Document:

EXHIBIT
10.08

 

Prepared
by:

Catherine
A. Tanck

Davenport,
Evans, Hurwitz & Smith, LLP

206
W. 14th St., PO Box 1030

Sioux
Falls, SD 57101-1030

(605)
357-1223

 

TERMINATION
AGREEMENT

 

This
TERMINATION AGREEMENT is made and entered into as of this 16 day of May, 2014, by and between SED, L.L.C., a South Dakota limited
liability company, of 1100 E. 64th St. North, Sioux Falls, SD 57104, hereinafter referred to as “Seller”, and Verity
Farms, L.L.C., a South Dakota limited liability company, of 47184 258th St., Sioux Falls, SD 57107, hereinafter referred to as
“Buyer.”

 

WITNESSETH:

 

WHEREAS,
Seller sold to Buyer, and Buyer purchased from Seller, pursuant to a contract for deed dated December 28, 2012, (“Contract
for Deed”), that certain real estate located in Mitchell County, Georgia, which is legally described on Exhibit A, attached
hereto and incorporated herein by this reference, which real estate is referred to herein and in the Contract for Deed as the
“Property”; and

 

WHEREAS,
the Contract for Deed provided for payment of a total purchase price of Five Hundred Thousand Dollars ($500,000.00), together
with interest from and after the date of the Contract for Deed, at the rate of six percent (6%) per annum, payable in annual installments
of principal and interest, commencing on September 20, 2013, and continuing on the same date of the succeeding four (4) calendar
years, and with a balloon payment of all unpaid principal and accrued interest due on September 20, 2017; and

 

WHEREAS,
Seller has not received any payments from Buyer to date of principal or interest under the Contract for Deed and, as such, Buyer
is in default thereunder; and

 

WHEREAS,
the parties now desire to terminate the Contract for Deed by mutual agreement and to return the Property to the Seller,

 

NOW,
THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, it is agreed as follows:

 

    	 

    	 

    

 

1.Termination.
The parties agree that in lieu of proceeding under the default and remedy provisions of Sections 15 and 16 of the Contract for
Deed, the parties by mutual agreement hereby agree that the Contract for Deed shall terminate on _____________, 2014 (“Termination
Date”). Prior to the Termination Date, Buyer shall vacate the Property and surrender and return the Property to the Seller
in substantially the same condition as it was on December 28, 2012.

 

2.Existing
Leases and Contracts. Buyer warrants and represents and agrees as follows:

 

(a)the
Property is subject to no leases or other contracts except (i) leases that were in place on December 28, 2012, and to which no
modifications or amendments have since been made; or (ii) other leases or other contracts to which Seller gave its prior written
consent;

 

(b)to
Buyer’s knowledge, no liens, restrictions or encumbrances have been placed on the Property from and after December 28, 2012,
with or without the permission of the Buyer; and

 

(c)Seller
has paid and in the future may pay ad valorem taxes on the Property that were the obligation of Buyer under Section 5 of the Contract
for Deed. Within six (6) months following the date hereof or, if later, within six (6) months following the date of payment by
Seller, Buyer agrees to reimburse Seller for the same, together with interest at the rate of three percent (3%) per annum from
the date paid by Seller until reimbursement is made hereunder;

 

(d)Buyer
has complied, in full, with all its obligations to pay utilities under Section 8 of the Contract for Deed up through the Termination
Date;

 

(e)Buyer
has complied, in full, with all its obligations under Section 9 of the Contract for Deed up through the Termination Date:

 

(f)Buyer
has complied, in full, with all its obligations under Section 19 of the Contract for Deed up through the Termination Date:

 

(g)Buyer
has not assigned all or any part of the Contract for Deed in violation of Section 25 of the Contract for Deed up through the Termination
Date;

 

(h)To
the best knowledge of Buyer, the Property is free of any contaminants or hazardous waste and Buyer has complied with all applicable
laws, ordinances, regulations, statutes, rules and restrictions pertaining to and affecting the Property and Buyer has installed
no underground storage tanks of the Property; and

 

(i)upon
execution of this Termination Agreement by both parties, Buyer shall deliver to Seller a duly executed Quit Claim Deed in the
form attached as Exhibit B.

 

3.Mutual
Release. Upon Buyer and Seller satisfying their obligations as set forth in this Termination Agreement, and subject to such
satisfaction:

 

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(a)Except
as provided herein, Seller releases, discharges and waives any claims, known or unknown, against Buyer and its officers, directors,
managers, members, affiliates (including but not limited to Verity Corp.) or agents, and their respective successors and assigns,
arising out of or in any way connected to the Contract for Deed through the date hereof, including its right to accrued interest.
The foregoing release discharge, and waiver shall not apply to any claim that Seller may have for indemnification under Section
11 of the Contract for Deed for injuries occurring on or before the Termination Date or for reimbursement of ad valorem taxes,
with interest, under Section 2(c) hereof; and

 

(b)Buyer
releases, discharges and waives any claims, known or unknown, against Seller and its officers, managers, members or agents, and
their respective successors and assigns, arising out of or in any way connected with the Contract for Deed through the date hereof.

Nothing
in this Section shall operate as a release of any party from its liabilities and obligations arising under this Termination Agreement.

 

4.Binding
Effect. This Termination Agreement shall be for the benefit of, and shall be binding upon, the parties hereto and their respective
successors and assigns.

 

5.Final
Agreement. This Termination Agreement shall constitute the final agreement and understanding of the parties on the subject
matter hereof. This Termination Agreement may be modified only by a further writing signed by both parties.

 

6.Governing
Law; Illegality. This Termination Agreement shall governed by the laws of the State of South Dakota, without regard to its
conflict of law provisions. If one or more of the provisions contained herein shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this
Termination Agreement, and this Termination Agreement shall be construed as if such invalid, illegal or unenforceable provision
had not been contained herein, and shall be enforced to the maximum extent permitted by law.

 

7.Counterparts.
This Termination Agreement may be executed in any number of counterparts, each of which shall be deemed and original, but all
of which together shall constitute one and the same instrument.

 

IN
WITNESS WHEREOF, the parties have caused this Termination Agreement to be executed by their duly authorized representatives as
of the ___ day of ___________, 2014.

 

	 	SED, L.L.C.
	 	 	 
	 	By:
    	/s/
    DUANE SPADER
	 	Its:
	Member

 

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Signed,
sealed and delivered in the presence of the undersigned this ___ day of _____________, 2014.

 

	 	 
	Witness	 
	 	 
	 	 
	Notary Public	 

 

	 	VERITY FARMS, L.L.C.
	 	 	 
	 	By: 	/s/ VERLYN SNELLER
	 	Its	 

 

Signed,
sealed and delivered in the presence of the undersigned this ___ day of _____________, 2014.

 

	 	 
	Witness	 
	 	 
	 	 
	Notary Public	 

 

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Exhibit
A

 

Legal
Description

 

All
that tract or parcel of land in the City of Pelham, containing 6.82 acres, and being a part of Lot of Land No. 266 in the 10th
Land District of Mitchell County, Georgia and being more particularly described as follows: Begin at a point on the western edge
of U.S. Highway 19, also known as State Route No. 333, which point is south 04 degrees 17 minutes east 514 feet from the north
line of Lot No. 266, and with said point as the point of beginning, running thence along the western edge of the right of way
of U.S. Highway 19, also known as State Route No. 333, as follows: South 04 degrees 17 minutes east 257.3 feet, north 85 degrees
43 minutes east 10.0 feet, south 04 degrees 17 minutes east 758 feet to a point where the western edge of the right of way of
said highway is intersected by the run of a branch, thence north 83 degrees 31 minutes west along the run of a branch 305.4 feet
to a point, thence north 04 degrees 17 minutes west 700.9 feet, thence south 85 degrees 43 minutes west 10 feet, thence north
04 degrees 17 minutes west 266 feet to a point, thence north 87 degrees 23 minutes east 300.1 feet to the western edge of the
right of way of said highway, the point of beginning.

 

This
description according to a plat of survey of same by G.E. Warren, Georgia Registered Land Surveyor No. 925, dated July 11, 1966,
and recorded in Plat Book 5, Page 176, Office of Clerk of Superior Court, Mitchell County, Georgia.

 

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Exhibit
B

 

Quit
Claim Deed

 

    	6EXHIBIT 10.09

 

 

VERITY
CORP. SECURITY AGREEMENT-VERITY FARMS

 

THIS
VERITY CORP. SECURITY AGREEMENT-VERITY FARMS is dated as of May 16, 2014 and Verity Corp., a Nevada corporation, (“Grantor”),
and DUANE SPADER (the “Lender”).

 

R
E C I T A L S

 

WHEREAS,
Verity Farms, L.L.C., a South Dakota limited liability company (“Borrower”) and the Lender have
entered into a Revolving Credit Agreement dated October 13, 2013 (said Agreement, as it may hereafter be amended, supplemented
or otherwise modified from time to time, being the “Credit Agreement”). (Terms defined in the Credit
Agreement and not otherwise defined in this Agreement are used in this Agreement as defined in the Credit Agreement.)

 

WHEREAS,
in partial consideration for amendment of the Credit Agreement, the Grantor is entering into this Agreement to secure Grantor’s
obligations under the Verity Corp. Guaranty-Verity Farms (“Verity Farms Guaranty”) entered into between the
parties as of the date hereof and in order to grant to the Lender a security interest in the Collateral (as hereinafter defined).

 

WHEREAS,
it is a condition precedent to Lender’s obligations under the Change in Terms Agreement to be entered into by Borrower and
Lender as of the date hereof, which is an amendment to the Credit Agreement, that the Grantor shall have entered into the Verity
Farms Guaranty shall have granted the assignment and security interest contemplated by this Agreement.

 

WHEREAS,
Grantor has and will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement,
including the Change in Terms Agreement..

 

WHEREAS,
Grantor acknowledges and agrees that Lender advanced funds to Borrower as start-up funding until funds could be raised by Borrower
or its Affiliates through sales of equity interest in Borrower or its Affiliates or from borrowings with the intention that amounts
advanced by Lender under the Credit Agreement and otherwise would be promptly repaid to Lender as other sources of funding become
available.

 

NOW,
THEREFORE, in consideration of the premises and in order to induce the Lender to amend under the Credit Agreement as described
in the Change in Terms Agreement, Grantor hereby agrees with the Lender as follows:

 

Section
1. Grant of Security. Grantor hereby grants to the Lender a security interest in Grantor’s right, title and interest
in and to all of Grantor’s goods, assets and properties of all kinds and descriptions, wherever the same may now or hereafter
be located, now existing and/or owned or hereafter arising and/or acquired, or in which Grantor has or hereafter may acquire an
interest, to the extent of such interest (collectively, the “Collateral”), including without limitation
the following:

 

All
accounts, deposit accounts, equipment, inventory, fixtures, contract rights, investment property, chattel paper, documents, instruments,
commercial tort claims and general intangibles (including payment intangibles), and all other personal property, whether now owned
or hereafter acquired and wherever arising or located, and all products and proceeds thereof, and all accessions, substitutions
and replacements thereof, including, without limitation, the personal property described on Schedule I attached hereto.

 

    	 

    	 

    

 

Section
2. Security for Obligations. . This Agreement secures, in the case of Grantor, the payment of all obligations of Grantor to
Lender now or hereafter existing under the Loan Documents, including, without limitation, the “Guaranteed Obligations”
under the Verity Farms Guaranty, whether such obligations are direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties, indemnifications, contract causes of action, costs, expenses or
otherwise (all such obligations being the “Secured Obligations”). Notwithstanding the terms of the Credit
Agreement or any related document, as concerns the obligations of Grantor with respect to the Secured Obligations, prepayment
is required by Grantor under the Verity Farms Guaranty each time (to be paid within ten (10) days thereafter) that Grantor or
any Affiliate thereof raises, from time to time, funds through the sales of equity interests in Grantor or its Affiliates or obtains
funds by borrowing from other sources; provided that (i) this prepayment requirement shall only apply to funds received by Grantor
or any Affiliate thereof after September 30, 2015, and then, after such date, only to sales of equity interests or borrowings
from other sources if the total funds generated thereby from and after October 1, 2015, exceed Five Hundred Thousand Dollars ($500,000.00),
and (ii) the total amount of any such prepayment required at a particular time under such Verity Farms Guaranty, together with
any prepayment then due under similar prepayment provisions included in other guarantees executed by Grantor or its Affiliates
in favor of Lender, is limited to fifty percent (50%) of the amount of funds then raised by such sale of equity interest or borrowings.
Without limiting the generality of the foregoing, this Agreement secures, as to Grantor, the payment of all amounts that constitute
part of the Secured Obligations and would be owed by Grantor to Lender under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving an Obligated
Party.

 

Section
3. Grantor Remains Liable. Anything herein to the contrary notwithstanding, (a) Grantor shall remain liable under the
contracts and agreements included in Grantor’s Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Lender of any
of the rights hereunder shall not release Grantor from any of its duties or obligations under the contracts and agreements included
in the Collateral and (c) Lender shall not have any obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement or any other Loan Document, nor shall Lender be obligated to perform any of the obligations
or duties of Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. 

 

Section
4. Covenants from Credit Agreement. Grantor covenants and agrees that, so long as any part of the Secured Obligations shall
remain unpaid or Lender shall have any commitment under the Credit Agreement, Grantor will perform and observe all of the terms,
covenants and agreements set forth in the Credit Agreement and the other Loan Documents on its part to be performed or observed
or that Borrower has agreed to cause Grantor to perform or observe. 

 

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Section
5. Representations and Warranties. Grantor represents and warrants as follows:

 

(a) Grantor’s exact legal name, as defined in Section 9-503(a) of the UCC, is correctly set forth in Schedule II hereto.
Grantor is located (within the meaning of Section 9-307 of the UCC) and has its chief executive office in the state or jurisdiction
set forth in Schedule II hereto. The information set forth in Schedule II hereto with respect to Grantor is true and accurate
in all respects. Grantor has not previously changed its name, location, chief executive office, place where it maintains its agreements,
type of organization, jurisdiction of organization or organizational identification number or federal employer identification
number (EIN) from those set forth in Schedule II hereto. All of the equipment and inventory of Grantor are located at the locations
specified for Grantor in Schedule II hereto. 

 

(b) Grantor is the legal and beneficial owner of the Collateral of Grantor free and clear of any lien, security interest, claim,
option or right of others, except for the security interest created under this Agreement or permitted under the Credit Agreement.
No effective financing statement or other instrument similar in effect covering all or any part of such Collateral or listing
Grantor or any trade name of Grantor as debtor is on file in any recording office, except such as may have been filed in favor
of the Lender relating to the Loan Documents or the Verity Farms Guaranty, the Verity Corp. Guaranty-Meats or the Verity Corp.
Guaranty-Water, all of such guaranties to be executed as of the date hereof, or as otherwise permitted under the Credit Agreement.

 

(c) Grantor has exclusive possession and control of the equipment and inventory other than inventory stored at any leased premises
or warehouse for which a landlord’s or warehouseman’s agreement, in form and substance satisfactory to the Lender,
is in effect. In the case of equipment and inventory located on leased premises or in warehouses, no lessor or warehouseman of
any premises or warehouse upon or in which such equipment or inventory is located has issued any warehouse receipt or document,
or received notification of any secured party’s interest (other than the security interest granted hereunder or permitted
by the Credit Agreement) in Grantor’s equipment or inventory, or asserted any lien, claim or charge (based on contract,
statute or otherwise) on such equipment and inventory. 

 

(d) All filings and other actions (including, without limitation, actions necessary to obtain control of Collateral as provided
in Sections 9-105, 9-106 and 9-107 of the UCC) necessary to perfect the security interest in the Collateral of Grantor created
under this Agreement have been duly made or taken and are in full force and effect, and this Agreement creates in favor of the
Lender a valid and, together with such filings and other actions, perfected first priority security interest in the Collateral
of Grantor, securing the payment of the Secured Obligations.

 

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(e) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory
body or any other third party is required for (i) the grant by Grantor of the security interest granted hereunder or for
the execution, delivery or performance of this Agreement by Grantor, or (ii) the perfection or maintenance of the security
interest created hereunder (including the first priority nature of such security interest), except for the filing of financing
and continuation statements under the UCC, which financing statements have been duly filed and are in full force and effect.

 

Section
6. Further Assurances. Grantor agrees as follows:

 

(a)
Grantor agrees that from time to time, at the expense of Grantor, Grantor will promptly execute and deliver, or otherwise
authenticate, all further instruments and documents, and take all further action that may be necessary or desirable, or that the
Lender may request, in order to perfect and protect any security interest granted or purported to be granted by Grantor hereunder
or to enable the Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral of Grantor. Without
limiting the generality of the foregoing, Grantor will promptly, upon the written request of the Lender, with respect to Collateral
of Grantor: (i) mark conspicuously each document, contract, and all chattel paper and, at the request of the Lender, each
of its records pertaining to such Collateral with a legend, in form and substance satisfactory to the Lender, indicating that
such Collateral or record is subject to the security interest granted hereby; (ii) if any such Collateral shall be evidenced
by a promissory note or other instrument or chattel paper, deliver and pledge to the Lender hereunder such note or instrument
or chattel paper duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance
satisfactory to the Lender; (iii) execute or authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or desirable, or as the Lender may request, in order to perfect
and preserve the security interest granted or purported to be granted by Grantor hereunder; (iv) deliver and pledge to the
Lender certificates representing Collateral, if any, that constitutes certificated securities, accompanied by undated stock or
bond powers executed in blank; (v) take all action necessary to ensure that the Lender has control of Collateral consisting of
electronic chattel paper, investment property, and transferable records as provided in Sections 9-105, 9-106 and 9-107 of the
UCC; (vi) cause the Lender to be the beneficiary under all letters of credit that constitute Collateral, with the exclusive right
to make all draws under such letters of credit, and with all rights of a transferee under Section 5-114(e) of the UCC; and (vii)
deliver to the Lender evidence that all other action that the Lender may deem reasonably necessary or desirable in order to perfect
and protect the security interest created by Grantor under this Agreement has been taken. 

 

(b) Grantor hereby authorizes the Lender to file one or more financing or continuation statements, and amendments thereto, including,
without limitation, one or more financing statements indicating that such financing statements cover all assets or all personal
property (or words of similar effect) of Grantor, in each case without the signature of Grantor, and regardless of whether any
particular asset described in such financing statements falls within the scope of the UCC or the granting clause of this Agreement.
A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall
be sufficient as a financing statement where permitted by law. Grantor ratifies its authorization for the Lender to have filed
such financing statements, continuation statements or amendments filed prior to the date hereof. 

 

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(c) Grantor will furnish to the Lender from time to time statements and schedules further identifying and describing the Collateral
of Grantor and such other reports in connection with such Collateral as the Lender may reasonably request, all in reasonable detail.

 

Section
7. Transfers and Other Liens. Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or grant any
option with respect to, any of the Collateral, except as permitted under the terms of the Credit Agreement, or (ii) create
or suffer to exist any lien upon or with respect to any of the Collateral of Grantor except for the pledge, assignment and security
interest created under this Agreement and liens permitted under the Credit Agreement.

 

Section
8. Lender Appointed Attorney-in-Fact. Grantor hereby irrevocably appoints the Lender as Grantor’s attorney-in-fact,
with full authority in the place and stead of Grantor and in the name of Grantor or otherwise, from time to time upon the occurrence
and during the continuance of an Event of Default, in the Lender’s discretion, to take any action and to execute any instrument
that the Lender may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

 

(a) to obtain and adjust insurance claims,

 

(b) to ask for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral,

 

(c) to receive, indorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a)
or (b) above, and

 

(d) to file any claims or take any action or institute any proceedings that the Lender may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with the terms and conditions of any assigned agreement
or the rights of the Lender with respect to any of the Collateral.

 

Section
9. Lender May Perform. If Grantor fails to perform any agreement contained herein, the Lender may, but without any obligation
to do so and without notice, itself perform, or cause performance of, such agreement, and the expenses of the Lender incurred
in connection therewith shall be payable by Grantor.

 

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Section
10. The Lender’s
Duties. 

 

(a)
The powers conferred on the Lender hereunder are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Lender shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not
Lender has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against
any parties or any other rights pertaining to any Collateral. The Lender shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal
to that which it accords its own property.

 

(b) Anything contained herein to the contrary notwithstanding, the Lender may from time to time, when the Lender deems it to be necessary,
appoint one or more subagents (each a “Subagent”) for the Lender hereunder with respect to all or any
part of the Collateral. In the event that the Lender so appoints any Subagent with respect to any Collateral, (i) the assignment
and pledge of such Collateral and the security interest granted in such Collateral by Grantor hereunder shall be deemed for purposes
of this Security Agreement to have been made to such Subagent, in addition to the Lender, as security for the Secured Obligations
of Grantor, (ii) such Subagent shall automatically be vested, in addition to the Lender, with all rights, powers, privileges,
interests and remedies of the Lender hereunder with respect to such Collateral, and (iii) the term “Lender,” when
used herein in relation to any rights, powers, privileges, interests and remedies of the Lender with respect to such Collateral,
shall include such Subagent; provided, however, that no such Subagent shall be authorized to take any action with
respect to any such Collateral unless and except to the extent expressly authorized in writing by the Lender.

 

Section
11. Remedies. If
any Event of Default shall have occurred and be continuing:

 

(a) The Lender may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to
the affected Collateral) and also may: (i) require Grantor to, and Grantor hereby agrees that it will at its expense and
upon request of the Lender forthwith, assemble all or part of the Collateral as directed by the Lender and make it available to
the Lender at a place and time to be designated by the Lender that is reasonably convenient to both parties; (ii) without
notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at
any of the Lender’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Lender
may deem commercially reasonable; (iii) occupy any premises owned or leased by the Grantor where the Collateral or any part thereof
is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without
obligation to Grantor in respect of such occupation; and (iv) exercise any and all rights and remedies of any of the Grantor under
or in connection with the Collateral, or otherwise in respect of the Collateral, including, without limitation, (A) any and all
rights of Grantor to demand or otherwise require payment of any amount under, or performance of any provision of the Collateral,
(B) withdraw, or cause or direct the withdrawal, of all funds with respect to the Collateral and (C) exercise all other rights
and remedies with respect to the Collateral, including, without limitation, those set forth in Section 9-607 of the UCC. Grantor
agrees that, to the extent notice of sale shall be required by law, at least ten days’ notice to Grantor of the time and
place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The
Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Lender may adjourn
any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

 

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(b) At any time during which the Lender is exercising its rights and remedies in respect of the Collateral, any cash held by or
on behalf of the Lender and all cash proceeds received by or on behalf of the Lender in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral may, in the discretion of the Lender, be held by the Lender as collateral
for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Lender pursuant hereto) in whole
or in part by the Lender against, all or any part of the Secured Obligations. Any surplus of such cash or cash proceeds held by
or on the behalf of the Lender and remaining after payment in full of all the Secured Obligations shall be paid over to the Grantor
or to whomsoever may be lawfully entitled to receive such surplus.

 

(c) All payments received by Grantor under or in connection with any Collateral shall be received in trust for the benefit of
the Lender, shall be segregated from other funds of Grantor and shall be forthwith paid over to the Lender in the same form as
so received (with any necessary indorsement).

 

(d) The Lender may, without notice to Grantor except as required by law and at any time or from time to time, charge, set-off
and otherwise apply all or any part of the Secured Obligations against any funds held with respect to the Collateral.

 

Section
12. Indemnity and Expenses.
 \l 2(a) Grantor agrees to indemnify, defend and save and hold harmless Lender and each of its Affiliates and their respective
officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against,
and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable
fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or resulting from this Agreement (including, without limitation, enforcement of this Agreement),
except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

 

Grantor
will upon demand pay to the Lender the amount of any and all reasonable expenses, including, without limitation, the reasonable
fees and expenses of its counsel and of any experts and agents, that the Lender may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization
upon, any of the Collateral of Grantor, (iii) the exercise or enforcement of any of the rights of the Lender hereunder or
(iv) the failure by Grantor to perform or observe any of the provisions hereof.

 

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Section
13. Amendments; Waivers.
No amendment or waiver of any provision of this Agreement, and no consent to any departure by Grantor herefrom, shall in any event
be effective unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No failure on the part of the Lender to exercise,
and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of any other right.

 

Section
14. Notices. All
notices and other communications provided for hereunder shall be given in accordance with the Verity Farms Guaranty executed by
the Grantor in favor of Lender.

 

Section
15. Continuing Security
Interest; Assignments under the Credit Agreement. This Agreement shall create a continuing security interest in the Collateral
and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of the Secured Obligations
and (ii) the Termination Date, (b) be binding upon Grantor, its successors and assigns and (c) inure, together
with the rights and remedies of the Lender hereunder, to the benefit of the Lender and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), Lender may assign or otherwise transfer all or any portion of
its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its commitment, the
advances owing to it and the Note or Notes, if any, held by it) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to Lender herein or otherwise.

 

Section
16. Release; Termination.
 \l 2(a) Upon any sale, lease, transfer or other disposition of any item of Collateral of Grantor in accordance with the
terms of the Loan Documents (other than sales of inventory in the ordinary course of business), the Lender will, at Grantor’s
expense, execute and deliver to Grantor such documents as Grantor shall reasonably request to evidence the release of such item
of Collateral from the assignment and security interest granted hereby; provided, however, that (i) at the
time of such request and such release no Event of Default shall have occurred and be continuing, (ii) Grantor shall have
delivered to the Lender, at least ten Business Days (five days in the case of the proposed sale of any individual vehicle on which
Lender has a lien) prior to the date of the proposed release, a written request for release describing the item of Collateral
and the terms of the sale, lease, transfer or other disposition in reasonable detail, including, without limitation, the price
thereof and any expenses in connection therewith, together with a form of release for execution by the Lender and a certificate
of Grantor to the effect that the transaction is in compliance with the Loan Documents and as to such other matters as the Lender
may request and (iii) the proceeds of any such sale, lease, transfer or other disposition required to be applied, or any
payment to be made in connection therewith shall, to the extent so required under the Credit Agreement, be paid or made to, or
in accordance with the instructions of the Lender.

 

(b) Upon the latest of (i) the payment in full in cash of the Secured Obligations and (ii) the Termination Date, the security
interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor. Upon any such termination,
the Lender will, at the Grantor’s expense, execute and deliver to Grantor such documents as Grantor shall reasonably request
to evidence such termination.

 

    	8

    	 

    

 

Section
17. Execution in Counterparts.
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. Delivery of an executed counterpart of a signature
page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

 

Section
18.Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of South
Dakota.

 

IN
WITNESS WHEREOF, Grantor has caused this Security Agreement to be duly executed and delivered by its officer thereunto duly authorized
as of the date first above written.

 

	 	LENDER:
	 	 	 
	 	/s/
    DUANE SPADER
	 	Duane Spader
	 	 	 
	 	GRANTOR:
	 	 	 
	 	Verity Corp.
	 	 	 
	 	By:	/s/
    RICHARD KAMOLVATHIN
	 	Its:	 

 

    	9

    	 

    

 

Schedule
I to the

Security
Agreement

 

COLLATERAL

 

(a) All accounts, deposit accounts, contract rights, chattel paper, (whether electronic or tangible) instruments, promissory notes,
documents, general intangibles (including, but not limited to, all rights under franchise agreements, non-compete agreements and
goodwill), payment intangibles, software, letter of credit rights, health-care insurance receivables and other rights to payment
of every kind now existing or at any time hereafter arising. 

 

(b) All inventory, goods held for sale or lease or to be furnished under contracts for service, or goods so leased or furnished, raw
materials, component parts, work in process, farm products and other materials used or consumed in Grantor’s business, now
or at any time hereafter owned or acquired by Grantor, wherever located, and all products thereof, whether in the possession of
Grantor, any warehousemen, any bailee or any other person, or in process of delivery, and whether located in Grantor’s place
of business or elsewhere;

 

(c) All warehouse receipts, bills of sale, bills of lading and other documents of every kind (whether or not negotiable) in which
Grantor now has or at any time hereafter acquires any interest, and all additions and accessions thereto, whether in the possession
or custody of Grantor, any bailee or any other person for any purpose;

 

(d) All money and property heretofore, now or hereafter delivered to or deposited with Lender or otherwise coming into the possession,
custody or control of Lender (or any agent or bailee of Lender) in any manner or for any purpose whatsoever during the existence
of this Agreement and whether held in a general or special account or deposit for safekeeping or otherwise; 

 

(e) All right, title and interest of Grantor under licenses, guaranties, warranties, management agreements, marketing or sales agreements,
escrow contracts, indemnity agreements, insurance policies, service or maintenance agreements, supporting obligations and other
similar contracts of every kind in which Grantor now has or at any time hereafter shall have an interest;

 

(f) All goods, tools, machinery, furnishings, furniture and other equipment and fixtures of every kind now existing or hereafter acquired,
and all improvements, replacements, accessions and additions thereto and embedded software included therein, whether located on
any property owned or leased by Grantor or elsewhere, including without limitation, any of the foregoing now or at any time hereafter
located at or installed on the land or in the improvements at any of the real property owned or leased by Grantor, and all such
goods after they have been severed and removed from any of said real property; and

 

(g) All motor vehicles, trailers, mobile homes, manufactured homes, boats, other rolling stock and related equipment of every kind
now existing or hereafter acquired and all additions and accessories thereto, whether located on any property owned or leased
by Grantor or elsewhere;

 

together
with whatever is receivable or received whether any of the foregoing or the proceeds thereof are sold, leased, collected, exchanged
or otherwise disposed of, whether such disposition is voluntary or involuntary, including without limitation, all rights to payment,
including returned premiums, with respect to any insurance relating to any of the foregoing, and all rights to payment with respect
to any claim or cause of action affecting or relating to any of the foregoing.

 

    	 

    	 

    

 

Schedule
II to the

Security
Agreement

  

LOCATION,
CHIEF EXECUTIVE OFFICE, BUSINESS LOCATIONS, TYPE OF ORGANIZATION, JURISDICTION OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION
NUMBER

 

	 
 
Grantor	 	 
 
Location	 	Chief Executive Office	 	Business Locations	 	 	Type of Organization	 	 	 	Jurisdiction of Organization	 	 	Organizational ID No.	 	 	EIN	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Verity Corp.	 	47184 258th St., Sioux Falls, SD 57107-6433	 	Same	 	Same 
  
	 	 	Corporation	 	 	 	NV	 	 	NV20061630801	 	 	38-3767357

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