Agreement. Before and after the occurrence of any default under the Notes, at the Requisite Holders’ or Collateral Agent’s,
as applicable, request, the Grantor shall execute all such further financing statements, instruments and documents, and shall
do all such further acts and things, as may be deemed necessary or desirable by the Requisite Holders or Collateral Agent, as
applicable, to create and perfect, and to continue and preserve, an indefeasible security interest in the Collateral in favor
of the Noteholders or the priority thereof, including causing any such financing statements to be filed and/or recorded in the
applicable jurisdiction.


 




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ARTICLE IV
– SECURITY AGREEMENT


 


4.1           This
Agreement secures the payment of all of the Secured Obligations of the Grantor now or hereafter existing under the Notes, whether
for principal, interest, fees, expenses or otherwise, and all of the Secured Obligations of the Grantor now or hereafter existing
under this Agreement and provides for the application of proceeds from the Collateral, upon the occurrence of an Event of Default,
to satisfy the Secured Obligations, including the irrevocable right of the Collateral Agent to apply proceeds from Collateral
to the payment of any and all amounts owing to the Collateral Agent pursuant to any of the provisions of Article X or Article
XIII of this Agreement prior to making any payment to any or all of the Noteholders. 


 


ARTICLE V
– EVENTS OF DEFAULT


 


5.1           There
shall be an Event of Default (as defined in the Notes) hereunder upon the occurrence and during the continuance of an Event of
Default under any of the Notes.


 


ARTICLE VI
– RIGHTS UPON EVENT OF DEFAULT


 


6.1           Upon
the occurrence and during the continuance of an Event of Default, upon the appointment of the Collateral Agent as set forth herein
and in the Purchase Agreement, the Collateral Agent shall have, in any jurisdiction where enforcement hereof is sought, in addition
to all other rights and remedies that the Collateral Agent may have under applicable law or in equity or under this Agreement,
all rights and remedies of a secured party under the Uniform Commercial Code as enacted in any jurisdiction. Without limiting
the foregoing, and subject to the consent of the Requisite Holders, on behalf of the Noteholders: (a) without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law) to or upon the
Grantor or any other person (all of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances
collect, receive, appropriate and realize upon any or all of the Collateral, and/or may sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver any or all of the Collateral (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker’s board or office or elsewhere upon such terms
and conditions as the Collateral Agent may deem advisable, for cash or on credit or for future delivery without assumption of
any credit risk; (b) shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase all or any part of the Collateral so sold, free of any right or equity of redemption in the
Grantor, which right or equity is hereby waived or released; and (c) shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable expenses incurred therein or in connection with the
care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Noteholders under this
Agreement (including, without limitation, reasonable attorneys’ fees and expenses) to the payment in whole or in part of
the Secured Obligations, in such order as the Collateral Agent may elect, and only after such application and after the payment
by the Collateral Agent of any other amount required by any provision of law, need the Collateral Agent account for the surplus,
if any, to the Grantor. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. The Grantor shall
remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the
Secured Obligations and the reasonable fees and disbursements of any attorneys employed by the Collateral Agent to collect such
deficiency.


 




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ARTICLE VII
– VOTING RIGHTS; DIVIDENDS; ETC.


 


7.1           With
respect to Grantor’s right, title and interest to any Collateral consisting of securities, partnership interests, joint
venture interests, investments or the like (referred to collectively and individually in this Article VII and in Article
VIII hereof as the “Investment Collateral”), so long as no Event of Default occurs and remains continuing:


 


  (a)          the
Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Investment Collateral,
or any part thereof, for any purpose not inconsistent with the terms of this Agreement or the Notes; and


 


  (b)          the
Grantor shall be entitled to receive and to retain and use any and all dividends or distributions paid in respect of the Investment
Collateral.


 


ARTICLE VIII
– RIGHTS DURING EVENT OF DEFAULT


 


8.1           With
respect to any Investment Collateral in the possession of the Grantor, so long as an Event of Default has occurred and is continuing:


 


			  (a)          at
                                                        the option of the Collateral Agent, all rights of the Grantor to exercise
                                                        the voting and other consensual rights which it would otherwise be entitled
                                                        to exercise pursuant to Section (a) of Article VII hereof, and
                                                        to receive the dividends and distributions which it would otherwise be
                                                        authorized to receive and retain pursuant to Section (b) of Article
                                                        VIII hereof, shall cease, and all such rights thereupon shall become
                                                        vested in the Collateral Agent for the benefit of the Noteholders which
                                                        thereupon shall have the sole right to exercise such voting and other
                                                        consensual rights and to receive and to hold as pledged Investment Collateral
                                                        such dividends and distributions; and



 


			  (b)          all
                                                        dividends and other distributions that are received by the Grantor contrary
                                                        to the provisions of this Agreement shall be held in trust for the benefit
                                                        of the Collateral Agent on behalf of the Noteholders, shall be segregated
                                                        from other funds of the Grantor and forthwith shall be paid over to Collateral
                                                        Agent for the benefit of the Noteholders as pledged Collateral in the
                                                        same form as so received (with any necessary endorsements).



 


ARTICLE IX
– GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS


 


9.1           The
Grantor represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:


 


  (a)          except
for the security interest granted to the Noteholders herein, the Grantor is, and as to Collateral acquired from time to time after
the date hereof, the Grantor will be, the owner of all the Collateral free from any lien, security interest, encumbrance or other
right, title or interest of any person, and the Grantor shall defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein adverse to the Collateral Agent for the benefit of the Noteholders;


 




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  (b)          there
is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) now on file or
registered in any public office covering any interest of any kind in the Collateral, or intended to cover any such interest that
has not been terminated or released by the secured party named therein, and so long as any Notes remain outstanding or any of
the Secured Obligations of the Grantor remain unpaid, the Grantor will not execute and there will not be on file in any public
office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interest
hereby granted to the Collateral Agent for the benefit of the Noteholders;


 


  (c)          at
the Grantor’s own expense, the Grantor will keep the Collateral (i) in good condition at all times (normal wear and tear
excepted) and maintain same in accordance with all manufacturer’s specifications and requirements, and (ii) free and clear
of all liens and encumbrances, except for the liens granted hereby; and without the consent of the Collateral Agent, the Grantor
will not sell, transfer, change the registration, if any, dispose of, attempt to dispose of, substantially modify or abandon the
Collateral or any part thereof other than sales of inventory in the ordinary course of business and the disposition of obsolete
or worn-out equipment in the ordinary course of business; and


 


  (d)          the
chief executive office and chief place of business of the Grantor is located at 2101 Vista Parkway, Suite 122, West Palm Beach,
FL 33411. The Grantor will not move its chief executive office and chief place of business until (i) it shall have given to the
Noteholders, of if a Collateral Agent has been appointed hereunder, the Collateral Agent, not less than 30 days’ prior written
notice of its intention to do so, clearly describing such new location and providing such other information in connection therewith
as the Requisite Holders or Collateral Agent, as applicable, may reasonably request, and (ii) with respect to such new location,
it shall have taken such action, satisfactory to the Requisite Holders or Collateral Agent, as applicable, to maintain the security
interest of the Noteholders in the Collateral.


 


ARTICLE X
–COSTS AND EXPENSES


 


10.1         The
Grantor shall pay any and all reasonable costs and expenses incurred by the Collateral Agent, including, without limitation, reasonable
costs and expenses relating to all waivers, releases, discharges, satisfactions, modifications and amendments of this Agreement,
the administration and holding of the Collateral, insurance expenses, and the enforcement, protection and adjudication of the
parties’ rights hereunder by the Collateral Agent, including, without limitation, the reasonable disbursements, expenses
and fees of the attorneys the Collateral Agent may retain, if any. 


 




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10.2         All
advances, charges, costs and expenses, including reasonable attorneys' fees and disbursements (collectively, “Costs and
Expenses”), incurred or paid by the Collateral Agent in exercising any right, privilege, power or remedy conferred by this
Agreement or in the enforcement or attempted enforcement thereof, shall be secured hereby and shall become a part of the Secured
Obligations and shall be paid to the Collateral Agent by the Grantor. To the extent that the Costs and Expenses are not paid promptly
by the Grantor, the Collateral Agent may request each Noteholder to deposit with it, in proportion to their initially purchased
respective principal amounts of Notes, sufficient sums to cover the Costs and Expenses. To the extent Costs and Expenses are not
paid to the Collateral Agent by the Grantor or the Noteholders, the Collateral Agent, in addition to any other rights granted
under this Agreement, is hereby authorized to deduct the aggregate of unpaid Costs and Expenses from the Collateral or proceeds
therefrom.


 


ARTICLE XI
– CONTINUING EFFECT


 


11.1         This
Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Grantor
for liquidation or reorganization, should the Grantor become insolvent or make an assignment for the benefit of creditors or should
a receiver or trustee be appointed for all or any significant part of the Grantor’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 Secured Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Collateral Agent,
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 Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.


 


ARTICLE XII
– TERMINATION; RELEASE OF THE GRANTOR


 


12.1         This
Agreement shall be terminated and all Secured Obligations of the Grantor hereunder shall be released when all Secured Obligations
of the Grantor have been paid in full or upon such release of the Grantor's Secured Obligations hereunder or, with respect to
any Note, when such Note shall no longer be outstanding. Upon such termination, the Collateral Agent shall return any pledged
Collateral to the Grantor, or to the person or persons legally entitled thereto, and shall endorse, execute, deliver, record and
file all instruments and documents, and do all other acts and things reasonably required for the return of the Collateral to the
Grantor, or to the person or persons legally entitled thereto, and to evidence or document the release of the Collateral Agent's
interests arising for the benefit of the Noteholders under this Agreement, all as reasonably requested by, and at the sole expense
of, the Grantor.


 




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ARTICLE XIII
– 


COLLATERAL
AGENT’S APPOINTMENT AS ATTORNEY-IN-FACT


 


13.1         Powers.
Upon the occurrence of an Event of Default, the Grantor hereby authorizes and empowers the Requisite Holders to appoint a Collateral
Agent, and any officer or agent of the Collateral Agent, with full power of substitution, as its attorney-in-fact with full irrevocable
power and authority in the place of the Grantor and in the name of the Grantor or in its own name, from time to time in the Collateral
Agent’s discretion so long as an Event of Default has occurred and is continuing, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to execute any instrument which may be necessary or desirable to
accomplish the purposes of this Agreement. Upon such appointment, Collateral Agent will execute a Joinder Agreement, substantially
in the form annexed hereto as Exhibit A, pursuant to which Collateral Agent shall become a party to this Agreement and shall be
fully bound by, and subject to, all of the terms and conditions that are applicable to Collateral Agent as stated herein. Except
with respect to those matters as to which the Collateral Agent is expressly required to act under the terms of this Article
XIII, the Collateral Agent may act or refrain from acting with the written consent of Requisite Holders, which Requisite Holders
shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Collateral
Agent; provided, however, that such direction shall not be in conflict with any rule of law or expose the Collateral
Agent to personal liability and the Collateral Agent may take any action deemed proper by the Collateral Agent, in its discretion,
which is not inconsistent with such direction or the terms of this Agreement.


 


Without
limiting the foregoing, so long as an Event of Default has occurred and is continuing and provided that the Collateral Agent has
received instructions from the Requisite Holders, the Collateral Agent shall have the right, without notice to, or the consent
of, the Grantor, to do any of the following on the Grantor’s behalf:


 


(a)          to
pay or discharge any taxes or liens levied or placed on or threatened against the Collateral;


 


(b)          to
direct any party liable for any payment under any of the Collateral to make payment of any and all amounts due or to become due
thereunder as the Collateral Agent direct;


 


(c)          to
ask for or demand, collect, and receive payment of and receipt for, any payments due or to become due at any time in respect of
or arising out of any Collateral;


 


(d)          to
commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to enforce
any right in respect of any Collateral;


 


(e)          to
defend any suit, action or proceeding brought against the Grantor with respect to any Collateral;


 


(f)    
      to settle, compromise or adjust any suit, action or proceeding described in
subsection (e) above and, to give such discharges or releases in connection therewith as the Collateral Agent may deem
appropriate;


 


(g)          to
assign any Patent right included in the Collateral of Grantor (along with the goodwill of the business to which any such patent
right pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Collateral Agent
shall in its sole discretion determine; and


 




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(h)          generally,
to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral, and to take, at
the Collateral Agent’s option and the Grantor’s expense, any actions which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Noteholders’ liens on the Collateral and to carry out the intent
of this Agreement, in each case to the same extent as if the Collateral Agent were the absolute owner of the Collateral for all
purposes.


 


13.2         All
acts done under the foregoing authorization are hereby ratified and approved.


 


13.3         Each
Noteholder agrees with all other Noteholders and the Collateral Agent (i) that it shall not, and shall not attempt to, exercise
any rights with respect to its security interest in the Collateral, other than pursuant to this Agreement, or take or institute
any action against the Collateral Agent or any of the other Noteholders in respect of the Collateral or its rights hereunder (other
than any such action arising from the breach of this Agreement) and (ii) that such Noteholder has no other rights with respect
to the Collateral other than as set forth in this Agreement and the other transaction documents.


 


ARTICLE XIV
– COLLATERAL AGENT


 


14.1         By
their execution of the Omnibus Signature Page to the Purchase Agreement and this Agreement, each of the Noteholders have agreed
to appoint a Collateral Agent upon an Event of Default and hereby authorize the Collateral Agent to exercise for the benefit of
the Noteholders all rights, powers and remedies provided to it under or pursuant to this Agreement, including all rights, powers
and remedies upon an Event of Default, subject always to the terms, conditions, limitations and restrictions provided in this
Agreement. Except with respect to those matters as to which the Collateral Agent is expressly required to act under the terms
of this Article XIV, the Collateral Agent may act or refrain from acting with the written consent of the Requiste Holders, which
Requisite Holders shall have the right to direct the time, method and place of conducting any proceeding for any remedy available
to the Collateral Agent; provided, however, that such direction shall not be in conflict with any rule of law or
expose the Collateral Agent to personal liability, and the Collateral Agent may take any action deemed proper by the Collateral
Agent, in its discretion, which is not inconsistent with such direction or the terms of this Agreement.


 


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


 




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14.3.          The Collateral Agent shall not be responsible to the Grantor or any Noteholder for any recitals, statements, information, representations
or warranties herein or in any document, certificate or other writing delivered in connection herewith, or for the execution,
effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority or sufficiency of the Agreement or
any other transaction document, or for the financial condition of the Grantor or the value of any of the Collateral, or be required
to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of the Agreement
or any other transaction document, or the financial condition of the Grantor, or the value of any of the Collateral, or the existence
or possible existence of any default or Event of Default under the Agreement, the Notes or any of the other transaction documents.


 


14.4.         The
Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed,
sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other
transaction documents and its duties thereunder, upon reasonable advice of counsel selected by it and upon all other matters pertaining
to this Agreement and the other transaction documents and its duties thereunder, upon advice of other experts selected by it.
Anything to the contrary notwithstanding and until such time as the Collateral Agent takes any action upon the instructions of
the Requisite Holders, the Collateral Agent shall have no obligation whatsoever to any Noteholder to assure that the Collateral
exists or is owned by the Grantor or is cared for, protected or insured or that the liens granted pursuant to the Agreement have
been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.


 


14.5.         Notwithstanding anything in this Agreement to the contrary, none of the provisions of this Agreement shall be construed to require
the Collateral Agent to expend or risk its own funds or otherwise incur any liability (financial or otherwise) in the performance
of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or indemnification satisfactory to it against such risk or liability is not assured to it. In no
event shall the Collateral Agent be liable (a) for any consequential, punitive or special damages or (b) for the acts
or omissions of its nominees, correspondents, designees, subagents or subcustodians. The Collateral Agent shall not incur any
liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence
beyond the control of the Collateral Agent (including any act or provision of any present or future law or regulation or governmental
authority, any act of God or war, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication
facility).


 


14.6         The
Collateral Agent shall not be required or bound to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent, entitlement order, approval or other paper or document.
The Collateral Agent may execute any of the powers under this Agreement or perform any duties hereunder either directly or by
or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible or liable for the acts
or omissions, including any willful misconduct or gross negligence, on the part of any agent, attorney, custodian or nominee so
appointed.


 




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14.7         The
Grantor agrees to be responsible to indemnify and hold the Collateral Agent and its directors, employees, officers, agents, successors
and assigns harmless from and against any and all losses, claims, damages, liabilities and expenses, including reasonable costs
of investigation and reasonable counsel fees and expenses that may be imposed on the Collateral Agent or incurred by it in connection
with its acceptance of its appointment as the Collateral Agent hereunder or the performance of its duties hereunder, except as
a result of the Collateral Agent’s gross negligence or willful misconduct. Such indemnity includes all losses, damages,
liabilities and expenses (including reasonable counsel fees and expenses) incurred in connection with any litigation (whether
at the trial or appellate levels) arising from this Agreement or involving the subject matter hereof. The indemnification provisions
contained in this Section 14.7 are in addition to any other rights any of the indemnified parties may have by law or otherwise
and shall survive the termination of this Agreement or the resignation or removal of the Collateral Agent.


 


14.8         Any
corporation or other entity whatsoever into which the Collateral Agent may be merged or converted or with which it may be consolidated,
any corporation or other entity whatsoever resulting from any merger, conversion or consolidation to which the Collateral Agent
shall be a party or any corporation or other entity whatsoever succeeding to the business of the Collateral Agent shall be the
successor of the Collateral Agent hereunder without the execution or filing of any paper with any party hereto except where an
instrument of transfer or assignment is required by law to effect such succession.


 


14.9         The
Collateral Agent may generally engage in any kind of business with any Noteholder as if it had not entered into this Agreement.
The Collateral Agent and its affiliates and their officers, directors, employees, and agents (including legal counsel) may hereafter
be engaged in one or more transactions with any Noteholder or may act as trustee, agent or representative of any Noteholder, or
otherwise be engaged in other transactions with such parties (collectively, the “Other Activities”). Without
limiting the forgoing, Collateral Agent and its affiliates and their officers, directors, employees, and agents (including legal
counsel) shall not be responsible to account to any Noteholder for such other activities.


 


14.10       The
Collateral Agent may resign and be discharged of its duties hereunder at any time by giving written notice of such resignation
to the other parties hereto, stating the date such resignation is to take effect. Within twenty (20) days of the giving of such
notice, a successor collateral agent shall be appointed by the Requisite Holders; provided, however, that if the
Noteholders are unable so to agree upon a successor within such time period, and notify the Collateral Agent during such period
of the identity of the successor collateral agent, the successor collateral agent may be a person designated by the Collateral
Agent, and any and all fees of such successor collateral agent shall be the joint and several obligation of the Noteholders. The
Collateral Agent shall continue to serve until the effective date of the resignation or until its successor accepts the appointment
and receives the Collateral held by the Collateral Agent but shall not be obligated to take any action hereunder. The Collateral
Agent may deposit any Collateral with the Supreme Court of the State of New York for New York County or any such other court in
New York State that accepts such Collateral. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor
collateral agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring agent and the retiring agent shall be discharged from its duties and obligations under the Agreement. 
After any retiring agent’s resignation or removal hereunder as agent, the provisions of the Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was agent.


 




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ARTICLE XV
– GOVERNING LAW


 


15.1         THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
TO BE PERFORMED WHOLLY WITHIN SUCH JURISDICTION.


 


ARTICLE XVI
– ASSIGNMENT


 


16.1         This
Agreement shall create a continuing security interest in the Collateral and shall be binding upon the Grantor and the Grantor’s
successors and assigns; inure, together with the rights and remedies of the Collateral Agent hereunder, in favor of the Noteholders
and their successors, transferees and assigns; and be severable in the event that one or more of the provisions herein is determined
to be illegal or unenforceable. Without limiting the generality of the foregoing, the Noteholders may assign or otherwise transfer
any portion of their Notes, in accordance with the terms of the Notes, to any other person or entity, and such other person or
entity shall thereupon become vested with all the benefits and obligations in respect thereof granted to the Noteholders (including
the beneficial interest in the rights and benefits granted to the Collateral Agent for the benefit of the Noteholders) herein
or otherwise. The Grantor shall promptly provide the Collateral Agent with notice of any such assignment or transfer of a Note
by any Noteholder.


 


ARTICLE XVII
– AMENDMENT 


 


17.1         The
terms of this Agreement may be amended only with the written consent of the Requisite Holders and the written consent of the Collateral
Agent.


 


ARTICLE XVIII-MISCELLANEOUS.


 


18.1         No
course of dealing between the Grantor and the Noteholders, nor any failure to exercise, nor any delay in exercising, on the part
of the Noteholders, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.


 


18.2         All
of the rights and remedies of the Noteholders with respect to the Collateral, whether established hereby or by the Notes or by
any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.


 




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


 


18.4    
      No waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right.


 


18.5.          The
Noteholders, Grantor and Collateral Agent agree that all proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts
sitting in the City of New York, Borough of Manhattan. 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, and hereby irrevocably waives, and
agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that
such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby.


 


18.6    
     This Agreement may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event
that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile
signature were the original thereof.


 




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


 


18.9         Any notice or other communication under the provisions of this Agreement shall be given in writing and delivered in person, by
reputable overnight courier or delivery service, by facsimile machine (receipt confirmed) with a copy sent by first class mail
on the date of transmissions, or by registered or certified mail, return receipt requested, directed to such party’s addresses
set forth below (or to any new address of which any party hereto shall have informed the others by the giving of notice in the
manner provided herein):


 


In
the case of the Collateral Agent, to:


 


To
the address and telecopier number provided by the Collateral Agent to the Grantor upon his, her or its appointment


 


In
the case of the Noteholder, to:


 


To
the address and telecopier number set forth on


the
Omnibus signature page to the Purchase Agreement.


 


In
the case of Grantor, to:


 


BeesFree,
Inc.


2101
Vista Parkway, Suite 122


West
Palm Beach, FL 33411


Attn:
David Todhunter, CEO


Telecopy
No.: (561) 939-4861


 




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With
a copy (that shall not constitute notice) to:


 


Steven
D. Uslaner, Esq.


Littman
Krooks, LLP


655
Third Avenue, 20th Floor


New
York, NY 10017


Telecopy
No.: (212) 490-2990


 


[Remainder
of page intentionally left blank]


 




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IN
WITNESS WHEREOF, the undersigned have executed this Security Agreement by its duly authorized officer as of the date first
written above.


 


	 	BEESFREE, INC.
	 	 
	 	By:	/S/ DAVID W. TODHUNTER
	 	Name: David W. Todhunter
	 	Title: President and CEO
	 	 
	 	BEESFREE USA, INC.
	 	 
	 	By:	/S/ DAVID W. TODHUNTER
	 	Name: David W. Todhunter
	 	Title: President
	 	 
	 	NOTEHOLDERS
	 	 
	 	See Omnibus Signature Page to Purchase Agreement for
	 	Noteholders’ Signatures


 




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EXHIBIT A


 


BEESFREE,
INC. 


 


JOINDER AGREEMENT
AND SIGNATURE PAGE 


 


TO SECURITY
AGREEMENT


 


This
JOINDER AGREEMENT AND SIGNATURE PAGE is entered into as of ____________ ___ 201__, by ____________________________________ (the
“Collateral Agent”), for the purpose of becoming a party to that certain Security Agreement, dated March 13,
2013, by and among BeesFree, Inc., a Nevada corporation, BeesFree USA, Inc., a Delaware corporation, and the investor signatories
thereto (the “Noteholders”) (the “Security Agreement”).


 


NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration,
the parties have agreed as follows (with all capitalized terms not otherwise defined herein having the meaning ascribed to them
in the Security Agreement):


 


		1.	By executing and delivering
this Joinder Agreement and Signature Page, and having been appointed to serve as Collateral Agent by the Requisite Holders, the
Collateral Agent acknowledges that Collateral Agent is now a party to the Security Agreement and agrees and acknowledges that
as such will be subject to the terms, conditions and obligations of the Security Agreement relating to its duties as Collateral
Agent for the benefit of the Noteholders.



 


		2.	The Collateral Agent represents
and warrants that the Collateral Agent has reviewed, understands and agrees to the terms of the Security Agreement and that by
signing this Agreement the Collateral Agent agrees to be, and shall be, bound by the provisions of the Security Agreement, and
shall be a party to the Security Agreement as Collateral Agent, and shall have the rights and obligations as set forth therein.



 


		3.	This Joinder shall be binding
upon and enforceable by the Company , BeesFree DE, the Noteholders and Collateral Agent and their respective successors, heirs
and assigns.



 


		4.	This Joinder may be executed
in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same
agreement.



 


		5.	This Agreement shall be construed
in accordance with and governed by the law of the State of New York (without regard to choice of law provisions thereof).



 


Collateral
Agent agrees that this signature page may be attached to any counterpart of the Security Agreement.


 


[Signature
Page to Follow]


 




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IN
WITNESS WHEREOF, the undersigned hereby executes the Joinder Agreement as of the date first above written.


 


	 	 
	 	Name:
	 	Title:
	 	 
	 	Accepted:
	 	 
	 	BEESFREE, INC.
	 	 
	 	By:	 
	 	Name:
	 	Title:
	 	 
	 	BEESFREE USA, INC.
	 	 
	 	By:	 
	 	Name:
	 	Title:


 




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