Document:

SECURED
PROMISSORY NOTE

 

 

DATA443
RISK MITIGATION, INC.,

AS
PAYOR

 

MODEVITY,
LLC,

AS
HOLDER

 

____________,
2018

 

    	 	 	 

    	 

    

 

SECURED
PROMISSORY NOTE

 

	$750,000.00	Raleigh,
    North Carolina
	 	

__
__________, 2018

 

THIS
SECURED PROMISSORY NOTE (the “Note”) is being issued and executed by DATA443 RISK MITIGATION, INC., a North
Carolina corporation (“Payor”), in favor of and being delivered to MODEVITY, LLC, a Pennsylvania limited liability
company (“Holder”) in connection with, and pursuant to, that certain Asset Purchase Agreement concurrently
executed by and between Payor and Holder (the “Purchase Agreement”). This Note is intended to embody that portion
of the Purchase Price (as defined in the Purchase Agreement) which is payable to Holder pursuant to Section 4.3.2.(d) of the Purchase
Agreement, and is the same Note as attached to the Purchase Agreement as Exhibit 4.3.2.(d). Unless otherwise separately defined
herein, all capitalized terms used in this Note shall have the same meaning as set forth in the Purchase Agreement. 

 

FOR
VALUE RECEIVED, Payor does hereby unconditionally promise to pay to the order of Holder the original principal balance of
SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000) in legal and lawful money of the United States of America, pursuant to the following
terms and conditions: 

 

I

PAYMENT
OBLIGATIONS

 

1.1
Required Payments. Payments of principal (no interest is charged hereunder) shall be made in ten (10) equal monthly
principal installments of SEVENTY FIVE THOUSAND DOLLARS ($75,000). Said payments shall begin on the thirtieth (30th)
day following the Closing Date, and continue thereafter on the same day of each successive month until the ten (10) month anniversary
of the Closing Date (the “Maturity Date”), at which time the entire remaining principal amount, plus any and all accrued
interest and all other amounts due hereunder, shall be due and payable.

 

1.2
Default Interest Rate. Without limitation on Holder’s other rights and remedies, upon the earliest to occur
of an Event of Default or the Maturity Date, accelerated or otherwise, and until payment in full of the amount due hereunder,
the rate of interest accruing on the unpaid principal balance shall be at the rate equal to the highest rate permitted under applicable
law (the “Default Rate”), from and after the date of the Event of Default, irrespective of the acceleration
of the unpaid principal balance. This Section 1.2 shall not be construed as an agreement or privilege to extend the date upon
which payment in full is due hereunder, or a waiver of any other right or remedy available to Holder hereunder.

 

1.3
Prepayments. Payor shall have the right, at any time, to prepay any unpaid principal or interest due hereunder without
penalty. 

 

1.4
Delivery of Payments. All payments under this Note, whether of principal or interest, or both, shall be made to
Holder in lawful money of the United States at such place as Holder shall designate in writing to Payor, without any offset, reduction,
or recoupment whatsoever, unless expressly provided to the contrary herein. All payments shall be applied first against outstanding
fees and damages, then against accrued interest, and then applied in reduction of the principal sum due hereunder. Upon assignment
of the interest of Holder in this Note, Payor shall instead make its payment pursuant to the assignee’s instructions upon
receipt of written notice thereof. 

 

1.5
Illegality. Nothing in this Note shall be construed or shall operate, either presently or prospectively, (a) to
require Payor to pay interest at a rate greater than is at any time lawful in such case to contract for but shall require payment
of interest only to the extent of such lawful rate; or, (b) to require Payor to make any payment or do any act contrary to law.
If it should be held that the interest payable under this Note is in excess of the maximum permitted by law, the interest chargeable
hereunder (whether included in the face amount or otherwise) shall be reduced to the maximum amount permitted by law, and any
excess of the said maximum amount permitted by law shall be cancelled automatically and, at the option of Holder, if theretofore
or thereafter paid, shall be either refunded to Payor or credited to the principal balance of this Note (without prepayment penalties)
and applied to the payment of the last maturing installment or installments of the indebtedness evidenced hereby (whether or not
then due and payable) and not to the payment of interest.

 

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1.6
Security Interest. This Note is secured by a security interest granted by Payor to Holder pursuant to a Security
Agreement concurrently executed by Payor and Holder (the “Security Agreement”). This Note is subject to all
terms and conditions of the Security Agreement. Payor acknowledges and agrees that should a proceeding under any bankruptcy or
insolvency law be commenced by or against the Payor, or if any of the Collateral (as defined in the Security Agreement) should
become the subject of any bankruptcy or insolvency proceeding, then Holder will be entitled to, among other relief to which the
Holder may be entitled under this Note, an order from the court granting immediate relief from the automatic stay pursuant to
11 U.S.C. Section 362 to permit Holder to exercise all of its rights and remedies pursuant to the Security Agreement and/or applicable
law. PAYOR EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, PAYOR EXPRESSLY ACKNOWLEDGES
AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING,
WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE, OR INHIBIT IN ANY WAY THE ABILITY OF HOLDER
TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE SECURITY AGREEMENT AND/OR APPLICABLE LAW. Payor hereby consents to any motion
for relief from stay that may be filed by Holder in any bankruptcy or insolvency proceeding initiated by or against Payor and,
further, agrees not to file any opposition to any motion for relief from stay filed by Holder. Payor represents, acknowledges,
and agrees that this provision is a specific and material aspect of this Note and the Purchase Agreement, and that Holder would
not agree to the terms of the Purchase Agreement if this waiver were not a part of this Note. Payor further represents, acknowledges,
and agrees that (i) this waiver is knowingly, intelligently, and voluntarily made; (ii) neither Holder nor any person acting on
behalf of Holder has made any representations to induce this waiver; and, (iii) Payor has been represented (or has had the opportunity
to he represented) in the signing of this Note and all Transaction Documents and in the making of this waiver by independent legal
counsel selected by Payor and that the Payor has discussed this waiver with counsel. 

 

1.7
Purchase Agreement. This Note is entitled to the benefits of, and is subject to the terms contained in, the Purchase
Agreement.

 

1.8
Covenants Agreements. This Note is entitled to the benefits of, and is subject to the terms contained in, that certain
Business Covenants Agreement concurrently executed pursuant to the Purchase Agreement (the “Covenants Agreement”).

 

II

EVENTS
OF DEFAULT AND REMEDIES

 

2.1
Events of Default. An “Event of Default” hereunder shall mean any of the following: 

 

(a)
If a default shall be made in the payment of any installment of principal or interest or any other amount due hereunder, as when
due and payable and continuing for a period of ten (10) days following written notice thereof by Holder to Payor.

 

(b)
If under any of the Transaction Documents, an Event of Default shall have occurred, as such term is defined in the particular
Transaction Document. 

 

(c)
Any representation or warranty made in (i) this Note; (ii) any of the Transaction Documents; (iii) any written statement pursuant
hereto or thereto; or, (iv) any other report, financial statement, or certificate made or delivered to Holder shall be untrue
or incorrect in any material respect as of the date when made or deemed made;

 

(d)
The common stock of Payor shall not be eligible for listing or quotation for trading on a trading market and shall not be eligible
to resume listing or quotation for trading thereon within ten (10) trading days;

 

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(e)
If at any time Holder fails to have a first priority perfected security interest in the Collateral; or 

 

(f)
Payor shall be subject to a Bankruptcy Event. For purposes of this Note, the term “Bankruptcy Event” means
any of the following events: (a) Payor commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to Payor;
(b) there is commenced against Payor any such case or proceeding that is not dismissed within sixty (60) calendar days after commencement;
(c) a Payor is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is
entered; (d) Payor suffers any appointment of any custodian or the like for it or any substantial part of its property that is
not discharged or stayed within sixty (60) calendar days after such appointment; (e) Payor makes a general assignment for the
benefit of creditors; (f) Payor calls a meeting of its creditors with a view to arranging a composition, adjustment, or restructuring
of its debts; or, (g) Payor, by any act or failure to act, expressly indicates its consent to, approval of, or acquiescence in
any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

(g)
If Payor’s business suspends business or ceases to exist. 

 

2.2
Acceleration. At any time after the occurrence of an Event of Default and until such time as the Event of Default
is cured and no longer existing, Holder may, by written notice sent to Payor, declare the entire amount of this Note to be forthwith
due and payable, whereupon this Note shall become forthwith due and payable without presentment, demand, protest, or other notice
of any kind, all of which are expressly waived. However, if Payor pays to Holder all scheduled installments of principal
and interest due and owing (without regard to any acceleration hereunder) within ten (10) days of receipt of the notice referred
to herein, then this Note shall be reinstated and such acceleration shall be deemed rescinded. No such rescission or reinstatement
shall affect any subsequent Event of Default. 

 

2.3
Remedies. Upon acceleration by Holder, Holder shall be entitled to those remedies contained in the Security Agreement
and all other legal and equitable rights available under applicable law. The remedies of Holder shall be distinct and cumulative,
and may be pursued singly, successively, or together, at the sole discretion of Holder, and may be exercised as often as occasion
therefor shall arise. Failure to exercise any of the foregoing options upon the occurrence of an Event of Default shall not constitute
a waiver of the right to exercise the same or any other option at any subsequent time in respect to the same or any other further
exercise of the same or any other right or remedy. Holder shall have no duty to exercise any or all of the rights and remedies
herein provided or contemplated. The acceptance by Holder of any payment hereunder that is less than payment in full of all amounts
due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing rights
or remedies at that time, or nullify any prior exercise of any such rights or remedies without the express written consent of
Holder. 

 

2.4
Confession of Judgment for Possession. 

 

(a)
Payor, without further consent of or notice thereto, hereby irrevocably and unconditionally authorizes the prothonotary, clerk
of court, or any attorney of any court of record in the Commonwealth of Pennsylvania, or any other jurisdiction, as attorney for
Payor to appear for Payor in such court and, with or without one or more complaints filed, confess judgment or judgments against
Payor in favor of Holder, and its successors and assigns, at any time following the occurrence and continuance of an event of
default hereunder for all amounts due under this Note, with release of all errors and waiver of any right to a stay of execution,
for which this Note or a verified copy hereof shall be sufficient warrant. The authority to enter judgment solely for possession
of the Collateral, as defined in the Security Agreement, shall not be exhausted by one exercise hereof, but, to the extent permitted
by law, shall continue from time to time until full payment of all amounts hereunder. The foregoing right and remedy is in addition
to and not in lieu of any other right or remedy available to Holder under this Note or otherwise.

 

(b)
Payor, being fully aware of the right to prior notice and a hearing concerning the validity of any and all claims that may be
asserted against Payor by Holder before a judgment can be rendered hereunder or before execution may be levied on such judgment
against the Collateral, hereby waives these rights and agrees and consents to judgment being entered by confession for possession
of the Collateral, in accordance with the terms hereof without first giving notice and the opportunity to be heard on the validity
of the claim or claims upon which such judgment is entered. 

 

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(c)
Holder may confess one or more judgments in the same or different jurisdictions for all amounts owing hereunder, without regard
to whether judgment has theretofore been confessed on more than one occasion for the same amount. In the event any judgment confessed
against Payor hereunder is stricken or opened upon application by or on Payor’s behalf for any reason, Holder is hereby
authorized and empowered to again appear for and confess judgment against Payor for any part or all of the amounts owing hereunder,
as provided for herein, if doing so will cure any errors or defects in such prior proceedings.

 

(d)
Payor acknowledges and agrees that Holder may, after entry of judgment, foreclose upon, attach, levy, take possession of or otherwise
seize the Collateral in full payment of the judgment, including but not limited to the passwords and codes for the AraLoc Business
Assets, as defined in the Purchase Agreement. Being fully aware of its rights after judgment is entered, Payor hereby freely,
knowingly and intelligently waives these rights and expressly agrees and consents to Holder taking such actions as may be permitted
under applicable law without prior notice to Payor.

 

III

ADDITIONAL
PROVISIONS

 

3.1
Waiver. The granting, without notice, of any extension or extensions of time for payment of any sum or sums due
hereunder, or for the performance of any covenant, condition or agreement contained herein, or the granting of any other indulgences
to Payor, or any other modification or amendment of this Note shall in no way release or discharge the liability of Payor, or
of any endorser, guarantor or other person secondarily liable for this Note. Payor and any other persons presently liable hereon
agree that additional makers, endorsers, guarantors or sureties may become parties hereto or liable hereon without notice to them
and without affecting their liability hereunder. Unless agreed to the contrary in writing, failure or delay on the part of Holder
to enforce any provision of this Note shall not be deemed a waiver of any such provision, nor shall the Holder be estopped from
enforcing any such provision at a later time. 

 

3.2
Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation
of Payor, which is absolute and unconditional, to pay the principal, accrued interest, and all other amounts due hereunder, at
the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of Payor.

 

3.3
Amendment and Assignability. This Note may be amended or modified only by a writing signed by all parties. This
Note shall apply to and bind Payor and each of its successors and assigns. Payor may not assign its obligations under this Note
without Holder’s prior written consent, and any such assignment shall not relieve Payor of its obligations hereunder.

 

3.4
Selected Provisions of the Purchase Agreement. To the extent not expressly inconsistent with this Note, and applying
all necessary revisions to apply to this Note, Sections 3.3 and 3.4, and Article XVI of the Purchase Agreement are hereby expressly
incorporated herein by reference as if set forth in full herein.

 

3.5
Waiver of Jury Trial. PAYOR HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND WHETHER
ARISING OUT OF, UNDER OR BY REASON OF THIS NOTE OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY ASSIGNMENT OR TRANSACTION THEREUNDER.
PAYOR UNDERSTANDS THAT HOLDER IS RELYING ON THIS WAIVER IN MAKING THE LOAN EVIDENCED BY THIS NOTE.

 

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IV

EXECUTION

 

Payor
hereby represents and warrants that it (i) has the requisite power and authority to enter into and carry out the terms and conditions
of this Note, as well as all transactions contemplated hereunder; and, (ii) it is duly authorized and empowered to execute and
deliver this Note.

 

	 	PAYOR:
	 	 
	 	DATA443 RISK MITIGATION, INC., 
	 	a North Carolina corporation
	 	 
	 	BY:
    	___________________________
	 	NAME:	 _________________________
	 	TITLE:
    	________________________
	 	DATED:	 __________________

 

ACCEPTANCE
AND ACKNOWLEDGEMENT

 

Holder
hereby accepts receipt of this Note and acknowledges that said acceptance shall serve as evidence of payment of part of the Purchase
Price under the Purchase Agreement.

 

	 	HOLDER:
	 	 
	 	MODEVITY, LLC, 
	 	a Pennsylvania limited liability company 
	 	 
	 	BY:	 ___________________________
	 	NAME:	 ________________________
	 	TITLE:	 _________________________
	 	DATED	:
    ________________________

 

    	 	5SECURITY
AGREEMENT

 

 

MODEVITY,
LLC,

AS
THE SECURED PARTY

 

and

 

DATA443
RISK MITIGATION, INC.,

AS
THE DEBTOR

 

 

_________________,
2018

 

    	 

    	 

    

 

SECURITY
AGREEMENT

 

I

PARTIES

 

THIS
SECURITY AGREEMENT (the “Agreement”) is entered into effective as of the ____ day of ________, 2018,
by and between MODEVITY, LLC, a Pennsylvania limited liability company (“ Secured Party ”); and,
DATA443 RISK MITIGATION, INC., a North Carolina corporation (“ Debtor”). Debtor and Secured Party are
sometimes referred to collectively herein as the “Parties”, and each individually as a
“Party”.

 

II

RECITALS

 

A.
Debtor has concurrently acquired the Purchased Assets from Secured Party pursuant to an Asset Purchase Agreement concurrently
executed by the Parties (the “Purchase Agreement”). Capitalized terms not defined herein shall have the same
meanings attached to them as in the Purchase Agreement.

 

B.
Pursuant to the Purchase Agreement, Debtor provided to Secured Party the Note as part of the Purchase Price.

 

C.
This Agreement is the “Security Agreement” referred to in Section 4.3.2.(e) of the Purchase Agreement attached
thereto as Exhibit 4.3.2.(e).

 

D.
The Note is secured by this Agreement and is subject to all terms and conditions of the Note which are not expressly inconsistent
with the terms and conditions hereof.

 

E.
It is a condition precedent to the closing of the transactions contemplated under the Purchase Agreement that Debtor execute
and deliver this Agreement.

 

F.
Debtor desires to grant Secured Party a continuing security interest in the Collateral to secure Debtor’s performance
under the Note and the Purchase Agreement.

 

G.
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby
agree as follows:

 

III

CREATION
OF SECURITY INTEREST

 

3.1
Grant. Debtor hereby grants to Secured Party a present and continuing security interest (the “Granted Interest”)
in the Purchased Assets (the “Collateral”). The Collateral shall specifically be limited to the following:

 

(a)
Each, every, and all of the Purchased Assets and all replacements, substitutions, accessions, additions, and improvements thereto;
and

 

(b)
All proceeds of the Collateral, including but not limited to all accounts, instruments, contract rights, chattel paper, notes,
general intangibles, goods, equipment, inventory, deposit accounts, money, and other tangible and intangible property of Debtor
resulting from the sale or other disposition of the Collateral or the proceeds thereof, together with all proceeds of insurance
relating thereto.

 

3.2
Obligations Secured. The Granted Interest is granted to secure the timely payment and performance of Debtor’s
obligations under the Note and the Purchase Agreement (collectively, the “Obligations”), which Obligations
include, without limitation, payment and performance of Debtor’s obligations under the Note.

 

    	1

    	 

    

 

IV

DEBTOR’S
RETAINED RIGHTS, OBLIGATIONS, WARRANTIES, AND REPRESENTATIONS

 

4.1
Debtor’s Treatment of Collateral. Debtor warrants, represents, and covenants to Secured Party that so long
as the Note remains outstanding and Secured Party does not consent in writing to the contrary:

 

(a)
Debtor will defend title to the Collateral and the Granted Interest of Secured Party therein against the claims and demands of
all persons;

 

(b)
Debtor will, at Debtor’s own cost and expense, keep the Collateral in a good state of repair, and maintain the Collateral
in the ordinary course of business of the Debtor;

 

(c)
Debtor will not waste, destroy, misuse, abuse, or illegally use the Collateral, or any part thereof, and will not be negligent
in the care thereof;

 

(d)
Debtor will keep the Collateral free and clear of all attachments, levies, taxes, liens, purchase money and other Security Interests,
charges and all other encumbrances of every kind and nature (other than liens for taxes not yet due and payable);

 

(e)
Debtor will not sell, assign, transfer, lease, exchange, hypothecate or in any way allow or suffer the Collateral, or any part
thereof or any right or interest therein, to be transferred or come into the possession of any other person or removed from the
Premises, other than (i) in the ordinary course of business of Debtor, or (ii) if relocated to any other facility which is owned
or operated by Debtor or any of its affiliates;

 

(f)
Debtor will keep the Collateral insured in accordance with present practice, and name Secured Party as an additional insured on
all such insurance policies;

 

(g)
Debtor will, at Debtor’s own cost and expense, pay prior to delinquency, all taxes or other charges levied against or otherwise
respecting the Collateral;

 

(h)
Debtor will, when requested by Secured Party, execute any and all written instruments and documents, and, at Debtor’s sole
cost and expense, do any other acts necessary to effectuate the purposes and provisions of this Agreement, including but not limited
to executing a Form UCC-1 covering the Collateral; and

 

(i)
Debtor shall not be released from this Agreement because of the loss, injury, or destruction of the Collateral.

 

4.2
Encumbrances and the Like. Notwithstanding any other provision herein to the contrary, Debtor shall take all reasonably
ordinary and necessary measures to ensure that the Debtor does not create or suffer to exist any Security Interest after the Closing
Date in respect to the Collateral.

 

4.3
Retained Rights. Until an Event of Default hereunder, Debtor shall be entitled to retain possession and enjoy the
use of the Collateral, subject to the provisions of Article V, below.

 

4.4
Change of Address. Debtor will immediately notify Secured Party of any change in Debtor’s address.

 

4.5
Express Waivers. Debtor hereby expressly waives:

 

(a)
Diligence, presentment, protest, demand, and notice of every kind, except as required under the Note or the Purchase Agreement;

 

(b)
The right, if any, to require Secured Party to proceed against any person liable for the payment of any of the Obligations of
Debtor as a condition or prior to proceeding under this Agreement; and

 

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(c)
The right, if any, to require Secured Party to foreclose upon, sell or otherwise realize upon, collect or apply any other property,
real or personal, securing any of the Obligations of Debtor as a condition or prior to proceeding hereunder.

 

4.6
Confession of Judgment for Possession. Section 2.4 of the Note, in its entirety, is hereby incorporated by reference
as if set forth in full herein.

 

4.7
Insurance. Debtor, at Debtor’s sole cost and expense, shall keep the Collateral insured against loss or damage
by fire, theft, explosion, sprinklers, and all other hazards and risks ordinarily insured against by owners of similar properties
in similar businesses for the full insurable value thereof, and shall maintain business interruption insurance and public liability
and property damage insurance relating to Debtor’s ownership and use of Debtor’s other assets. All policies of insurance
shall be in such form, with such companies, and in such amounts as may be satisfactory to Secured Party. Debtor shall deliver
to Secured Party certified copies of all required policies of insurance and, at the request of Secured Party, evidence of the
payment of all premiums therefore. All required policies of insurance (except those of public liability and property damage) shall
contain an endorsement, in a form satisfactory to Secured Party, showing loss payable to Secured Party. Upon receipt by Secured
Party, all proceeds shall be applied on the account of Debtor’s Obligations. To secure the payment of Debtor’s Obligations,
Debtor grants Secured Party a Security Interest in and to all required policies of insurance (except those of public liability
and property damage) and the proceeds thereof and shall direct all insurers to pay all proceeds directly to Secured Party. Debtor
hereby irrevocably appoints Secured Party (and any of Secured Party’s designated officers, employees, or agents) as Debtor’s
attorney-in-fact for the purpose of making, settling and adjusting claims and for making all determinations and decisions with
respect to required policies of insurance. Each insurer shall agree by endorsement upon the policy or policies of insurance issued
by it to Debtor, or by independent instruments furnished to Secured Party, that it will give Secured Party at least ten (10) days
written notice before any policy or policies of insurance may be altered or cancelled, and that no act or default of Debtor, or
any other person, shall affect the right of Secured Party to recover under any required policy or policies of insurance. Secured
Party, without waiving or releasing any Obligations or defaults of Debtor hereunder, may, but shall not be required to, obtain
and maintain any required policies of insurance and to pay premiums and take any other action which Secured Party deems advisable.
All amounts disbursed by Secured Party under this Section 4.6, together with all costs and expenses, including reasonable attorney
fees, shall be repaid by Debtor, together with interest at two percent (2%) above the prime interest rate (the “Prime Rate”)
charged by commercial banks in New York, New York to its most credit worthy customers on unsecured commercial loans of ninety
(90) day maturities, unless otherwise limited by applicable law.

 

4.8
Representations and Warranties Concerning the Business of Debtor. With regard to the business of Debtor, Debtor
hereby represents and warrants to Secured Party as follows:

 

4.8.1.
Organization. Debtor is a corporation, duly organized, validly existing, and in good standing under the laws of
the State of North Carolina, with the requisite power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Debtor is not violation or default of any of the provisions of its Organizational Documents.

 

4.8.2.
Execution and Performance of Agreement. Debtor has the requisite right, corporate power, authority, and capacity
to enter into, execute, deliver, perform, and carry out the terms and conditions of this Agreement and each of the other instruments
and agreements to be executed and delivered by Debtor in connection with this Agreement, as well as all transactions contemplated
hereunder. All requisite corporate proceedings have been taken and Debtor has obtained all approvals, consents, and authorizations
necessary to authorize the execution, delivery, and performance by Debtor of this Agreement, and the Purchase Agreement to which
it is a party. This Agreement has been duly and validly executed and delivered by Debtor and constitutes the valid, binding, and
enforceable obligation of Debtor, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law.

 

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4.8.3.
Effect of Agreement. As of the Closing Date the consummation by Debtor of the transactions herein contemplated,
including the execution, delivery and consummation of this Agreement and the Purchase Agreement to which it is a party, will not:

 

(a)
Violate any Requirement of Law applicable to or binding upon Debtor or any of its assets;

 

(b)
Violate (i) the terms of any of the Organizational Documents of Debtor; or, (ii) any material agreement, contract, mortgage, indenture,
bond, bill, note, or other material instrument or writing binding upon Debtor or to which Debtor is subject;

 

(c)
Accelerate or constitute an event entitling the holder of any indebtedness of Debtor to accelerate the maturity of such indebtedness
or to increase the rate of interest presently in effect with respect to such indebtedness; or

 

(d)
Result in the breach of, constitute a default under, constitute an event which with notice or lapse of time, or both, would become
a default under, or result in the creation of any Security Interest upon any part of the assets of Debtor or any other assets
of Debtor under any agreement, commitment, contract (written or oral) or other instrument to which Debtor is a party, or by which
any of its assets (or any part thereof) is bound or affected.

 

4.8.4.
Consents. No consents, approvals or other authorizations or notices, other than those which have been obtained and
are in full force and effect, are required by any state or federal regulatory authority or other person or entity in connection
with the execution and delivery of the Purchase Agreement and the performance of any obligations contemplated thereby.

 

V

RIGHTS
OF SECURED PARTY

 

5.1
Source Codes. All source codes and similar solutions related to the ARALOC system and software, as well as sole
administrative access to third party automated technology support services accounts, marketing support accounts, and other services
necessary to maintain control over the ARALOC software and system shall be maintained and retained by Secured Party as part of
the Collateral.

 

5.2
Additional Enforcement Rights. In addition to all other rights afforded Secured Party hereunder, Secured Party may,
at Secured Party’s option, from time-to-time, and without notice to Debtor except as otherwise required hereunder, and without
affecting the obligations of Debtor:

 

(a)
pay, purchase, contest, compromise or discharge any Security Interests, which, in Secured Party’s judgment, may affect or
appear to affect the Collateral or Secured Party’s rights under this Agreement;

 

(b)
pay for the maintenance and preservation of the Collateral, with all amounts advanced by Secured Party under this Article V, together
with all costs and expenses, including reasonable attorney fees, shall be repaid by Debtor;

 

(c)
release, renew, or extend the time or terms of payment of any Obligation;

 

(d)
release, surrender, or substitute any property or other security;

 

(e)
accept any type of further security therefore;

 

    	4

    	 

    

 

(f)
demand that Debtor shall, and Debtor shall act to, at the sole expense of Debtor, promptly execute and deliver any and all such
further instruments and documents and take such further action as Secured Party Debtor may reasonably deem necessary to obtain
the full benefits of the rights and powers herein granted;

 

(g)
take all action as Secured Party may reasonably deem necessary to obtain the full benefits of the rights and powers herein granted,
including but not limited to filing any financing or continuation statements under the UCC or any federal law with respect to
the Granted Interest granted hereby, executing and filing any mortgage or other agreement, paying any necessary filing fees or
taxes, executing any additional agreement, granting any proxy or power, giving any notice, or otherwise; and

 

(h)
file financing statements and continuation statements without the signature of or other authentication by Debtor to the extent
permitted by applicable law.

 

VI

DEFAULT
AND ACCELERATION

 

6.1
Event of Default. An “Event of Default” hereunder shall include the following:

 

(a)
Default by Debtor in the payment or performance of any of the Obligations, which default is not cured within the cure period and
in compliance with any other cure requirements, as provided in the document underlying the Obligation in default; or

 

(b)
Default by Debtor of any material provision hereunder and not cured within fifteen (15) days after Debtor’s receipt of written
notice from Secured Party identifying the material breach.

 

6.2
Acceleration. Upon an Event of Default, all Obligations secured by this Agreement shall immediately become due and
payable at the option of Secured Party.

 

6.3
Remedies. Upon a default by Debtor, and at the option of Secured Party, all of Debtor’s Obligations shall
become immediately due and payable without notice or demand (except as otherwise required hereunder or under any of the Settlement
Documents), and then and thereafter Secured Party shall have all of the rights and remedies of a secured party under the Nevada
Uniform Commercial Code. Secured Party shall have the immediate right to:

 

(a)
Notify all persons indebted to Debtor under leases, trade accounts and other obligations to make all payments solely and directly
to Secured Party;

 

(b)
Take and maintain possession of the Collateral and in so doing, alone or with any other person, enter upon the premises where
the Collateral may be found or believed by Secured Party to be located. Debtor hereby waives all claims for damages and otherwise,
due to, arising from, or connected with any entry upon the premises or any seizure of the Collateral by Secured Party;

 

(c)
Maintain possession and dispose of the Collateral on any premises of Debtor or under Debtor’s control; or

 

(d)
Remove the Collateral or any part thereof to any place Secured Party may desire.

 

6.4
No Deficiency. Debtor shall not be liable for any deficiency if the Collateral is insufficient to pay all amounts to which
the Secured Party is entitled hereunder.

 

6.5
Sale of Collateral. If requested by Secured Party, Debtor shall assemble and make the Collateral available to Secured
Party at a place to be designated by Secured Party. In the event of a sale by Secured Party after an Event of Default by Debtor,
the Collateral need not be in view of those present attending the sale, or at the same location at which the sale is being conducted.
Secured Party may sell the Collateral in such order, priority, and lots as is commercially reasonable in the opinion of Secured
Party. Debtor shall receive all notices of sale required to be given and which cannot be waived by law, all other notices of every
type, nature, or kind being hereby expressly waived by Debtor. Any notice required to be given by law shall be conclusively presumed
given and received by Debtor when it is mailed, postage prepaid, to Debtor at Debtor’s last business address known to Secured
Party. Unless the Collateral is perishable, depreciates rapidly, or is of a type customarily sold on a recognized market, Debtor
will be given reasonable notice of the time and place of any public sale, or of the time on or after which any private sale or
other intended disposition is to be made. The requirements of reasonable notice shall be met if notice is mailed, postage prepaid,
to Debtor at least five (5) days before the time of sale or other disposition. Secured Party may be the purchaser at any public
sale of the Collateral.

 

    	5

    	 

    

 

VII

TERM

 

This
Agreement and the Granted Interest created hereunder shall remain in effect until such time as no indebtedness is owing to Secured
Party under the Note. Upon payment in full of all of the indebtedness of Debtor under the Note, this Agreement shall terminate
and be of no further force or effect. The Debtor shall thereafter be entitled to file a termination statement of the Granted Interest
(commonly referred to as a Form UCC-2).

 

VIII

ADDITIONAL
PROVISIONS

 

To
the extent not expressly inconsistent with this Agreement, and applying all necessary revisions to apply to this Agreement, Sections
3.3 and 3.4, and Article XVI of the Purchase Agreement are hereby expressly incorporated herein by reference as if set forth in
full herein.

 

IX

EXECUTION

 

IN
WITNESS WHEREOF, this SECURITY AGREEMENT has been duly executed by the Parties and shall be effective as of and on the Closing
Date. Each of the undersigned Parties hereby represents and warrants that it (i) has the requisite power and authority to enter
into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder; and, (ii) it
is duly authorized and empowered to execute and deliver this Agreement.

 

	SECURED PARTY:	 	DEBTOR:
	 	           	 	 	 
	MODEVITY, LLC,	 	DATA443
    RISK MITIGATION, INC.,
	a Pennsylvania limited liability company	 	a
    North Carolina corporation
	 	 	 	 	                      
	BY:
    	       	 	BY:
    	        
	NAME:
    	 	 	NAME:
    	 
	TITLE:
    	 	 	TITLE:
    	 
	DATED: 	 	 	DATED: 	 

 

    	6

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