Document:

Exhibit 10.4

 

		 

 

VARIABLE
RATE RIDER

(Daily
Simple SOFR)

 

Borrower:
RAND CAPITAL CORPORATION

 

Promissory
Note Original/Maximum Principal Amount: $25,000,000.00

 

Promissory
Note Date: June 27, 2022

 

DEFINITIONS.
The above-referenced Promissory Note is referred to herein as the “Note” and all references to the “Note”
shall be deemed to include the Note and this Rider. As used in the Note and this Rider, each capitalized term shall have the meaning
specified in the Note, and the following terms shall have the indicated meanings:

 

	 	a.	“Base
    Rate” shall mean the rate per annum equal to the greater of (i) two (2) percentage points above the rate of interest announced
    by the Bank each day as its prime rate of interest (“Prime Rate”), or (ii) 3.25% (the “Base Rate Floor”).
    
	 	 	 
	 	b.	“Business
    Day” shall mean any day other than Saturday, Sunday or other day on which commercial banking institutions in New York,
    New York are authorized or required by law or other governmental action to remain closed for business.
	 	 	 
	 	c.	“Daily
    Simple SOFR” shall mean for any day (a “SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day
    “i”) that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government
    Securities Business Day, such SOFR Rate Day, or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the
    U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the
    SOFR Administrator on the SOFR Administrator’s Website. If by 5:00 pm (ET) on the second (2nd) U.S. Government Securities
    Business Day immediately following any day “i”, the SOFR in respect of such day “i” has not
    been published on the SOFR Administrator’s Website (and a Benchmark Replacement Date with respect to the Daily Simple SOFR
    has not occurred), then the SOFR for such day “i” will be the SOFR as published in respect of the first preceding
    U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided
    that any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation of Daily Simple SOFR for no
    more than three (3) consecutive SOFR Rate Days. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and
    including the effective date of such change in SOFR without notice to the Borrower. 
	 	 	 
	 	d.	“SOFR”
    shall mean, with respect to any U.S. Government Securities Business Day, a rate per annum equal to the secured overnight financing
    rate for such U.S. Government Securities Business Day.
	 	 	 
	 	e.	“SOFR
    Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing
    rate).
	 	 	 
	 	f.	“SOFR
    Administrator’s Website” shall mean the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org,
    or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
	 	 	 
	 	g.	“SOFR
    Loan Rate” shall mean Daily Simple SOFR. 
	 	 	 
	 	h.	“SOFR
    Rate Day” shall have the meaning specified in the definition of Daily Simple SOFR. 
	 	 	 
	 	i.	“U.S.
    Government Securities Business Day” shall mean any day other than Saturday, Sunday or other day on which the Securities
    Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day
    for purposes of trading in United States government securities.
	 	 	 
	 	j.	“Variable
    Loan Rate” shall mean the SOFR Loan Rate.

 

ADDITIONAL
PROVISIONS.

 

Timing
of Requests for Advances. In addition to and without compromising any additional requirements referenced in the Note, the Bank reserves
the right to require that any Borrower request for an advance must be delivered to the Bank a certain number of days prior to the requested
date of funding that shall be equal to the number of days in any lookback period used to determine SOFR for purposes of calculating the
Daily Simple SOFR for any SOFR Rate Day.

 

    	 	1	 

     

    

 

Modification
to Payment Due Date. Notwithstanding any provision to the contrary in the Note, if in any particular month the applicable payment
due date is not a Business Day, the payment due date shall be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such payment due date shall be the immediately preceding Business Day.

 

Conversion
to Base Rate Upon Default. Unless the Bank shall otherwise and in its sole discretion consent in writing, if (i) an event of default
(with respect to any payment obligation or otherwise, as may be defined or described in the Note or related documents) has occurred and
is continuing, or (ii) there exists a condition or event that, with the passage of time, the giving of notice, or both, shall constitute
such an event of default, the Bank, in its sole discretion, may convert the applicable interest rate to the Base Rate, and each reference
in the Note and herein to the applicable interest rate shall be deemed to be a reference to the Base Rate. Nothing herein shall be construed
to be a waiver by the Bank of its right to have the outstanding principal balance accrue interest at the Default Rate, accelerate the
indebtedness and/or exercise any other remedies available to the Bank under the terms hereof or applicable law.

 

Repayment
Upon Conversion to Base Rate. Except as otherwise provided herein, during the time of any conversion of the applicable interest rate
to the Base Rate, whether temporary or permanent, and whether pursuant to an event of default or otherwise, and without compromising
any other rights and remedies of the Bank, and in the absence of the Bank exercising any such other rights or remedies as may be applicable,
Borrower shall continue to repay all indebtedness in accordance with the terms of the Note. The determination by the Bank of the foregoing
amounts shall, in the absence of manifest error, be conclusive and binding upon Borrower.

 

Illegality.
If the Bank shall determine that the introduction of any law (statutory or common), treaty, rule, regulation, guideline or determination
of an arbitrator or of a governmental authority or in the interpretation or administration thereof, has made it unlawful, or that any
central bank or other governmental or regulatory authority has asserted that it is unlawful or otherwise impermissible for the Bank to
make or maintain loans using the then-current applicable interest rate index, then, on notice thereof by the Bank to Borrower, the Bank
may (i) suspend the maintaining of the loan hereunder using the then-current applicable interest rate index until the Bank shall have
notified Borrower that the circumstances giving rise to such determination shall no longer exist, and/or (ii) convert the applicable
interest rate for the loan hereunder to the Base Rate, subject to the terms of the section below entitled “Inability to Determine
SOFR; Effect of Benchmark Transition Event”.

 

Inability
to Determine SOFR; Effect of Benchmark Transition Event.

 

	 	(a)	If
    the Bank shall determine (which determination shall be conclusive and binding on Borrower) that for any reason SOFR cannot be determined,
    other than as a result of a Benchmark Transition Event, the Bank will give notice of such determination to Borrower. Thereafter,
    the Bank may not make or maintain the loan hereunder using the SOFR Loan Rate until the Bank revokes such notice in writing, and
    until such revocation, the Bank may convert the applicable interest rate to the Base Rate, subject to the provisions below.
	 	 	 
	 	(b)	Benchmark
    Replacement. Notwithstanding anything to the contrary herein or in the Note or any related agreement, upon the occurrence of a Benchmark
    Transition Event, the Bank may unilaterally amend the terms of the Note to replace the SOFR Loan Rate (or the then-current Benchmark)
    with a Benchmark Replacement. Any such amendment will become effective as soon as practicable for the Bank and upon notice to the
    Borrower, without any further action or consent of the Borrower. No replacement of SOFR (or the then-current Benchmark) with a Benchmark
    Replacement pursuant to this Section titled “Inability to Determine SOFR; Effect of Benchmark Transition Event” (“this
    Section”) will occur prior to the applicable Benchmark Transition Start Date. Borrower shall pay all out-of-pocket costs (including
    reasonable attorney fees) incurred by the Bank in connection with any amendment and related actions contemplated in this Section.
	 	 	 
	 	(c)	Benchmark
    Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Bank will have the right to
    make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary in the Note or in any
    related document or agreement, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without
    any further action or consent of the Borrower or any other party hereto. The Bank shall not be liable to the Borrower for any Benchmark
    Replacement Conforming Changes made by the Bank in good faith.
	 	 	 
	 	(d)	Notices;
    Standards for Decisions and Determinations. The Bank will provide notification to the Borrower (which may at the Bank’s discretion
    be electronic, part of a billing statement, a general notice to customers or other communication) of the implementation of any Benchmark
    Replacement and the effectiveness of any Benchmark Replacement Conforming Changes, within a reasonable time prior to such implementation
    and effectiveness, as applicable. Any determination, decision or election that may be made by the Bank pursuant to this Section,
    including, without limitation, any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence
    of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive
    and binding upon the Borrower and any other parties hereto absent manifest error and may be made in the Bank’s sole discretion
    and without consent from the Borrower, except, in each case, as expressly required pursuant to this Section, and shall not be the
    basis of any claim of liability of any kind or nature against the Bank by any party hereto, all such claims being hereby waived individually
    by each party hereto.
	 	 	 
	 	(e)	Benchmark
    Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the
    Borrower may revoke (as applicable) any request for an advance/borrowing of, conversion to, or continuation of a loan based on the
    SOFR Loan Rate (or the then-current Benchmark) to be made, converted or continued during any Benchmark Unavailability Period and,
    failing that, the Borrower will be deemed to have converted any such request (as applicable) into a request for an advance/borrowing
    of or conversion to a loan that shall accrue interest at the Base Rate. 

 

    	 	2	 

     

    

 

	 	(f)	The
    Bank does not warrant or accept responsibility for, and shall not have any liability with respect to (a) the continuation of, administration
    of, submission of, calculation of or any other matter related to the Benchmark, any component definition thereof or rates referenced
    in the definition thereof or any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including
    whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement)
    will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Benchmark
    or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Benchmark
    Replacement Conforming Changes. The Bank may select information sources or services in its reasonable discretion to ascertain the
    Benchmark, in each case pursuant to the terms hereof, and shall have no liability to the Borrower or any other person or entity for
    damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses
    (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component
    thereof) provided by any such information source or service.
	 	 	 
	 	(g)	Certain
    Defined Terms. As used in this Section: 

 

	 	1.	“Benchmark”
    means the SOFR Loan Rate or any subsequent Benchmark Replacement that has become effective hereunder. 
	 	 	 
	 	2.	“Benchmark
    Replacement” means the sum of: (a) the alternate benchmark rate that has been selected by the Bank giving due consideration
    to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental
    Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the then-current
    Benchmark for U.S. dollar-denominated syndicated or bilateral credit facilities and (b) the related Benchmark Replacement Adjustment;
    provided that, if the Benchmark Replacement as so determined would be less than the current benchmark rate floor with respect to
    the SOFR Loan Rate (if any, the “Floor”), the Benchmark Replacement will be deemed to be such Floor for the purposes
    hereof.
	 	 	 
	 	3.	“Benchmark
    Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement,
    the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value
    or zero) that has been selected by the Bank giving due consideration to (i) any selection or recommendation of a spread adjustment,
    or method for calculating or determining such spread adjustment, for the replacement of such then-current Benchmark with the applicable
    Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for
    determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such then-current
    Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated or bilateral credit facilities
    at such time.
	 	 	 
	 	4.	“Benchmark
    Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational
    changes (including, without limitation, changes to the definition of “Business Day,” the definition of “Interest
    Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment,
    conversion or continuation notices, length of lookback periods, the applicability of breakage provisions and other technical, administrative
    or operational matters) that the Bank decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement
    and to permit the administration thereof by the Bank in a manner substantially consistent with market practice (or, if the Bank decides
    that adoption of any portion of such market practice is not administratively feasible or if the Bank determines that no market practice
    for the administration of such Benchmark Replacement exists, in such other manner of administration as the Bank decides is reasonably
    necessary in connection with the administration of the loan evidenced hereby).
	 	 	 
	 	5.	“Benchmark
    Replacement Date” means the earlier to occur of the following events with respect to the then-current Benchmark:

 

	 	1)	in
    the case of clause (a) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement
    or publication of information referenced therein and (ii) the date on which the administrator of the Benchmark permanently or indefinitely
    ceases to provide the Benchmark; or 
	 	 	 
	 	2)	in
    the case of clause (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement
    or publication of information referenced therein, and (ii) the announced or stated date as of which all applicable tenors of such
    Benchmark will no longer be representative.

 

    	 	3	 

     

    

 

	 	6.	“Benchmark
    Transition Event” means, with respect to any then-current Benchmark, the occurrence of a public statement or publication of
    information by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of
    such Benchmark, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official
    with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for
    such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark,
    announcing or stating that (a) such administrator has ceased, or will cease on a specified date, to provide such Benchmark (or all
    tenors of such Benchmark applicable to the loan evidenced hereby), permanently or indefinitely, provided that, at the time
    of such statement or publication, there is no successor administrator that will continue to provide any applicable tenors of such
    Benchmark or (b) all applicable tenors of such Benchmark are or will no longer be representative of the underlying market and economic
    reality that such Benchmark is intended to measure and indicating that representativeness will not be restored.

   

	 	7.	“Benchmark
    Transition Start Date” means in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement
    Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the
    180th day prior to the expected date of such event as of such public statement or publication of information (or if the expected
    date of such prospective event is fewer than 180 days after such statement or publication, the date of such statement or publication).
	 	 	 
	 	8.	“Benchmark
    Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if,
    at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder in accordance with this
    Section and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder
    in accordance with this Section.
	 	 	 
	 	9.	“Relevant
    Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed
    or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.
	 	 	 
	 	10.	“Unadjusted
    Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

 

Acknowledgment.
Borrower acknowledges that it has read and understands all the provisions of this Rider and has been advised by counsel as necessary
or appropriate.

 

    	 	4	 

     

    

 

IN
WITNESS WHEREOF, Borrower has executed and delivered this Rider as an instrument under seal (in jurisdictions where applicable).

 

	 	RAND CAPITAL CORPORATION
	 	 	 
	 	By:	/s/
    Daniel P. Penberthy
	 	Name:	Daniel
    P. Penberthy
	 	Title:
    	President
    and Chief Executive Officer

 

(Signature Page to Variable Rate Rider)Exhibit 10.5

 

		

 

GENERAL
SECURITY AGREEMENT

New
York

 

Debtor
(Name): Rand Capital Corporation 

(Organizational
Structure): corporation

(State
Law organized under): New York

(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer Identification Number): 273023

(Address
of residence/chief executive office): 14 Lafayette Square, Suite 1405, Buffalo, NY 14203

 

Debtor
(Name): Rand BMP Swanson Holdings Corp.

(Organizational
Structure): corporation

(State
Law organized under): New York

(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer Identification Number): 5666889

(Address
of residence/chief executive office): 14 Lafayette Square, Suite 1405, Buffalo, NY 14203

 

Debtor
(Name): Rand Capital Sub LLC 

(Organizational
Structure): limited liability company

(State
Law organized under): Delaware

(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer Identification Number): 6464811

(Address
of residence/chief executive office): 14 Lafayette Square, Suite 1405, Buffalo, NY 14203

 

Debtor
(Name): Rand Carolina Skiff Holdings Corp.

(Organizational
Structure): corporation

(State
Law organized under): New York

(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer Identification Number): 5666876

(Address
of residence/chief executive office): 14 Lafayette Square, Suite 1405, Buffalo, NY 14203

 

Debtor
(Name): Rand DSD Holdings Corp.

(Organizational
Structure): corporation

(State
Law organized under): New York

(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer Identification Number): 6206436

(Address
of residence/chief executive office): 14 Lafayette Square, Suite 1405, Buffalo, NY 14203

 

Debtor
(Name): Rand Filterworks Holdings Corp.

(Organizational
Structure): corporation

(State
Law organized under): New York

(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer Identification Number): 5666872

(Address
of residence/chief executive office): 14 Lafayette Square, Suite 1405, Buffalo, NY 14203

 

Debtor
(Name): Rand ITA Holdings Corp.

(Organizational
Structure): corporation

(State
Law organized under): New York

(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer Identification Number): 6033623

(Address
of residence/chief executive office): 14 Lafayette Square, Suite 1405, Buffalo, NY 14203

 

Debtor
(Name): Rand Somerset Holdings Corp. (Organizational Structure): corporation

(State
Law organized under): New York

(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer Identification Number): 5666897

(Address
of residence/chief executive office): 14 Lafayette Square, Suite 1405, Buffalo, NY 14203

 

Each
of the foregoing shall be referred to herein both individually and collectively as the “Debtor”.

 

    	 

     

    

 

Bank/Secured
Party: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation with its banking offices at One M&T Plaza, Buffalo,
New York 14203 Attention: Office of General Counsel.

 

For
good and valuable consideration, the receipt and sufficiency of which is acknowledged, and intending to be legally bound, each Debtor
agrees with Secured Party as follows:

 

1. Security
Interests.

 

1.1 Grant.
As security for the prompt and complete payment and performance when due of all of the Obligations, Debtor does hereby grant to Secured
Party a continuing security interest (“Security Interest”) in all personal property and fixtures of Debtor, wherever located,
whether now existing or owned or hereafter arising or acquired, whether or not subject to the Uniform Commercial Code, as the same may
be in effect in the State of New York, as amended from time to time (“UCC”), and whether or not affixed to any realty, including,
without limitation, (i) all accounts, chattel paper, investment property, deposit accounts, documents, goods, equipment, farm products,
general intangibles (including trademarks, service marks, trade names, patents, copyrights, licenses and franchises), instruments, inventory,
money, letter of credit rights, causes of action (including tort claims) and other personal property (including agreements and instruments
not constituting chattel paper or a document, general intangible or instrument); (ii) all additions to, accessions to, substitutions
for, replacements of and supporting obligations of the foregoing; (iii) all proceeds, products, rents, issues, profits and accounts arising
from the foregoing and substitutions therefore, including, without limitation, insurance proceeds; and (iv) all business records and
information relating to any of the foregoing and any software or other programs for accessing and manipulating such information (collectively,
the “Collateral”). Debtor acknowledges and agrees that the foregoing collateral description is intended to cover all assets
of Debtor.

 

Notwithstanding
anything to the contrary herein, if, now or in the future, any of the obligations secured pursuant to any Security Interest created by
this Agreement include any Special Flood Zone Loan, then the following shall apply: any such Special Flood Zone Loan shall not
be secured pursuant to any Security Interest created by this instrument in personal property that would constitute “contents”
located within Flood Zone Improvements securing such Special Flood Zone Loan unless covered by the requisite flood insurance, where,
for purposes of the foregoing, “Flood Zone Improvements” mean any “improved” real property that is located within
a Special Flood Hazard Area, a “Special Flood Zone Loan” means a loan, line of credit or other credit facility which is secured
by Flood Zone Improvements, and the terms “improved” real property, “Special Flood Hazard Area,” and “contents”
shall have the meaning ascribed to them by the Flood Disaster Protection Act of 1973, 42 U.S.C. § 4001 et seq., and implementing
regulations 44 C.F.R. Parts 59 et seq., and/or the Federal Emergency Management Agency, as all may be amended from time to time.

 

1.2 Obligations.
The term “Obligations” means any and all indebtedness or other obligations of Debtor to Secured Party in any capacity, now
existing or hereafter incurred, however created or evidenced, regardless of kind, class or form, whether direct, indirect, absolute or
contingent (including obligations pursuant to any guaranty, endorsement, other assurance of payment or otherwise), whether joint or several,
whether from time to time reduced and thereafter increased, or entirely extinguished and thereafter reincurred, together with all extensions,
renewals and replacements thereof, and all interest, fees, charges, costs or expenses which accrue on or in connection with the foregoing,
including, without limitation, any indebtedness or obligations (i) not yet outstanding but contracted for, or with regard to which any
other commitment by Secured Party exists; (ii) arising prior to, during or after any pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or allowable in such proceeding; (iii) owed by Debtor to others and which
Secured Party obtained, or may obtain, by assignment or otherwise; or (iv) payable under this Agreement.

 

2. Covenants.
Debtor covenants and agrees as follows:

 

2.1 Perfection
of Security Interest. Debtor shall execute and deliver to Secured Party such financing statements, control agreements or other documents,
in form and content satisfactory to Secured Party, as Secured Party may from time to time request to perfect and continue the Security
Interest. Upon the request of Secured Party, Debtor shall deliver to Secured Party any and all instruments, chattel paper, negotiable
documents or other documents evidencing or constituting any part of the Collateral properly endorsed or assigned, in a manner satisfactory
to Secured Party. Until such delivery, Debtor shall hold such portion of the Collateral in trust for Secured Party. Debtor shall pay
all out-of-pocket expenses for the preparation, filing, searches and related costs in connection with the grant and perfection of the
Security Interest. Debtor authorizes (both prospectively and retroactively) Secured Party to file financing statements, and any continuations
and amendments thereof, with respect to the Collateral without Debtor’s signature. A photocopy or other reproduction of any financing
statement or this Agreement shall be sufficient as a financing statement for filing in any jurisdiction. Notwithstanding anything herein
to the contrary, provided that no Event of Default has occurred and is continuing and provided that the Debtor has not established any
deposit accounts or securities accounts with any other financial institution other than the Bank, the Debtor shall only be obligated
to deliver financing statements as the Secured Party may from time to time request.

 

    	 	2	 

     

    

 

2.2 Negative
Pledge; Disposition of Collateral. Debtor shall not grant or allow the imposition of any lien, security interest or encumbrance on,
or assignment of, the Collateral unless consented to in writing by Secured Party or otherwise permitted under the Credit Agreement of
even date herewith between Rand Capital Corp and the Secured Party (the “Credit Agreement”). Debtor shall not make or permit
to be made any sale, transfer or other disposition of the Collateral except as permitted in accordance with the Credit Agreement.

 

2.3 Condition
of Collateral; Impermissible Use. Debtor shall keep the Collateral consisting of goods in good condition and shall not commit or
permit damage or destruction (other than ordinary wear and tear) to such Collateral. Debtor shall not permit any Collateral consisting
of goods (i) to be used in such a manner that would violate any insurance policy or warranty covering the Collateral or that would violate
any applicable law of any governmental authority (including any environmental law) now or hereafter in effect; (ii) to become fixtures
on any real property on which Secured Party does not have a first priority mortgage lien (unless Secured Party has been provided with
an acceptable landlord/mortgagee waiver) or become an accession to any goods not included in the Collateral; or (iii) to be placed in
any warehouse that may issue a negotiable document with regard to such Collateral.

 

2.4 Modification
to Collateral. Debtor shall not, without Secured Party’s prior written consent, grant any extension on, compound, settle for
less than the full amount of, release (in whole or in part), modify, cancel, or allow for any substitution, credit or adjustment on Collateral
consisting of accounts, chattel paper, general intangibles, instruments, documents or investment property, except that provided that
no Event of Default has occurred and is continuing, Debtor may grant to account debtors, or other persons obligated with respect to the
Collateral, extensions, credits, discounts, compromises or settlements in the ordinary course of business consistent with its past practices
and consistent with prudent and standard practices used in the industries that are the same or similar to those in which Debtor is engaged.

 

2.5 Titled
Goods. Debtor shall cause all goods included in the Collateral to be properly titled and registered to the extent required by applicable
law. Upon the request of Secured Party, Debtor shall cause the interest of Secured Party to be properly indicated on any certificate
of title relating to such goods and deliver to Secured Party each such certificate, and any additional evidence of ownership, certificates
of origin or other documents evidencing any interest in such goods.

 

2.6 Insurance.
Debtor shall, at its own expense and at all times, maintain effective insurance policies covering damage to persons and against fire,
flood, theft and all other risks to which the Collateral may be subject, all in such amounts, with such deductibles and issued by such
insurance company as shall be reasonably satisfactory to Secured Party. Such insurance policies shall have all endorsements that Secured
Party may reasonably require and shall further (i) name Secured Party, exclusively, as the additional insured on the casualty insurance
and the lender’s loss payee and/or mortgagee on the hazard insurance; (ii) provide that Secured Party shall receive a minimum of
thirty (30) days prior written notice of any amendment or cancellation; and (iii) insure Secured Party notwithstanding any act or neglect
of Debtor or other owner of the property described in such insurance. If Debtor fails to obtain the required insurance as provided herein,
Secured Party may, but is not obligated, to obtain such insurance as Secured Party may deem appropriate, including, without limitation,
if Secured Party so chooses, “single interest insurance” which will cover only Secured Party’s interest in the Collateral.
Debtor shall pay or reimburse to Secured Party the cost of such insurance. Secured Party shall have the option, in its sole discretion,
to hold insurance proceeds as part of the Collateral, apply any insurance proceeds toward the Obligations or allow the Debtor to apply
the insurance proceeds towards repair or replacement of the item of Collateral in respect of which such proceeds were received. Upon
the request of Secured Party, Debtor shall from time to time deliver to Secured Party such insurance policies, or other evidence of such
policies satisfactory to Secured Party, and such other related information Secured Party may request.

 

2.7 Collateral
Information. Debtor shall provide all information, in form and substance reasonably satisfactory to Secured Party, that Secured Party
shall from time to time reasonably request to (i) identify the nature, extent, value, age and location of any of the Collateral, or (ii)
identify any account debtor or other party obligated with respect to any chattel paper, general intangible, instrument, investment property,
document or deposit account included in the Collateral.

 

2.8 Reserved.

 

2.9 Reserved.

 

2.10 Records;
Legend. Debtor shall maintain accurate and complete books and records relating to the Collateral in conformity with generally accepted
accounting principles consistently applied. At Secured Party’s request while an Event of Default has occurred and is continuing,
Debtor will legend, in form and manner satisfactory to Secured Party, its books and records to indicate the Security Interest.

 

2.11 Reserved.

 

    	 	3	 

     

    

 

2.12 Debtor
Notices. Promptly upon acquiring knowledge or reason to know of any of the following, Debtor shall notify Secured Party of the occurrence
or existence of (i) any Event of Default; (ii) any event or condition that, after notice, lapse of time or after both notice and lapse
of time, would constitute an Event of Default; (iii) any account or general intangible that arises out of a contract with any governmental
authority (including the United States); (iv) any event or condition that has or (so far as can be foreseen) will or might have any material
adverse effect on the Collateral (including a material loss, destruction or theft of, or of any damage to, the Collateral, material decline
in value of the Collateral or a material default by an account debtor or other party’s performance of obligations with respect
to the Collateral), on the Debtors taken as a whole, or their business, operations, affairs or condition (financial or otherwise).

 

2.13 Reserved.

 

2.14 Protection
of Collateral; Further Assurances. Debtor shall, at its own cost, faithfully preserve, defend and protect the Security Interest as
a prior perfected security interest in the Collateral under the UCC and other applicable law, superior and prior to the rights of all
third parties (other than those permitted pursuant to Section 3.1) and shall defend the Collateral against all setoffs, claims, counterclaims,
demands and defenses other than Permitted Liens (as defined in the Credit Agreement). Debtor shall, and shall cause its affiliates to
take such action and execute and deliver to the Secured Party such additional documents, instruments, certificates, and agreements as
the Secured Party may reasonably request from time to time to effectuate the purposes and intent of the transaction(s) contemplated hereby,
including, without limitation, (i) to attach, continue, preserve, perfect or protect the Security Interest and Secured Party’s
interests in the Collateral and rights hereunder, including using commercially reasonable efforts to obtain waivers (in form and content
acceptable to Secured Party) from landlords, warehousemen and mortgagees and (ii) causing any subsidiary it may create hereafter, to
execute agreements, in form and substance acceptable to Secured Party, (a) assuming or guarantying the Debtor’s obligations under
this Agreement and all related agreements and (b) pledging assets to the Secured Party to the same extent as the Debtor. Debtor hereby
irrevocably appoints Secured Party, its officers, employees and agents, or any of them, as attorneys-in-fact for Debtor with full power
and authority in the place and stead of Debtor and in the name of Debtor or its own name from time to time in Secured Party’s discretion,
to perform all acts which Secured Party deems appropriate to attach, continue, preserve or perfect and continue the Security Interest,
including signing for Debtor (to the extent such signature may be required by applicable law) UCC-1 financing statements, UCC-3 amendment
or other instruments and documents to accomplish the purposes of this Agreement. This power of attorney, being coupled with an interest,
is irrevocable and shall not be affected by the subsequent disability or incompetence of Debtor.

 

3. Representations
and Warranties. Debtor represents, warrants and agrees as follows:

 

3.1 Title.
Debtor holds good and marketable title to the Collateral free and clear from any security interest or other lien or encumbrance of any
party, other than Permitted Liens. Debtor has not made any prior sale, pledge, encumbrance, assignment or other disposition of any of
the Collateral except for the Permitted Liens.

 

3.2 Authority.
If Debtor is a business entity, it is duly organized, validly existing and in good standing under the laws of the above-named state of
organization. Debtor has the full power and authority to grant the Security Interest and to execute, deliver and perform its obligations
in accordance with this Agreement. The execution and delivery of this Agreement will not (i) violate any applicable law of any governmental
authority or any judgment or order of any court, other governmental authority or arbitrator; (ii) violate any agreement governing Debtor
or to which Debtor is a party; or (iii) result in a security interest or other lien or encumbrance on any of Debtor’s assets, except
in favor of Secured Party. Debtor’s certificate of incorporation, by-laws or other organizational documents do not prohibit any
term or condition of this Agreement. Each authorization, approval or consent from, each registration and filing with, each declaration
and notice to, and each other act by or relating to, any party required as a condition of Debtor’s execution, delivery or performance
of this Agreement (including any shareholder or board of directors or similar approvals) has been duly obtained and is in full force
and effect. Debtor has the power and authority to transact the business in which it is engaged and is duly licensed or qualified and
in good standing in each jurisdiction in which the conduct of its business or ownership of property requires such licensing or such qualifications.

 

3.3 Judgments
and Litigation. There is no pending or, to Debtor’s knowledge, threatened claim, audit, investigation, action or other legal
proceeding or judgment or order of any court, agency or other governmental authority or arbitrator which involves Debtor or the Collateral
and which might have a material adverse effect upon the Collateral, the Debtors taken as a whole, their business, operations, affairs
or condition (financial or otherwise), or threaten the validity of this Agreement or any related document or action. Debtor will promptly
notify Secured Party upon acquiring knowledge of the foregoing.

 

3.4 Enforceability
of Collateral. Instruments, chattel paper, accounts or documents which constitute any part of the Collateral are genuine and enforceable
in accordance with their terms, comply with the applicable law of any governmental authority concerning form, content, manner of preparation
and execution, and all persons appearing to be obligated on such Collateral have authority and capacity to contract and are in fact obligated
as they appear to be on such Collateral. There are no restrictions on any assignment or other transfer or grant of the Security Interest
by Debtor (other than customary restrictions for private company equity investments included in the Collateral). Each sum represented
by Debtor from time to time as owing on accounts, instruments, deposit accounts, chattel paper and general intangibles constituting any
part of the Collateral by account debtors and other parties with respect to such Collateral is the sum actually and unconditionally owing
by account debtors and other parties with respect thereto at such time, except for applicable normal cash discounts. None of the Collateral
is subject to any defense, set-off, claim or counterclaim of a material nature against Debtor except as to which Debtor has notified
Secured Party in writing.

 

    	 	4	 

     

    

 

3.5 Location
of Chief Executive Office, Records, Collateral. The locations of the following are listed on page one of this Agreement or, if different
or additional, on Exhibit A hereto: (i) Debtor’s residence, principal place of business and chief executive office; (ii) the office
in which Debtor maintains its books or records relating to the Collateral; (iii) the facility (including any storage facility) at which
now owned or subsequently acquired inventory, equipment, goods, fixtures and other tangible personal property constituting any part of
the Collateral shall be kept; and (iv) the real property on which any crop included in the Collateral is growing or is to be grown, or
on which any timber constituting any part of the Collateral is or is to be standing. Debtor will not effect or permit any change in any
of the foregoing locations (or remove or permit the removal of the records or Collateral therefrom, except for mobile equipment included
in the Collateral which may be moved to another location for not more than thirty (30) days) without thirty (30) days prior written notice
to Secured Party and all actions deemed necessary by Secured Party to maintain the Security Interest intended to be granted hereby at
all times fully perfected and in full force and effect have been taken. All of the locations listed on page one or Exhibit A are owned
by Debtor, or if not, by the party(ies) identified on Exhibit A.

 

3.6 Structure;
Name. Debtor’s organizational structure, state of registration and organizational identification number (if any) are stated
accurately on page one of this Agreement, and its full legal name and any trade name used to identify it are stated accurately on page
one of this Agreement, or if different or additional are listed on Exhibit A hereto. Debtor will not change its name, any trade names
or its identity, its organizational structure, state of registration or organizational identification number without thirty (30) days
prior written notice to Secured Party. All actions deemed necessary by Secured Party to maintain the Security Interest intended to be
granted hereby at all times fully perfected and in full force and effect have been taken.

 

4. Performance
and Expenditures by Secured Party. If Debtor fails to perform or comply with any of the terms hereof, Secured Party, at its option,
but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such terms including the
payment or discharge of all taxes, fees, security interest or other liens, encumbrances or claims, at any time levied or placed on the
Collateral. An election to make expenditures or to take action or perform an obligation of Debtor under this Agreement, after Debtor’s
failure to perform, shall not affect Secured Party’s right to declare an Event of Default and to exercise its remedies. Nor shall
the provisions of this Section relieve Debtor of any of its obligations hereunder with respect to the Collateral or impose any obligation
on Secured Party to proceed in any particular manner with respect to the Collateral. Interest on any judgment entered against Debtor
related to this Agreement shall accrue at the highest default rate specified in any instrument evidencing any of the Obligations.

 

5. Duty
of Secured Party. Secured Party’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral
in its possession shall be to deal with it in the same manner as Secured Party deals with similar property for its own account. Neither
Secured Party nor its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon the Collateral
or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of the Collateral upon the request of Debtor
or any other person or to take any other action whatsoever with regard to the Collateral. The powers conferred on Secured Party hereunder
are solely to protect Secured Party’s interests in the Collateral and shall not impose any duty upon any Secured Party to exercise
any such powers. Secured Party shall be accountable only for amounts that it actually receives as a result of the exercise of its powers
under this Agreement, and neither it nor its officers, directors, employees or agents shall be responsible to Debtor for any act or failure
to act hereunder, except for its own gross negligence or willful misconduct.

 

6. Certain
Rights and Remedies.

 

6.1 Inspection;
Verification. Secured Party, and such persons as it may designate, shall have the right from time to time to (i) audit and inspect
(a) the Collateral, (b) all books and records related thereto (and make extracts and copies from such records), and (c) the premises
upon which any of the Collateral or books and records may be located; (ii) discuss Debtor’s business, operations, affairs or condition
(financial or otherwise) with its officers, accountants; and (iii) verify the validity, amount, quality, quantity, value, condition and
status of, or any other matter relating to the Collateral in any manner and through any medium Secured Party may consider appropriate
(including contacting account debtors or third party possessing the Collateral for purpose of making such verification). Debtor shall
furnish all assistance and information and perform any acts Secured Party may require regarding thereto. Provided that no Default or
Event of Default has occurred and is continuing, the Bank shall bear the cost and expense of any such inspection and verification.

 

6.2 Notification
of Security Interest. Secured Party may notify any or all account debtors and other person obligated with respect to the Collateral
of the Security Interest therein. Upon the request of Secured Party, Debtor agrees to enter into such warehousing, lockbox or other custodial
arrangement with respect to any of the Collateral that Secured Party shall deem necessary or desirable.

 

    	 	5	 

     

    

 

6.3 Application
of Proceeds. Secured Party may apply the proceeds from the sale, lease or other disposition or realization upon the Collateral to
the Obligations in such order and manner and at such time as Secured Party shall, in its sole discretion, determine. Debtor shall remain
liable for any deficiency if the proceeds of any sale, lease or other disposition or realization upon the Collateral are insufficient
to pay the Obligations. Any proceeds received by Debtor from the Collateral during an Event of Default shall (i) be held by Debtor in
trust for Secured Party in the same medium in which received; (ii) not be commingled with any assets of Debtor; and (iii) be delivered
to Secured Party in the form received, properly indorsed to permit collection. During an Event of Default, Debtor shall promptly notify
Secured Party of the return to or repossession by Debtor of goods constituting part of the Collateral, and Debtor shall hold the same
in trust for Secured Party and shall dispose of the same as Secured Party directs.

 

6.4 Income
and Proceeds of Instruments and Investment Property. Except during the continuance of an Event of Default, Debtor reserves the right
to request to receive all cash income or cash distribution (whether in cash or evidenced by check) payable on account of any instrument
or investment property constituting part of the Collateral (collectively, “Cash Distribution”). Until actually paid, all
rights in the foregoing shall remain subject to the Security Interest. Any other income, dividend, distribution, increase in or profits
(including any stock issued as a result of any stock split or dividend, any capital distributions and the like) on account of any instrument
or investment property constituting part of the Collateral and, upon the occurrence and continuance of an Event of Default, all Cash
Distributions, shall be delivered to Secured Party immediately upon receipt, in the exact form received and without commingling with
other property which may be received by, paid or delivered to Debtor or for Debtor’s account, whether as an addition to, in discharge
of, in substitution of, or in exchange of the Collateral. Until delivery, such Collateral shall be held in trust for Secured Party.

 

6.5 Registered
Holder of the Collateral. In the event an Event of Default has occurred and is continuing, the Secured Party shall have the right
to transfer to or register (with or without reference to this Agreement) in the name of Secured Party or its nominee any investment property,
general intangible, instrument or deposit account constituting part of the Collateral so that Secured Party or such nominee shall appear
as the sole owner of record thereof; provided, however, that so long as no Event of Default exists, Secured Party shall deliver to Debtor
all notices, statements or other communications received by it or its nominee as such registered owner, and upon demand and receipt of
payment of necessary expenses thereof, shall give to Debtor or its designee a proxy or proxies to vote and take all action with respect
to such Collateral. During any Event of Default, Debtor waives all rights to be advised of or to receive any notices, statements or communications
received by Secured Party or its nominee as such record owner, and agrees that no proxy or proxies given by Secured Party to Debtor or
its designee as aforesaid shall thereafter be effective.

 

7. Default.

 

7.1 Events
of Default. Any of the following events or conditions shall constitute an “Event of Default”: (i) any Event of Default
occurs under and as defined in the Credit Agreement; (ii) Debtor defaults in the performance of any obligation, condition, covenant or
other provision of this Agreement, which, if such default can be cured solely by the payment of money, is not cured within three (3)
business days after written notice from the Secured Party, or if it is a nonmonetary default, it is not cured within thirty (30) days
after written notice from the Secured Party; (iii) Debtor fails to pay when due (whether at the stated maturity, by acceleration or otherwise)
any material indebtedness for borrowed money owing to any third party or Affiliate or the failure to perform any agreement with any third
party or Affiliate which would have a material adverse effect on the Debtors taken as a whole; (iv) the sale, assignment transfer or
delivery, by operation of law or otherwise, of all or substantially all of the assets of the Debtor to a third party; (v) Debtor, without
the Secured Party’s prior written consent, engages in, agrees to or approves a plan for (a) reorganization, (b) merger or consolidation,
(c) division into (or of) one or more entities or series of entities or allocation or transfer of any of Debtor’s assets or liabilities
as a result of such a division, (d) conversion to another form of business entity, or (e) dissolution of Debtor or cessation by Debtor
as a going business concern; (vi) the death or judicial declaration of incompetency of Debtor, if an individual; (vii) failure to pay,
withhold or collect any tax as required by law; the service or filing against Debtor or any of its assets of any lien (other than a lien
permitted in writing by the Secured Party), judgment, garnishment, order or award; (viii) if Debtor becomes insolvent or is generally
not paying its debts as such debts become due; (ix) the making of any general assignment by Debtor for the benefit of creditors; the
appointment of a receiver or similar trustee for Debtor or its assets; or the making of any, or sending notice of any intended, bulk
sale; (x) Debtor commences (or has commenced against it and not dismissed or stayed within sixty (60) days) any proceeding or request
for relief under any bankruptcy, insolvency or similar laws now or hereafter in effect in the United States of America or any state or
territory thereof or any foreign jurisdiction or any formal or informal proceeding for the dissolution or liquidation of, settlement
of claims against or winding up of affairs of Debtor; (xi) any representation or warranty made in this Agreement, any related document,
any agreement between Debtor and the Secured Party or any Affiliate or in any financial statement of Debtor or elsewhere was misleading
in any material respect when made; Debtor omits to state a material fact necessary to make the statements made in this Agreement, any
related document, any agreement between Debtor and the Secured Party or any Affiliate or any financial statement of Debtor or elsewhere
not misleading in light of the circumstances in which they were made; or, if upon the date of execution of this Agreement, there shall
have been any material adverse change in any of the facts disclosed in any financial statement, representation, warranty or elsewhere
that was not disclosed in writing to the Secured Party at or prior to the time of execution hereof; (xii) any pension plan of Debtor
fails to comply with applicable law or has vested unfunded liabilities that, in the opinion of the Secured Party, might have a material
adverse effect on Debtor’s ability to repay its debts; (xiii) a material adverse change in the Collateral, or the Debtors, taken
as a whole, their business, assets, operations, management, ownership, affairs or condition (financial or otherwise) from the status
shown on any financial statement or other document submitted to the Secured Party or any Affiliate, and which change the Secured Party
reasonably determines will have a material adverse effect on (a) the Collateral, or the Debtors, taken as a whole, their business, assets,
operations or condition (financial or otherwise), or (b) the ability of the Debtor to pay or perform any obligation to the Secured Party;
or (xiv) the occurrence of any event described in sub-paragraph (i) through and including (xiii) hereof with respect to any endorser,
guarantor or any other party liable for, or whose assets or any interest therein secures, payment of any of the Obligations.

 

    	 	6	 

     

    

 

7.2 Rights
and Remedies Upon Default. Upon the occurrence and during the continuance of any Event of Default, Secured Party without demand of
performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law) to or upon
Debtor or any other person (all and each of which demands, presentments, protests, advertisements and notices are hereby waived), may
exercise all rights and remedies of a secured party under the UCC, under other applicable law, in equity or otherwise or available under
in this Agreement including:

 

7.2.1 Obligations
Immediately Due; Termination of Lending. Secured Party may declare all or any part of any Obligations not payable on demand to be
immediately due and payable without demand or notice of any kind. All or any part of any Obligations whether or not payable on demand,
shall be immediately due and payable automatically upon the occurrence of an Event of Default in Section 7.1 (ix) or (x) above. The provisions
hereof are not intended in any way to affect any rights of Secured Party with respect to any Obligations which may now or hereafter be
payable on demand. Secured Party may terminate any obligation it may have to grant any additional loan, credit or other financial accommodation
to Debtor.

 

7.2.2 Access
to Collateral. Secured Party, or its agents, may peaceably retake possession of the Collateral with or without notice or process
of law, and for that purpose may enter upon any premises where the Collateral is located and remove the same. At Secured Party’s
request, Debtor shall assemble the Collateral and deliver it to Secured Party or any place designated by Secured Party, at Debtor’s
expense.

 

7.2.3 Sell
Collateral. Secured Party shall have the right to sell, lease or otherwise dispose of the Collateral in one or more parcels at public
or private sale or sales upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit risk. Each purchaser at any such sale shall hold the property sold
absolutely, free from any claim or right on the part of Debtor. Debtor hereby waives (to the extent permitted by law) all rights of redemption,
stay and appraisal which Debtor now has or may at any time in the future have under any applicable law now existing or hereafter enacted.
Secured Party shall have the right to use Debtor’s premises and any materials or rights of Debtor (including any intellectual property
rights) without charge for such sales or disposition of the Collateral or the completion of any work in progress for such times as Secured
Party may see fit. Without in any way requiring notice to be given in the following time and manner, Debtor agrees that with respect
to any notice by Secured Party of any sale, lease or other disposition or realization or other intended action hereunder or in connection
herewith, whether required by the UCC or otherwise, such notice shall be deemed reasonable and proper if given at least five (5) days
before such action in the manner described below in the Section entitled “Notices”.

 

7.2.4 Collect
Revenues. Secured Party may either directly or through a receiver (i) demand, collect and sue on any Collateral consisting of accounts
or any other Collateral including notifying account debtors or any other persons obligated on the Collateral to make payment on the Collateral
directly to Secured Party; (ii) file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by Secured Party with respect to the Collateral or to enforce any other right in respect of the Collateral; (iii) take control,
in any manner, of any payment or proceeds from the Collateral; (iv) prosecute or defend any suit, action or proceeding brought against
Debtor with respect to the Collateral; (v) settle, compromise or adjust any and all claims arising under the Collateral or, to give such
discharges or releases as Secured Party may deem appropriate; (vi) receive and collect all mail addressed to Debtor, direct the place
of delivery thereof to any location designated by Secured Party; to open such mail; to remove all contents therefrom; to retain all contents
thereof constituting or relating to the Collateral; (vii) execute, sign or endorse any and all claims, endorsements, assignments, checks
or other instruments with respect to the Collateral; or (viii) generally, use, sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral; and Debtor hereby irrevocably appoints Secured Party, its officers, employees and agents,
or any of them, as attorneys-in-fact for Debtor with full power and authority in the place and stead of Debtor and in the name of Debtor
or in its own name from time to time in Secured Party’s discretion, to take any and all appropriate action Secured Party deems
necessary or desirable to accomplish any of the foregoing or otherwise to protect, preserve, collect or realize upon the Collateral or
to accomplish the purposes of this Agreement. Debtor revokes each power of attorney (including any proxy) heretofore granted by Debtor
with regard to the Collateral. This power of attorney, being coupled with an interest, is irrevocable and shall not be affected by the
subsequent disability or incompetence of Debtor.

 

    	 	7	 

     

    

 

7.2.5 Setoff.
Secured Party may place an administrative hold on and set off against the Obligations any property held in a deposit or other account
with Secured Party or any of its Affiliates or otherwise owing by Secured Party or any of its Affiliates in any capacity to Debtor. Such
set-off shall be deemed to have been exercised immediately at the time Secured Party or such Affiliate elects to do so.

 

7.2.6 Appointment
of Receiver. Secured Party, upon occurrence of an Event of Default, shall be entitled, and Debtor hereby consents, without notice
or demand and without regard to the adequacy of any security for the indebtedness and other Obligations or the solvency or insolvency
of any person liable for the payment thereof, to the appointment of a receiver for the Collateral. The receiver shall have all rights
and powers permitted under applicable law and such other powers as the court making such appointment shall confer. The expenses, including,
without limitation, receiver’s fees, attorneys’ fees, court costs, and agent’s compensation, incurred pursuant to or
arising from the powers herein contained shall be secured by the Collateral. The right of a receiver, among other rights and powers,
to enter and take possession of and to manage and operate the Collateral, and to collect the rents, issues, profits and proceeds thereof
shall be cumulative to any other rights or remedies hereunder or afforded by law, and may be exercised concurrently therewith or independently
thereof. Notwithstanding the appointment of any receiver or other custodian, Secured Party shall be entitled as pledgee to the possession
and control of any cash, deposits, or instruments or other Collateral at the time held by, or payable or deliverable under the terms
of this Agreement to Secured Party.

 

8. Expenses.
Debtor shall pay to Secured Party on demand all costs and expenses (including all reasonable fees and disbursements of all outside
counsel retained for advice, suit, appeal or other proceedings or purpose and of any experts or agents it may retain), which Secured
Party may incur in connection with (i) the administration of this Agreement, including any administrative fees Secured Party may impose
for the preparation of discharges, releases or assignments to third-parties; (ii) the custody or preservation of, or the sale, lease
or other disposition or realization on the Collateral; (iii) the enforcement and collection of any Obligations or any guaranty thereof;
(iv) the exercise, performance, enforcement or protection of any of the rights of Secured Party hereunder; or (v) the failure of Debtor
to perform or observe any provisions hereof. After such demand for payment of any cost, expense or fee under this Section or elsewhere
under this Agreement, Debtor shall pay interest at the highest default rate specified in any instrument evidencing any of the Obligations
from the date payment is demanded by Secured Party to the date reimbursed by Debtor. All such costs, expenses or fees under this Agreement
shall be added to the Obligations.

 

9. Indemnification.
Debtor shall indemnify Secured Party and its Affiliates and each officer, employee, accountant, attorney and other agent thereof
(each such person being an “Indemnified Party”) on demand, without any limitation as to amount, against each liability, cost
and expense (including all reasonable fees and disbursements of all counsel retained for advice, suit, appeal or other proceedings or
purpose, and of any expert or agents an Indemnified Party may retain) heretofore or hereafter imposed on, incurred by or asserted against
any Indemnified Party (including any claim involving any allegation of any violation of applicable law of any governmental authority
(including any environmental law or criminal law)), however asserted and whether now existing or hereafter arising, arising out of any
ownership, disposition or use of any of the Collateral; provided, however, the foregoing indemnity shall not apply to liability, cost
or expense solely attributable to an Indemnified Party’s gross negligence or willful misconduct. This indemnity agreement shall
survive the termination of this Agreement. Any amounts payable under this or any other section of this Agreement shall be additional
Obligations secured hereby.

 

10. USA
PATRIOT Act Notice. Secured Party hereby notifies the Debtor that pursuant to the requirements of the USA PATRIOT Act (“Patriot
Act”), it is required to obtain, verify and record information that identifies the Debtor, which information includes the name
and address of the Debtor and other information that will allow Secured Party to identify the Debtor in accordance with the Patriot Act.
The Debtor agrees to, promptly following a request by Secured Party, provide all such other documentation and information that Secured
Party requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering
rules and regulations, including the Patriot Act.

 

    	 	8	 

     

    

 

11. Miscellaneous.

 

11.1 Notices.
Any demand or notice hereunder or under any applicable law pertaining hereto shall be in writing and duly given if delivered to Debtor
(at its address on Secured Party’s records) or to Secured Party (at the address on page one and separately to Secured Party’s
officer responsible for Debtor’s relationship with Secured Party). Such notice or demand shall be deemed sufficiently given for
all purposes when delivered (i) by personal delivery and shall be deemed effective when delivered, or (ii) by mail or courier and shall
be deemed effective three (3) business days after deposit in an official depository maintained by the United States Post Office for the
collection of mail or one (1) business day after delivery to a nationally recognized overnight courier service (e.g., Federal Express).
Notice by e-mail is not valid notice under this or any other agreement between Debtor and Secured Party.

 

11.2 Governing
Law; Jurisdiction. This Agreement has been delivered to and accepted by Secured Party and will be deemed to be made in the State
of New York. Except as otherwise provided under federal law, this Agreement will be interpreted in accordance with the laws of the State
of New York excluding its conflict of laws rules. DEBTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT IN THE STATE OF NEW YORK IN A COUNTY OR JUDICIAL DISTRICT WHERE SECURED PARTY MAINTAINS A BRANCH AND CONSENTS THAT SECURED
PARTY MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT DEBTOR’S ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED
THAT NOTHING CONTAINED IN THIS AGREEMENT WILL PREVENT SECURED PARTY FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING
ANY RIGHTS AGAINST DEBTOR INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF DEBTOR WITHIN ANY OTHER COUNTY, STATE OR OTHER
FOREIGN OR DOMESTIC JURISDICTION. Debtor acknowledges and agrees that the venue provided above is the most convenient forum for both
Secured Party and Debtor. Debtor waives any objection to venue and any objection based on a more convenient forum in any action instituted
under this Agreement.

 

11.3 Security
Interest Absolute. All rights of Secured Party hereunder, the Security Interest and all obligations of Debtor hereunder shall be
absolute and unconditional irrespective of (i) any filing by or against Debtor of any petition in bankruptcy or any action under federal
or state law for the relief of debtors or the seeking or consenting to of the appointment of an administrator, receiver, custodian or
similar officer for the wind up of its business; (ii) any lack of validity or enforceability of any agreement with respect to any of
the Obligations, (iii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from any agreement or instrument with respect to the Obligations,
(iv)any exchange, release or non-perfection of any lien or any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (v) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, Debtor in respect of the Obligations or this Agreement. If, after receipt of any payment of all or any
part of the Obligations, Secured Party is for any reason compelled to surrender such payment to any person or entity, because such payment
is determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason, such
payment shall be reinstated as part of the Obligations and this Agreement shall continue in full force notwithstanding any contrary action
which may have been taken by Secured Party in reliance upon such payment, and any such contrary action so taken shall be without prejudice
to Secured Party’s rights under this Agreement and shall be deemed to have been conditioned upon such payment having become final
and irrevocable.

 

11.4 Remedies
Cumulative; Preservation of Rights. The rights and remedies herein are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies which Secured Party may have under other agreements now or hereafter in effect between
Debtor and Secured Party, at law (including under the UCC) or in equity. No failure or delay of Secured Party in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other
right or power. Debtor expressly disclaims any reliance on any course of dealing or usage of trade or oral representation of Secured
Party including representations to make loans to Debtor. No notice to or demand on Debtor in any case shall entitle Debtor to any other
or further notice or demand in similar or other circumstances.

 

11.5 Joint
and Several; Successors and Assigns. If there is more than one Debtor, each of them shall be jointly and severally liable for all
amounts, which become due, and the performance of all obligations under this Agreement and the term “Debtor” shall include
each as well as all of them. This Agreement shall be binding upon Debtor and upon its heirs and legal representatives, its successors
and assignees, and shall inure to the benefit of, and be enforceable by, Secured Party, its successors and assignees and each direct
or indirect assignee or other transferee of any of the Obligations; provided, however, that this Agreement may not be assigned by Debtor
without the prior written consent of Secured Party.

 

    	 	9	 

     

    

 

11.6 Waivers;
Changes in Writing. No course of dealing or other conduct, no oral agreement or representation made by Secured Party or usage of
trade shall operate as a waiver of any right or remedy of Secured Party. No waiver of any provision of this Agreement or consent to any
departure by Debtor therefrom shall in any event be effective unless made specifically in writing by Secured Party and then such waiver
or consent shall be effective only in the specific instance and for the purpose for which given. No modification to any provision of
this Agreement shall be effective unless made in writing in an agreement signed by Debtor and Secured Party.

 

11.7 Interpretation.
Unless the context otherwise clearly requires, references to plural includes the singular and references to the singular include the
plural; the word “or” has the inclusive meaning represented by the phrase “and/or”; the word “including”,
“includes” and “include” shall be deemed to be followed by the words “without limitation”; and captions
or section headings are solely for convenience and not part of the substance of this Agreement. Any representation, warranty, covenant
or agreement herein shall survive execution and delivery of this Agreement and shall be deemed continuous. Each provision of this Agreement
shall be interpreted as consistent with existing law and shall be deemed amended to the extent necessary to comply with any conflicting
law. If any provision nevertheless is held invalid, the other provisions shall remain in effect. Debtor agrees that in any legal proceeding,
a photocopy of this Agreement kept in Secured Party’s course of business may be admitted into evidence as an original. Terms not
otherwise defined in this Agreement shall have the meanings attributed to such terms in the UCC.

 

11.8 Waiver
of Jury Trial. Debtor and Secured Party hereby knowingly, voluntarily, and intentionally
waive any right to trial by jury Debtor and Secured Party may have in any action or proceeding, in law or in equity, in connection with
this Agreement or any transactions related hereto. Debtor represents and warrants that no representative or agent of Secured Party has
represented, expressly or otherwise, that Secured Party will not, in the event of litigation, seek to enforce this jury trial waiver.
Debtor acknowledges that Secured Party has been induced to enter into this Agreement by, among other things, the provisions of this section.

 

    	 	10	 

     

    

 

Dated
June 27, 2022

 

	 	RAND CAPITAL CORPORATION
	 	 	 
	 	By:
    	/s/
    Daniel P. Penberthy
	 	Name:
    	Daniel
    P. Penberthy
	 	Title:
    	President
    and Chief Executive Officer
	 	 
	 	RAND
    BMP SWANSON HOLDINGS CORP.
	 	 	 
	 	By:
    	/s/
    Daniel P. Penberthy
	 	Name:
    	Daniel
    P. Penberthy
	 	Title:
    	President
    and Chief Executive Officer
	 	 
	 	RAND
    CAPITAL SUB LLC
	 	 
	 	By:
    	/s/
    Daniel P. Penberthy
	 	Name:	 Daniel
    P. Penberthy
	 	Title:
    	President
    and Chief Executive Officer
	 	 
	 	RAND
    CAROLINA SKIFF HOLDINGS CORP.
	 	 	 
	 	By:	/s/
    Daniel P. Penberthy
	 	Name:
    	Daniel
    P. Penberthy
	 	Title:	 President
    and Chief Executive Officer
	 	 
	 	RAND
    DSD HOLDINGS CORP.
	 	 	 
	 	By:
    	/s/
    Daniel P. Penberthy
	 	Name:
    	Daniel
    P. Penberthy
	 	Title:
    	President
    and Chief Executive Officer

 

(Signature Page to General Security Agreement)

 

    	 

     

    

 

Dated
June 27, 2022

 

	 	RAND
    FILTERWORKS HOLDINGS CORP.
	 	 
	 	By:
    	/s/
    Daniel P. Penberthy
	 	Name:	Daniel
P. Penberthy
	 	Title:	President
and Chief Executive Officer
	 	 
	 	RAND
    ITA HOLDINGS CORP.
	 	 
	 	By:
    	/s/
    Daniel P. Penberthy
	 	Name:	 Daniel
    P. Penberthy
	 	Title:	 President
    and Chief Executive Officer
	 	 
	 	RAND
    SOMERSET HOLDINGS CORP.
	 	 
	 	By:	/s/
    Daniel P. Penberthy
	 	Name:
    	Daniel
    P. Penberthy
	 	Title:	 President
    and Chief Executive Officer

 

(Signature
Page to General Security Agreement)

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