Document:

LOAN
AGREEMENT

 

THIS
LOAN AGREEMENT (this “Agreement”), is dated as of this 28th day of April, 2017, by and between CODA OCTOPUS
GROUP, INC., a Delaware corporation, CODA OCTOPUS PRODUCTS, INC., a Delaware corporation, and CODA OCTOPUS COLMEK, INC., a Utah
Corporation (individually and/or collectively, the “Borrower”), and HSBC BANK
USA, N.A., its successors and/or assigns (the “Lender”).

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth below, Borrower and Lender agree as follows:

 

1.
DEFINITIONS. As used in this Agreement the terms listed below shall have the following meanings unless otherwise required
by the context:

 

a)
Affiliate: An Affiliate of the Borrower shall mean any entity which, directly or indirectly, controls or is controlled
by or is under common control with the Borrower. An entity shall be deemed to be “controlled by” another entity if
such other entity possesses, directly or indirectly, power to direct or cause the direction of the management and policies of
such entity whether by contract, ownership of voting securities, membership interests or otherwise.

 

b)
Business Day: Shall mean any day on which commercial banks are open for domestic and international business, including
dealings in Dollar deposits, in London, England and New York, New York, and with respect to all other matters, any day other than
a day on which commercial banks in New York, New York are authorized or required by law to close.

 

c)
Capital Expenditures: Shall mean, for any period, the aggregate of all expenditures made by Borrower during such period
that, in conformity with GAAP, required to be included in or reflected on the balance sheet as a capital asset of Borrower.

 

d)
Capital Lease: Shall mean any lease of any property (whether real, personal or mixed) that, in conformity with GAAP, should
be accounted for as a capital lease. For avoidance of doubt, the determination of whether a lease is a Capital Lease shall be
based upon GAAP as in effect on the date hereof and without giving effect to any future modification of GAAP resulting in operating
leases being recharacterized as capital lease obligations for accounting purposes.

 

e)
Capital Lease Obligations: Shall have the meaning provided in sub-clause (c) of the definition of “Indebtedness”.

 

f)
Chief Financial Officer: Shall mean the person who is the senior manager or officer of Borrower who is responsible for
overseeing the financial activities of Borrower and the preparation of the Borrower’s financial statements.

 

g)
Collateral: Shall have the meaning ascribed to such term in the Security Agreement.

 

h)
Equity Interests: Of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited
or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless
of how designated) equity of such Person, whether voting or nonvoting including common stock, preferred stock, convertible securities
or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).

 

    	 		 

     

    

 

i)
Fixed Charge Coverage Ratio: shall mean (A) the sum of (i) earnings before interest, taxes, depreciation and amortization
of Borrower, less (ii) income taxes, less (iii) distributions and dividends of Borrower, less (iv) maintenance Capital Expenditures
and other unfinanced Capital Expenditures, divided by (B) the sum of principal and interest payments due under indebtedness.

 

j)
GAAP: Shall mean generally accepted accounting principles in the United States of America in effect from time to time.

 

k)
Governmental Authority: Any governmental or quasi-governmental authority, agency, authority, board, commission, or governing
body authorized by federal, state or local laws or regulations as having jurisdiction over the Lender, or the Borrower.

 

l)
Guarantor: Shall mean collectively, CODA OCTOPUS MARTECH LIMITED, a UK limited liability company, CODA OCTOPUS PRODUCTS
PTY LTD, an Australian limited liability company, and CODA OCTOPUS PRODUCTS LIMITED, a UK limited liability company, and any other
Person who may hereafter guarantee payment or performance of the whole or any part of the obligations due under any Loan Document
and “Guarantors” shall mean collectively all such Persons.

 

m)
Guaranty: Shall mean any guaranty of the obligations due under any Loan Document of Borrower executed by a Guarantor in
favor of Lender, including, without limitation, that certain Guaranty Agreement dated of even date herewith, as the same may be
amended or modified from time to time.

 

n)
Indebtedness: Of a Person at a particular date shall mean all obligations of such Person which in accordance with GAAP
would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise) and in any event,
without limitation by reason of enumeration, shall include (a) all indebtedness, debt and similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness; (b)
all indebtedness for borrowed money; (c) Capital Lease Obligations; (d) notes payable and drafts accepted representing extensions
of credit whether or not representing obligations for borrowed money; (e) any obligation owed for all or any part of the deferred
purchase price of property or services if the purchase price is due more than six (6) months from the date the obligation is incurred
or is evidenced by a note or similar written instrument; (f) all guaranties of such Person with respect to Indebtedness described
in subparagraphs (a) through (e) of this definition; (g) the net amount of all obligations then due of such Person under any interest
rate hedge; and (h) all indebtedness secured by any lien on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person.

 

o)
Interest Expense: Shall mean, for any period, as to any Person, as determined in accordance with GAAP, the total interest
expense of such Person, whether paid or accrued during such period but without duplication (including the interest component of
Capital Leases for such period), excluding interest paid in property other than cash.

 

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p)
Loan: That certain loan in the original principal amount of up to EIGHT MILLION AND
00/100 DOLLARS ($8,000,000.00), as evidenced by the Note and secured by the Security Agreement and the other Loan Documents
as provided herein.

 

q)
Loan Document(s): Any and all documents evidencing, securing, or executed in connection with the Loan, including, without
limitation, the Note, the Security Agreement and this Agreement.

 

r)
Maturity Date: Means April ___, 2022.

 

s)
Note: That certain Promissory Note dated as of even date herewith from Borrower in favor of Lender in the original principal
amount of EIGHT MILLION AND 00/100 DOLLARS ($8,000,000.00) (as the same may be amended,
restated, modified or replaced from time to time, the “Note”).

 

t)
Permitted Liens: Means:

 

(a)
liens in favor of Lender;

 

(b)
liens for taxes or assessments or other governmental charges or levies if not yet due and payable or the non-payment of which
is being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on the Borrowers’
or the applicable Subsidiarys’ books, but only so long as no foreclosure, distraint, sale or similar proceedings have been
commenced with respect thereto and remain unstayed for a period of thirty (30) days after their commencement;

 

(c)
liens on leased equipment granted in connection with the leasing of such equipment in favor of the lessor of such equipment;

 

(d)
liens of record as of the date hereof listed on Schedule 4(f) attached hereto; and

 

(e)
liens securing the Subordinated Debt.

 

u)
Person: A natural person, a partnership, a joint venture, an unincorporated association, a limited liability company, a
corporation, a trust, any other legal entity, or any Governmental Authority.

 

v)
Receivables: Shall mean and include as to Borrower, all of Borrower’s accounts, contract rights, instruments (including
promissory notes and other instruments evidencing Indebtedness owed to Borrower by their Affiliates), documents, chattel paper
(whether tangible or electronic), general intangibles relating to accounts, drafts and acceptances, and all other forms of obligations
owing to Borrower arising out of or in connection with the sale, lease or other disposition of Inventory or the rendition of services,
all guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not
specifically sold or assigned to Lender hereunder.

 

w)
Security Agreement: Collectively, (i) that certain Security Agreement dated as of even date herewith from CODA OCTOPUS
GROUP, INC. in favor of Lender, (ii) that certain Security Agreement dated as of even date herewith from CODA OCTOPUS PRODUCTS,
INC. in favor of Lender, (iii) that certain Security Agreement dated as of even date herewith from CODA OCTOPUS COLMEK, INC. in
favor of Lender, and any replacements or additions, and all modifications and amendments to any of the foregoing.

 

    	 	3	 

     

    

 

x)
Subordinated Debt: Shall mean Indebtedness of the Borrower approved by Lender from time to time, which shall be subordinated
to the obligations under any Loan Document on terms satisfactory to Lender in its sole discretion, and all modifications, extensions
or renewals thereof.

 

y)
Subsidiary: Shall mean, with respect to any Person, a corporation or other entity of whose equity interests having ordinary
voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority
of the directors or managers of such corporation or other entity, or other Persons performing similar functions for such entity,
are owned, directly or indirectly, by such Person.

 

2.
THE LOAN. 

 

(a)
The proceeds of the Loan shall be advanced on
the date hereof to Borrower to be used to refinance existing indebtedness and for other business purposes of Borrower. Funds repaid
under the Loan may not be reborrowed.

 

(b)
Borrower shall pay principal and interest on the Loan in accordance with the terms of the Note. In addition, within thirty (30)
days after Borrower’s delivery of its annual financial statements as required under Section 6(a) hereof, Borrower shall
make an annual principal payment under the Loan in an amount equal to $700,000 each during the term of the Loan.

 

3.
EXPENSES: Borrower shall pay all fees and charges incurred in the procuring and making of the Loan and all other expenses
incurred by Lender during the term of the Loan, including without limitation Florida Documentary Stamp Taxes, if applicable, Florida
Intangible Taxes, if applicable, recording expenses and the reasonable fees of the attorneys for Lender. The Borrower shall also
pay any and all insurance premiums, taxes, assessments, and other charges, liens and encumbrances upon the Collateral. Such amounts,
unless sooner paid, shall be paid from time to time as Lender shall request either to the Person to whom such payments are due
or to Lender if Lender has paid the same.

 

4.
WARRANTIES AND REPRESENTATIONS OF BORROWER. Borrower represents and warrants (which representations and warranties shall
be deemed continuing) as follows:

 

a)
Organization Status. Each Borrower is a corporation, (i) duly organized and existing under the laws of the jurisdiction
of its formation, (ii) is in good standing under the laws of the jurisdiction of its formation, and (iii) Coda Octopus Products,
Inc. is qualified to do business in the State of Florida.

 

b)
Compliance with Laws. Borrower is in compliance in all material respects with all laws, regulations, ordinances and orders
of all Governmental Authorities.

 

c)
Accurate Information. All information now and hereafter furnished to Lender is and will be true, correct and complete in
all material respects. Any such information relating to Borrower’s financial condition has and will accurately reflect such
financial condition as of the date(s) thereof, (including all contingent liabilities of every type), and Borrower further represents
that its financial condition has not changed materially and adversely since the date(s) of such documents.

 

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d)
Authority to Enter into Loan Documents. Borrower has full power and authority to enter into the Loan Documents and consummate
the transactions contemplated hereby, and the facts and matters expressed or implied in the opinions of its legal counsel are
true and correct.

 

e)
Validity of Loan Documents. The Loan Documents have been approved by those Persons having proper authority, and are in
all respects legal, valid and binding according to their terms.

 

f)
Priority of Lien on Personalty. Except for Permitted Liens, no chattel mortgage, bill of sale, security agreement, financing
statement or other title retention agreement has been or will be executed with respect to any of the Collateral unless otherwise
approved by Lender in accordance with the Security Agreement.

 

g)
Conflicting Transactions of Borrower. The consummation of the transaction hereby contemplated and the performance of the
obligations of Borrower under and by virtue of the Loan Documents will not result in any breach of, or constitute a default under,
any lease, loan or credit agreement, or other instrument to which Borrower is a party or by which they may be bound or affected.

 

h)
Pending Litigation. There are no actions, suits or proceedings pending against Borrower, the Collateral, or, to its knowledge,
circumstances which could lead to such action, suits or proceedings against or affecting Borrower, the Collateral, or involving
the validity or enforceability of any of the Loan Documents, before or by any Governmental Authority, except actions, suits and
proceedings which have been specifically disclosed to and approved by Lender in writing, as more particularly provided on Exhibit
“A” attached hereto; and Borrower is not in default with respect to any order, writ, injunction, decree or demand
of any court or any Governmental Authority.

 

i)
Condition of Collateral. The Collateral is not now damaged or injured as a result of any fire, explosion, accident, flood
or other casualty.

 

j)
Discharge of Liens and Taxes. Borrower has duly filed, paid and/or discharged all taxes or other claims that may become
a lien on any of its property or assets, except to the extent that such items are being appropriately contested in good faith
and an adequate reserve for the payment thereof is being maintained.

 

k)
Sufficiency of Capital. Neither Borrower is, and after consummation of this Agreement and after giving effect to all indebtedness
incurred and liens created by Borrower in connection with the Note and any other Loan Documents, will be, insolvent within the
meaning of 11 U.S.C. § 101, as in effect from time to time.

 

l)
ERISA. Each employee pension benefit plan, as defined in Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
maintained by Borrower meets, as of the date hereof, the minimum funding standards of ERISA and all applicable regulations thereto
and requirements thereof, and of the Internal Revenue Code of 1986, as amended. No “Prohibited Transaction” or “Reportable
Event” (as both terms are defined by ERISA) has occurred with respect to any such plan.

 

m)
Indemnity. Borrower will indemnify Lender and its affiliates from and against any losses, liabilities, claims, damages,
penalties or fines imposed upon, asserted or assessed against or incurred by Lender arising out of the inaccuracy or breach of
any of the representations contained in this Agreement or any other Loan Document, except for claims arising from the gross negligence
or willful misconduct of Lender.

 

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n)
No Default. There is no Event of Default or default on the part of Borrower under this Agreement, the Note, or the Security
Agreement, and no event has occurred and is continuing which with notice, or the passage of time, or either, would constitute
an Event of Default under any provision thereof.

 

o)
Anti-Terrorism Laws.

 

a)
General. Neither Borrower nor any subsidiary or affiliate of Borrower is in violation of any anti-terrorism law or engages
in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any anti-terrorism law.

 

b)
Executive Order No. 13224. Neither Borrower nor any affiliate of Borrower or their respective agents acting or benefiting
in any capacity in connection with the Loan or other transactions hereunder, is any of the following (each a “Blocked Person”):

 

(i)
a person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

 

(ii)
a person owned or controlled by, or acting for or on behalf of, any person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order No. 13224;

 

(iii)
a person or entity with which Lender is prohibited from dealing or otherwise engaging in any transaction by any anti-terrorism
law;

 

(iv)
a person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive
Order No. 13224;

 

(v)
a person or entity that is named as a “specially designated national” on the most current list published by the U.S.
Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official
publication of such list, or

 

(vi)
a person or entity who is affiliated or associated with a person or entity listed above.

 

Neither
Borrower nor any of its agents acting in any capacity in connection with the Loan or other transactions hereunder (i) conducts
any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked
Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant
to the Executive Order No. 13224.

 

c)
Sanctions. None of the Borrower, any of its Subsidiaries, any director or officer, or any employee, agent, or Affiliate,
of the Borrower or any of its Subsidiaries is an individual or entity that is, or is owned or controlled by Persons that are,
(i) the subject of any sanctions administered or enforced by the US Department of the Treasury’s Office of Foreign Assets
Control, the US Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury or
the Hong Kong Monetary Authority (collectively, “Sanctions”), or (ii) located, organized or resident in a country
or territory that is, or whose government is, the subject of Sanctions, including, without limitation, currently, the Crimea region
of Ukraine, Cuba, Iran, North Korea, Sudan and Syria.

 

    	 	6	 

     

    

 

d)
Anti-Bribery. None of the Borrower or any of its Subsidiaries nor to the knowledge of the Borrower, any director, officer,
agent, employee, Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries is aware of or has taken
any action, directly or indirectly, that would result in a violation by such persons of any applicable anti-bribery law, including
but not limited to, the United Kingdom Bribery Act 2010 (the “UK Bribery Act”) and the U.S. Foreign Corrupt Practices
Act of 1977 (the “FCPA”). Furthermore, the Borrower and, to the knowledge of the Borrower, its Affiliates have
conducted their businesses in compliance with the UK Bribery Act, the FCPA and similar laws, rules or regulations and have instituted
and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance
therewith, and

 

The
Borrower will not, directly or indirectly, use the proceeds of the Loan, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other Person, (i) to fund any activities or business of or with any person,
or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of Sanctions, or (ii)
in any other manner that would result in a violation of Sanctions by any person (including any person participating in the Loan,
whether as underwriter, advisor, investor, or otherwise).

 

5.
COVENANTS. Borrower covenants and agrees with Lender as follows:

 

a)
Taxes. Borrower certifies that it has filed or caused to be filed all federal, state and other tax returns which are required
to be filed, and has paid or caused to be paid all taxes as shown on said returns or in any manner due to be paid (including,
but not limited to, ad valorem and personal property taxes) or on any assessment received by Borrower and not being contested
in good faith, to the extent that such taxes have become due. Borrower further certifies that Borrower has paid all other taxes,
levies and charges of any nature, including any governmental charges.

 

b)
Notice of Litigation. Borrower shall promptly give Lender written notice of (a) a judgment entered against Borrower, or
(b) the commencement of any action, suit, claim, counterclaim or proceeding against or investigation of Borrower which, if adversely
determined, would materially adversely affect the business of Borrower, or which questions the validity of this Agreement, the
Note, the Security Agreement, or any other actions or agreements taken or to be made pursuant to any of the foregoing.

 

c)
Notice of Default. Borrower shall promptly give Lender written notice of any act of default under any agreement with Lender
or under any other material contract to which Borrower is a party and of any acceleration of indebtedness caused thereby which
would have a materially adverse effect to the business of Borrower.

 

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d)
Reports. Borrower shall promptly furnish Lender with copies of all stockholder, governmental agency, and other special
reports pertaining to or affecting Borrower, which would materially adversely affect the business of Borrower.

 

e)
Change in Management of Borrower. Borrower shall not change its key management during the term of the Loan without the
prior written consent of Lender, which shall not be unreasonably withheld.

 

f)
Change in Fiscal Year. No Borrower shall change its fiscal year without the prior written consent of Lender. Borrower’s
fiscal year ends on October 31.

 

g)
Title to Collateral. Borrower will deliver to Lender, on demand, copies of any contracts, bills of sale, statements, receipted
vouchers or agreements under which Borrower claims title to any of the Collateral.

 

h)
Payment of Debts. Borrower shall pay and discharge when due, and before subject to penalty or further charge, and otherwise
satisfy before maturity or delinquency, all obligations, debts, taxes, and liabilities of whatever nature or amount, except those
which Borrower in good faith disputes.

 

i)
Collection of Insurance Proceeds. Borrower will cooperate with Lender in obtaining for Lender the benefits of any insurance
or other proceeds lawfully or equitably payable to it in connection with the transaction contemplated hereby and the collection
of any indebtedness or obligation of Borrower to Lender incurred hereunder.

 

j)
Indebtedness. Borrower shall not issue any evidence of Indebtedness or create, assume, guarantee, become contingently liable
for, or suffer to exist Indebtedness in addition to Indebtedness to the Lender other than trade debt, value added tax (VAT), import
duty and other similar tax obligations in the ordinary course of business. Guarantor shall not issue any evidence of Indebtedness
or create, assume, guarantee, become contingently liable for, or suffer to exist Indebtedness in addition to Indebtedness to the
Lender in excess of $250,000.

 

k)
No Defaults. Borrower is not in default in the payment of the principal of or interest on any Indebtedness, including any
Subordinated Debt, or under any instrument or agreement under or subject to which any Indebtedness has been issued and no event
has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of
notice, or both, constitutes or would constitute an event of default thereunder.

 

l)
Sale of Interest. There shall not be any sale or transfer of ownership of any interest in the Borrower without the Lender’s
prior written consent unless such transfer shall not result in change in control of Borrower.

 

m)
Loans or Advances. Borrower shall not make any loans or advance to any individual, partnership, corporation, limited liability
company, trust or other organization or person, including without limitation, its officers and employees; provided, however, that
Borrower may make advances to its employees, including its members or officers, with respect to expenses incurred or to be incurred
by such employees in the ordinary course of business which expenses are reimbursable by Borrower; and provided further, however,
that Borrower may extend credit in the ordinary course of business in accordance with customary trade practices.

 

    	 	8	 

     

    

 

n)
Distributions. Borrower shall not, without prior written permission of the Lender, make any distribution (including dividends
or other one-time payments to any shareholders) to any of Borrower’s members, managers or shareholders in cash or in property
or redeem, purchase or otherwise acquire, directly or indirectly, any interests, provided, so long as Borrower is not in default
hereunder, such distributions may be made to the members, managers or shareholders of Borrower in such amounts as are necessary
to pay the tax liability of such members, managers or shareholders due as a result of such member’s, manager’s or
shareholder’s interest in the Borrower. Notwithstanding the foregoing, so long as no Event of Default shall exist, Borrower
may make immaterial equity repurchases from employees upon the termination of their employment with Borrower; provided, however,
Borrower shall remain in proforma compliance with the financial covenants contained herein after giving effect to any such repurchase
and provide evidence satisfactory to Lender in its sole discretion of such compliance.

 

o)
Investments. The Borrower shall not make investments in, or advances to, any individual, partnership, corporation, limited
liability company, trust or other organization or person other than as previously specifically consented to in writing by the
Lender. The Borrower will not purchase or otherwise invest in or hold securities, nonoperating real estate or other nonoperating
assets or purchase all of substantially all of the assets of any entity other than as previously specifically consented to in
writing by the Lender.

 

p)
Merger. Borrower shall not merge or consolidate or be merged or consolidated with or into any other entity; provided, however,
so long as no Event of Default shall have occurred, the co-Borrowers party to this Agreement may consolidate or merge entities
so long as (i) the surviving entity remains in good standing and active, and (ii) Borrower provides Lender with prior written
notice and copies of all proposed merger documentation.

 

q)
Capital Expenditures. The Borrower shall not, directly or indirectly, make or commit to make Capital Expenditures by lease,
purchase, or otherwise, except in the ordinary and usual course of business for the purpose of (i) replacing or upgrading machinery,
equipment, software or other personal property, and (ii) research and development.

 

r)
Sale of Assets. Borrower shall not sell, lease or otherwise dispose of any of its assets, except in the ordinary and usual
course of business and except for the purpose of replacing machinery, equipment or other personal property which, as a consequence
of wear, duplication or obsolescence, is no longer used or necessary in the Borrower’s business, provided that fair consideration
is received therefor.

 

s)
Restriction on Liens. Except for Permitted Liens, Borrower shall not grant any security interest in, or mortgage of, any
of its properties or assets including the Collateral. Borrower shall not enter into any agreement with any person other than the
Lender that prohibits the Borrower from granting any security interest in, or mortgage of, any of its properties or assets including
the Collateral.

 

t)
Guaranties. Borrower shall not guarantee or otherwise in any way become or be responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of any other Person, or agreement for the furnishing of funds to any
other Person through the purchase of goods, supplies or services (or by way of stock purchase, capital contribution, advance or
loan) for the purpose of paying or discharging indebtedness of any other Person, or otherwise.

 

u)
Further Assurances and Preservation of Security. Borrower will do all acts and execute all documents for the better and
more effective carrying out of the intent and purposes of this Agreement, as Lender shall reasonably require from time to time,
and will do such other acts necessary or desirable to preserve and protect the collateral at any time securing or intending to
secure the Note, as Lender may require.

 

    	 	9	 

     

    

 

v)
No Assignment. Borrower shall not assign this Agreement or any interest therein and any such assignment is void and of
no effect. Lender may assign this Agreement and any other Agreements contemplated hereby, and all of its rights hereunder and
thereunder, and all provisions of this Agreement shall continue to apply to the Loan. Lender also shall have the right to participate
the Loan with any other lending institution. Lender agrees to notify Borrower of any such assignment or participation.

 

w)
Access to Books and Records. Borrower shall allow Lender, or its agents, after reasonable prior notice and during reasonable
normal business hours, to access to Borrower’s books, records and such other documents, and allow Lender, at Borrower’s
expense, to inspect, audit and examine the same and to make extracts therefrom and to make copies thereof.

 

x)
Business Continuity. Borrower shall conduct its business in substantially the same manner and locations as such business
is now and has previously been conducted during the term of the Loan.

 

y)
Insurance.

 

a)
Borrower shall obtain, maintain and keep in full force and effect during the term of the Loan adequate insurance coverage, with
all premiums paid thereon and without notice or demand, with respect to its properties and business against loss or damage of
the kinds and in the amounts customarily insured against by companies of established reputation engaged in the same or similar
businesses including, without limitation:

 

(i)
Public liability insurance insuring against all claims for personal or bodily injury, death, or property damage in such amounts
as Lender may require. Such policy shall include an additional insured endorsement naming the Lender; and

 

(ii)
Insurance in such amounts and against such other casualties and contingencies as may from time to time be reasonably required
by Lender.

 

b)
All policies of insurance required hereunder shall: (i) be written by carriers which are licensed or authorized to transact business
in the State of Florida, and are rated “A” or higher, Class XII or higher, according to the latest published Best’s
Key Rating Guide and which shall be otherwise acceptable to Lender in all other respects, (ii) provide that the Lender shall receive
notice in accordance with industry standard principles from the insurer before a cancellation, modification, material change or
non-renewal of the policy becomes effective, and (iii) be otherwise reasonably satisfactory to Lender.

 

c)
Borrower shall not, without the prior written consent of Lender, take out separate insurance concurrent in form or contributing
with regard to any insurance coverage required by Lender.

 

d)
At all times during the term of the Loan, Borrower shall have delivered to Lender the original (or a certified copy) of all policies
of insurance required hereby, together with receipts or other evidence that the premiums therefor have been paid (or are otherwise
in full force and effect subject to a timely periodic payment plan).

 

    	 	10	 

     

    

 

e)
Not less than thirty (30) days prior to the expiration date of any insurance policy, Borrower shall deliver to Lender the original
(or certified copy), or the original certificate, as applicable, of each renewal policy, together with receipts or other evidence
that the premiums therefor have been paid (or are otherwise in full force and effect subject to a timely periodic payment plan).

 

f)
The delivery of any insurance policy and any renewals thereof, shall constitute an assignment thereof to Lender, and Borrower
hereby grants to Lender a security interest in all such policies, in all proceeds thereof and in all unearned premiums therefor.

 

z)
Indemnification. Borrower hereby indemnifies and holds Lender, its directors, officers, agents, employees and attorneys
harmless from and against any liability, loss, expenses, damage of any nature, and claims, including, without limitation, any
and all present or future environmental liability or costs related to the Premises, brokers’ claims, arising in connection
with the Loan, except for claims arising from the gross negligence or willful misconduct of Lender, its directors, officers, agents,
employees or attorneys.

 

aa)
Primary Deposit Relationship. At all times during the term of the Loan, Borrower shall maintain a deposit relationship
with Lender.

 

bb)
Anti-Terrorism Laws. Borrower shall not nor shall it permit any subsidiary, affiliate or agent to:

 

a)
conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution
of funds, goods or services to or for the benefit of any Blocked Person.

 

b)
deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive
Order No. 13224.

 

c)
engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts
to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other anti-terrorism
law. Borrower shall deliver to Lender any certification or other evidence requested from time to time by Lender in its sole discretion,
confirming Borrower’s compliance with this Section.

 

d)
Borrower will not, directly or indirectly, use the proceeds of the Loans, or lend, contribute
or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, (i) to fund any activities
or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government
is, the subject of Sanctions or (ii) in any other manner that would result in a violation of Sanctions by any Person (including
any Person participating in the Loan, whether as underwriter, advisor, investor or otherwise).

 

e)
No part of the proceeds of the Loan will be used, directly or indirectly, for any payments that could constitute a violation of
any applicable anti-bribery law.

 

    	 	11	 

     

    

 

6.
FINANCIAL STATEMENTS. Each Borrower and/or Guarantor, as applicable, will furnish to Lender:

 

	 	a)	As
    soon as available to CODA OCTOPUS, INC., but in any event within 150 days after the close of each fiscal year, annual audited
    financial statements, including consolidated and consolidating information, if applicable, prepared in form acceptable to
    Lender, which shall be prepared by a certified public accountant acceptable to Lender;
	 	 	 
	 	b)
    	As
    soon as available to CODA OCTOPUS, INC., but in any event within 45 days after the close of each fiscal quarter, a full and
    complete signed copy of internally prepared financial statements, including consolidated and consolidating information, prepared
    in form acceptable to Lender, which shall include a balance sheet of the Borrower, as of the end of such quarter, and statement
    of profit and loss of the Borrower reflecting the results of its operations during such quarter. Such statements shall include
    a detailed schedule of accounts receivable aging, accounts payable aging, construction in progress report, and completed contracts
    report in form acceptable to Lender. Together with the submission of such financial statements, Borrower shall deliver a Covenant
    Compliance Certificate in the form attached hereto as Exhibit B verifying Borrower’s compliance with all financial covenants
    contained herein and certifying that no Event of Default then exists. 
	 	 	 
	 	c)	As
    soon as available to CODA OCTOPUS, INC., but in any event within 150 days after the close of each fiscal year, filed Federal
    business tax returns, including all schedules thereto, prepared by a certified public accountant acceptable to Lender on an
    accrual basis for the prior year on or before March 31 of each year, or by such other date approved by the Lender; provided,
    however, in the event the Borrower files an extension to the tax returns, the tax return shall be due on or before 30 days
    of such filing, but not later than November 15 of each year. 
	 	 	 
	 	d)	From
    time to time, such financial data and information about Borrower as Lender may reasonably request, to be delivered concurrently
    with the financial data and information required under this Section 6; and 
	 	 	 
	 	e)	Any
    financial data and information about the Guarantor of the obligations as Lender may reasonably request, to be delivered concurrently
    with the financial data and information required under this Section 6. 

 

7.
FINANCIAL COVENANTS. The Borrower will not at any time or during any fiscal period (as applicable) fail to be in compliance
with any of the financial covenants in this Section, which financial covenants shall be tested on an annual basis at Borrower’s
fiscal year end unless specified otherwise in this Section 7.

 

a)
Minimum Fixed Charge Coverage Ratio. At all times during the term of the Loan, Borrower shall maintain a combined Fixed
Charge Coverage Ratio of not less than 1.50 to 1.00. This covenant shall be tested quarterly on a trailing twelve (12) month basis.

 

    	 	12	 

     

    

 

b)
Total Liabilities to Tangible Net Worth. Borrower shall maintain an aggregate ratio of total liabilities to tangible net
worth not to exceed 3.00 to 1.00. This covenant shall be tested quarterly.

 

8.
DEFAULT. “Event of Default” shall mean the occurrence of one or more of any of the following events:

 

a)
default of any liability, obligation covenant or undertaking of the Borrower or any guarantor of the obligations to the Lender,
hereunder or otherwise, including, without limitation, failure to pay in full when due any installment of principal or interest
or default of the Borrower or any guarantor of the obligations under any other Loan Document or any other agreement with the Lender
continuing for 15 days with respect to any default (other than with respect to the payment of money for which there is no grace
period;

 

c)
failure of the Borrow to maintain aggregate collateral security value satisfactory to the Lender continuing for 15 days;

 

d)
default of any material liability, obligation or undertaking of the Borrower or any guarantor of the obligations to any other
party continuing for 15 days;

 

e)
if any statement, representation or warranty heretofore, now or hereafter made by the Borrower or any guarantor of the obligations
in connection with this Agreement or in any supporting financial statement of the Borrower or any guarantor of the obligations
shall be determined by the Lender to have been false or misleading in any material respect when made;

 

f)
if the Borrower, or any guarantor hereof is a corporation, trust, partnership or limited liability company, the liquidation, termination
or dissolution of any such organization, or the merger or consolidation of such organization into another entity (except as permitted
under Section 4(p) above), or its easing to carry on actively its present business or the appointment of a receiver for its property;

 

g)
the institution by or against the Borrower, any endorser or any guarantor hereof of any proceedings under the Bankruptcy Code
11 USC Section 101 et seq. or any other law in which the Borrower, any endorser or any guarantor hereof is alleged to be insolvent
or unable to pay its debts as they mature, or the making by the Borrower, any endorser or any guarantor hereof of an assignment
for the benefit of credits or the granting by the Borrower, any endorser or any guarantor hereof of a trust mortgage for the benefit
of creditors (each of the foregoing in this subclause an “Insolvency Default”);

 

h)
the service upon the Lender of a writ in which the Lender is named as trustee of the Borrower or any guarantor hereof;

 

i)
a judgment or judgments for the payment of money shall be rendered against the Borrower or any guarantor hereof, and any such
judgment shall remain unsatisfied and in effect for any period of thirty (30) consecutive days without a stay of execution;

 

j)
any levy, lien (including mechanics lien) except as permitted under any of the other loan documents between the Lender and the
Borrower, seizure, attachment, execution or similar process shall be issued or levied on any of the property of the Borrower or
any guarantor hereof;

 

    	 	13	 

     

    

 

k)
the termination or revocation of any guaranty hereof; or

 

l)
the occurrence of such a change in the condition or affairs (financial orotherwise) of the Borrower, any endorser or any guarantor
hereof, or the occurrence of any other event or circumstance, such that the Lender, in its sole discretion, deems that it is insecure
or that the prospects for timely payment or performance of any obligation of the Borrower, any endorser or any guarantor hereof
to the Lender has or may be impaired.

 

9.
REMEDIES OF LENDER. Upon the happening of an Event of Default, then Lender may, at its option, upon written notice to Borrower:

 

a)
Cancel this Agreement;

 

b)
Commence an appropriate legal or equitable action to enforce performance of this Agreement;

 

c)
Accelerate the payment of the Note and the Loan and any other sums secured by the Security Agreement, apply all or any portion
of any equity funds toward payment of the Loan, and commence appropriate legal and equitable action to collect all such amounts
due Lender; and

 

d)
Exercise any other rights or remedies Lender may have under the Security Agreement or other Loan Documents referred to in this
Agreement or executed in connection with the Loan or which may be available under applicable law.

 

10.
GENERAL TERMS. The following shall be applicable throughout the period of this Agreement or thereafter as provided herein:

 

a)
Rights of Third Parties. All conditions of the Lender hereunder are imposed solely and exclusively for the benefit of Lender
and its successors and assigns, and no other Person shall have standing to require satisfaction of such conditions or be entitled
to assume that Lender will make advances in the absence of strict compliance with any or all thereof, and no other Person shall,
under any circumstances, be deemed to be a beneficiary of this Agreement or the Loan Documents, any provisions of which may be
freely waived in whole or in part by the Lender at any time if, in its sole discretion, it deems it desirable to do so.

 

b)
Borrower is not Lender’s Agent. Nothing in this Agreement, the Note, the Security Agreement or any other Loan Document
shall be construed to make the Borrower the Lender’s agent for any purpose whatsoever, or the Borrower and Lender partners,
or joint or co-venturers, and the relationship of the parties shall, at all times, be that of debtor and creditor.

 

c)
Evidence of Satisfaction of Conditions. Lender shall, at all times, be free independently to establish to its good faith
and satisfaction, and in its absolute discretion, the existence or nonexistence of a fact or facts which are disclosed in documents
or other evidence required by the terms of this Agreement.

 

d)
Headings. The headings of the sections, paragraphs and subdivisions of this Agreement are for the convenience of reference
only, and shall not limit or otherwise affect any of the terms hereof.

 

    	 	14	 

     

    

 

e)
Invalid Provisions to Affect No Others. If performance of any provision hereof or any transaction related hereto is limited
by law, then the obligation to be performed shall be reduced accordingly; and if any clause or provision herein contained operates
or would prospectively operate to invalidate this Agreement in part, then the invalid part of said clause or provision only shall
be held for naught, as though not contained herein, and the remainder of this Agreement shall remain operative and in full force
and effect.

 

f)
Application of Interest to Reduce Principal Sums Due. In the event that any charge, interest or late charge is above the
maximum rate provided by law, then any excess amount over the lawful rate shall be applied by Lender to reduce the principal sum
of the Loan or any other amounts due Lender hereunder.

 

g)
Governing Law. The laws of the State of Florida shall govern the interpretation and enforcement of this Agreement, without
regard to its principles of conflict of law.

 

h)
Number and Gender. Whenever the singular or plural number, masculine or feminine or neuter gender is used herein, it shall
equally include the others and shall apply jointly and severally.

 

i)
Waiver. If Lender shall waive any provisions of the Loan Documents, or shall fail to enforce any of the conditions or provisions
of this Agreement, such waiver shall not be deemed to be a continuing waiver and shall never be construed as such; and Lender
shall thereafter have the right to insist upon the enforcement of such conditions or provisions. Furthermore, no provision of
this Agreement shall be amended, waived, modified, discharged or terminated, except by instrument in writing signed by the parties
hereto.

 

j)
Notices. All notices from the Borrower to Lender and Lender to Borrower required or permitted by any provision of this
Agreement shall be in writing and sent by registered or certified mail or nationally recognized overnight delivery service and
addressed as follows:

 

	 	TO
    LENDER:	 	HSBC
    Bank USA, N.A.
	 	 	 	2929
    Walden Avenue, C-111
	 	 	 	Depew,
    New York 14043
	 	 	 	Attention:
    Commercial Banking

 

	 	TO
    BORROWER:	 	7380
    Sand Lake Suite, Suite 500
	 	 	 	Orlando,
    Florida 32819

 

Such
addresses may be changed by such notice to the other party. Notice given as hereinabove provided shall be deemed given on the
date of its deposit in the United States Mail and, unless sooner actually received, shall be deemed received by the party to whom
it is addressed on the third calendar day following the date on which said notice is deposited in the mail, or if a courier system
is used, on the date of delivery of the notice.

 

k)
Successors and Assigns. This Agreement shall inure to the benefit of and be binding on the parties hereto and their heirs,
legal representatives, successors and assigns; but nothing herein shall authorize the assignment hereof by the Borrower.

 

    	 	15	 

     

    

 

l)
USA Patriot Act Notice. Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), Lender is required to obtain, verify and record
information that identifies Borrower, which information includes the name and address of Borrower and other information that will
allow Lender to identify Borrower in accordance with the Act.

 

m)
Counterparts, Facsimiles. This Agreement and any of the Loan Documents may be executed in counterparts. Each executed counterpart
of this Agreement or any Loan Document will constitute an original document, and all executed counterparts, together, will constitute
the same agreement. Any counterpart evidencing signature by one party that is delivered by facsimile by such party to the other
party hereto shall be binding on the sending party when such facsimile is sent, and such sending party shall within ten (10) days
thereafter deliver to the other parties a hard copy of such executed counterpart containing the original signature of such party
or its authorized representative.

 

n)
Conflict. In the event of a conflict between n the terms of this Agreement and the other Loan Documents, the terms of this
agreement shall control.

 

o)
WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT ANY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND
ANY AGREEMENT TO BE CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THIS AGREEMENT.

 

    	 	16	 

     

    

 

IN
WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be executed on the date first above written.

 

	 	BORROWER:
	 	 	 
	 	CODA OCTOPUS GROUP, INC., a Delaware corporation
	 	 	 
	 	By:	/s/
	 	 	Mike
Midgley, Acting Chief Financial Officer
	 	 	 
	 	CODA OCTOPUS PRODUCTS, INC., a Delaware corporation
	 	 	 
	 	By:	/s/
	 	 	Mike
    Midgley, Acting Chief Financial Officer
	 	 	 
	 	CODA OCTOPUS COLMEK, INC., a Utah corporation
	 	 	 
	 	By:	/s/
	 	 	Mike
    Midgley, Chief Executive Officer
	 	 	 
	 	LENDER:
	 	 	 
	 	HSBC BANK USA, N.A.
	 	 	 
	 	By:	/s/
	 	 	Joseph
    A. Davis, Senior Vice President

 

    	 	17	 

     

    

 

Exhibit
“A”

 

Existing
Litigation of Borrower

 

None.

 

    	 		 

     

    

 

Exhibit
“B”

 

FORM
OF COMPLIANCE CERTIFICATE (BORROWER)

 

________________
____, 201__

 

I
refer to the Loan Agreement dated April ___, 2017, between CODA OCTOPUS, INC., a Delaware corporation, CODA OCTOPUS PRODUCTS,
INC., a Delaware corporation, and CODA OCTOPUS COLMEK, INC., a Utah corporation (individually and/or collectively the “Borrower”),
and HSBC BANK USA, N.A. (“HSBC” or “Lender”) (as amended, restated, supplemented or modified
from time to time, the “Loan Agreement”). Unless otherwise defined herein, terms defined in the Loan Agreement
are used herein with the same meanings.

 

I,
__________________________, holding the office of each Borrower set forth below, do hereby certify on behalf of the Borrower as
of the quarter ending ____________________, (the “Report Date”), as follows:

 

(1)
The Borrower has performed and complied in all material respects with all covenants and conditions contained in the Loan Documents;

 

(2)
No Event of Default (as defined in the Loan Agreement) has occurred and is continuing or exists under the Note and the other Loan
Documents;

 

(3)
All representations and warranties of the Borrower are true and correct in all material respects on the date hereof, except to
the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations
and warranties were true and accurate on and as of such earlier date) or by their nature can no longer be true and correct as
the result of events not prohibited by the Loan Documents;

 

(4)
Borrower has maintained an aggregate Fixed Charge Coverage Ratio of not less than 1.50 to 1.00 [actual of ______ to 1.00 based
on calculations attached];

 

(5)
Borrower has maintained an aggregate ratio of total liabilities to tangible net worth of less than 3.00 to 1.00 [actual of ______
to 1.00 based on calculations attached]; and

 

(6)
Borrower has made all principal payments, including the annual $700,000 payment, under the Loan when due.

 

Supporting
financial information and covenant calculations are included in the financial statements and other information attached hereto.

 

    	 		 

     

    

 

IN
WITNESS WHEREOF, the undersigned has executed this Certificate this _____ day of ____________________, 20__.

 

	 	BORROWER:
	 	 	 
	 	CODA
    OCTOPUS GROUP, INC., a Delaware corporation
	 	 	 
	 	By:	              
	 	Name:	 
	 	Title:	 
	 	 	 
	 	CODA
    OCTOPUS PRODUCTS, INC., a Delaware corporation
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	CODA
    OCTOPUS COLMEK, INC., a Utah corporation
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:SECURITY
AGREEMENT

 

This
SECURITY AGREEMENT (this “Security Agreement”), dated as of this ___ day of April, 2017, is executed by and between
CODA OCTOPUS GROUP, INC., a Delaware corporation (the “Debtor”), whose notice address is 7380 Sand Lake Road, Suite
500, Orlando, Florida 32819, and HSBC BANK USA, N.A., its successors and/or assigns (the “Bank”), whose address is
2929 Walden Avenue, C-111, Depew New York 14043.

 

RECITALS

 

A.       Debtor
has requested and Bank has agreed to make a loan (the “Loan”) to Debtor, CODA OCTOPUS PRODUCTS, INC., a Delaware corporation,
and CODA OCTOPUS COLMEK, INC., a Utah corporation (individually and/or collectively, the “Borrower”) as evidenced
by that certain Promissory Note dated as of even date herewith from Borrower in favor of Bank in the original principal amount
of $8,000,000.00 (as the same may be amended or modified from time to time, the “Note”), which Note is secured, in
part, by (i) this Security Agreement, (ii) that certain Security Agreement dated of even date herewith from CODA OCTOPUS PRODUCTS,
INC., a Delaware corporation in favor of Bank, (iii) that certain Security Agreement dated of even date herewith from CODA OCTOPUS
COLMEK, INC., a Utah corporation in favor of Bank, and (iv) all other documents executed in connection with the Loan.

 

B.       As
a condition to the Bank’s making the Loan to Debtor, the Bank requires that the Debtor enter into this Security Agreement
in order to secure the obligations and performance of the Debtor under the Loan.

 

NOW
THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth herein, the Debtor and the Bank
hereby agree as follows:

 

AGREEMENTS:

 

Section
1        DEFINITIONS.

 

1.1       Defined
Terms. For the purposes of this Security Agreement, the following capitalized words and phrases shall have the meanings set
forth below.

 

“Affiliate”
of the Bank shall mean (a) any entity which, directly or indirectly, controls or is controlled by or is under common control with
the Bank, and (b) any entity administered or managed by the Bank, or an Affiliate or investment advisor thereof and which is engaged
in making, purchasing, holding or otherwise investing in commercial loans. An entity shall be deemed to be “controlled by”
another entity if such other entity possesses, directly or indirectly, power to direct or cause the direction of the management
and policies of such entity whether by contract, ownership of voting securities, membership interests or otherwise.

 

“Bank
Product Agreements” shall mean those certain cash management service agreements entered into from time to time by an
Obligor or any Subsidiary with the Bank or any Affiliate of the Bank concerning Bank Products.

 

“Bank
Product Obligations” shall mean all obligations, liabilities, contingent reimbursement obligations, fees, and expenses
owing by an Obligor or any Subsidiary to the Bank or any Affiliate of the Bank pursuant to or evidenced by the Bank Product Agreements
and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising.

 

    	 

    	 	 	 

    

 

“Bank
Products” shall mean any service or facility extended to an Obligor or any Subsidiary by the Bank or any Affiliate of
the Bank, including: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions,
(f) cash management, including controlled disbursement, accounts or services, or (g) Hedging Agreements.

 

“Bankruptcy
Code” shall mean the United States Bankruptcy Code, as now existing or hereafter amended.

 

“Business
Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to
be closed for the conduct of commercial banking business in Orlando, Florida.

 

“Capital
Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, by such Person, as lessee, that is, or should be, in accordance with Financial Accounting
Standards Board Statement No. 13, as amended from time to time, or, if such statement is not then in effect, such statement of
GAAP as may be applicable, recorded as a “capital lease” on the financial statements of such Person prepared in accordance
with GAAP.

 

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

 

“Capitalized
Lease Obligations” shall mean, as to any Person, all rental obligations of such Person, as lessee under a Capital Lease
which are or will be required to be capitalized on the books of such Person.

 

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

 

“Collateral
Access Agreement” shall mean an agreement in form and substance reasonably satisfactory to the Bank pursuant to which
a mortgagee or lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other
bailee of Inventory or other property owned by the Debtor or any Subsidiary, acknowledges the Liens of the Bank and waives any
Liens held by such Person on such property, and, in the case of any such agreement with a mortgagee or lessor, permits the Bank
reasonable access to and use of such real property following the occurrence and during the continuance of an Event of Default
to assemble, complete and sell any collateral stored or otherwise located thereon.

 

“Default
Rate” shall mean a per annum rate of interest equal to lesser of (i) the “Interest Rate” (as defined in
the Note) plus four percent (4.00%) per annum, or (ii) the highest rate authorized by applicable law. 

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

    	Page 2

    	 	 	 

    

 

“Event
of Default” shall have the meaning set forth in Section 5 hereof.

 

“GAAP”
shall mean generally accepted accounting principles consistently applied, as adopted in the United States, and as amended from
time to time.

 

“Hedging
Agreements” shall mean any interest rate, currency or commodity swap agreement, cap agreement or collar agreement, and
any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates
or commodity prices.

 

“Hedging
Obligation” shall mean, with respect to any Person, any liability of such Person under any Hedging Agreement.

 

“Letter
of Credit” and “Letters of Credit” shall mean, respectively, a letter of credit and all such letters
of credit issued by the Bank, in its sole discretion, for the account of an Obligor.

 

“Lien”
shall mean, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right
owned or being purchased or acquired by such Person (including an interest in respect of a Capital Lease) which secures payment
or performance of any obligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security
interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.

 

“Loan
Documents” shall mean each of the agreements, documents, instruments and certificates from time to time executed and
delivered by an Obligor or any of their Subsidiaries for the benefit of the Bank in connection with the Obligations, and all amendments,
restatements, supplements and other modifications thereto.

 

“Material
Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect upon, the assets, business,
properties, condition (financial or otherwise) or results of operations of an Obligor taken as a whole, (b) a material impairment
of the ability of an Obligor to perform any of the Obligations under any of the Loan Documents, or (c) a material adverse effect
on (i) any substantial portion of the Collateral, (ii) the legality, validity, binding effect or enforceability against an Obligor
and its Subsidiaries of any of the Loan Documents, (iii) the perfection or priority of any Lien granted to the Bank under any
Loan Document, or (iv) the rights or remedies of the Bank under any Loan Document.

 

“Obligations”
shall mean all loans, advances and other financial accommodations of any Obligor, including, but not limited to, the Loan (as
defined in Recital “A” above), all interest accrued thereon (including interest which would be payable as post-petition
in connection with any bankruptcy or similar proceeding, whether or not permitted as a claim thereunder), any fees due the Bank
under the Loan Documents, any expenses incurred by the Bank under the Loan Documents and any and all other liabilities and obligations
of any Obligor to the Bank, including any reimbursement obligations of an Obligor in respect of Letters of Credit and surety bonds,
all Hedging Obligations of an Obligor which are owed to the Bank or any Affiliate of the Bank, and all Bank Product Obligations
of an Obligor, all in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now
or hereafter existing, or due or to become due, together with any and all renewals or extensions thereof.

 

“Obligor”
shall mean the Debtor, any guarantor, accommodation endorser, third party pledgor, or any other party liable with respect to the
Obligations.

 

    	Page 3

    	 	 	 

    

 

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

 

“Permitted
Liens” shall mean (a) Liens for Taxes, assessments or other governmental charges not at the time delinquent or thereafter
payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains
adequate reserves in accordance with GAAP and in respect of which no Lien has been filed; (b) Liens arising in connection with
Capitalized Lease Obligations (and attaching only to the property being leased); (c) Liens granted to the Bank hereunder and under
the Loan Documents; and (d) Liens referred to on Exhibit A attached hereto and made a part hereof,

 

“Person”
shall mean any natural person, partnership, limited liability company, corporation, trust, joint venture, joint stock company,
association, unincorporated organization, government or agency or political subdivision thereof, or other entity, whether acting
in an individual, fiduciary or other capacity.

 

“Subsidiary”
and “Subsidiaries” shall mean, respectively, with respect to any Person, each and all such corporations, partnerships,
limited partnerships, limited liability companies, limited liability partnerships, joint ventures or other entities of which or
in which such Person owns, directly or indirectly, such number of outstanding Capital Securities as have more than fifty percent
(50.00%) of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited
liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference
to Subsidiaries of the Debtor.

 

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

 

“UCC”
shall mean the Uniform Commercial Code in effect in the state of Florida from time to time.

 

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

 

1.3       Other
Interpretive Provisions.

 

(a)       The
meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. Whenever the context so
requires, the neuter gender includes the masculine and feminine, the single number includes the plural, and vice versa, and in
particular the word “Debtor” shall be so construed.

 

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

 

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(c)       The
term “including” is not limiting, and means “including, without limitation”.

 

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

 

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

 

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

 

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

 

Section
2      SECURITY FOR THE OBLIGATIONS.

 

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

 

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

 

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

 

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

 

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

 

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(iv)       All
Software and computer programs, trademarks, patents, licensing agreements and other General Intangibles;

 

(v)       All
Securities, Investment Property, Financial Assets and Deposit Accounts;

 

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

 

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

 

Notwithstanding
the foregoing, the Collateral shall not include the Equipment described on Exhibit A attached hereto.

 

2.2       Possession
and Transfer of Collateral. Debtor shall be entitled to possession or use of the Collateral (other than Instruments or Documents
including Tangible Chattel Paper and Investment Property consisting of certificated securities) and other Collateral required
to be delivered to the Bank pursuant to this Section 2. The cancellation or surrender of any promissory note evidencing an Obligation,
upon payment or otherwise, shall not affect the right of the Bank to retain the Collateral for any other of the Obligations. Debtor
shall not sell, assign (by operation of law or otherwise), license, lease or otherwise dispose of, or grant any option with respect
to any of the Collateral, except that Debtor may sell Inventory in the ordinary course of business.

 

2.3       Financing
Statements. Debtor shall, at the Bank’s request, at any time and from time to time, execute and deliver to the Bank
such financing statements, amendments and other documents and do such acts as the Bank deems necessary in order to establish and
maintain valid, attached and perfected first priority security interests in the Collateral in favor of the Bank, for its own benefit
and as agent for its Affiliates, free and clear of all Liens and claims and rights of third parties whatsoever, except Permitted
Liens. Debtor hereby irrevocably authorizes the Bank at any time, and from time to time, to file in any jurisdiction any initial
financing statements and amendments thereto without the signature of Debtor that (a) indicate the Collateral (i) is comprised
of all assets of Debtor or words of similar effect, regardless of whether any particular asset comprising a part of the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment
is filed, or (ii) as being of an equal or lesser scope or within greater detail as the grant of the security interest set forth
herein, and (b) contain any other information required by Section 5 of Article 9 of the Uniform Commercial Code of the jurisdiction
wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether Debtor is an organization, the type of organization and any Organizational Identification
Number issued to Debtor, and (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted
collateral or timber to be cut, a sufficient description of the real property to which the Collateral relates. Debtor hereby agrees
that a photogenic or other reproduction of this Security Agreement is sufficient for filing as a financing statement and Debtor
authorizes the Bank to file this Security Agreement as a financing statement in any jurisdiction. Debtor agrees to furnish any
such information to the Bank promptly upon request. Debtor further ratifies and affirms its authorization for any financing statements
and/or amendments thereto, executed and filed by the Bank in any jurisdiction prior to the date of this Security Agreement. In
addition, Debtor shall make appropriate entries on its books and records disclosing the security interests of the Bank, for its
own benefit and as agent for its Affiliates, in the Collateral.

 

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2.4       Preservation
of the Collateral. The Bank may, but is not required, to take such actions from time to time as the Bank deems appropriate
to maintain or protect the Collateral. The Bank shall have exercised reasonable care in the custody and preservation of the Collateral
if the Bank takes such action as Debtor shall reasonably request in writing which is not inconsistent with the Bank’s status
as a secured party, but the failure of the Bank to comply with any such request shall not be deemed a failure to exercise reasonable
care; provided, however, the Bank’s responsibility for the safekeeping of the Collateral shall (i) be deemed reasonable
if such Collateral is accorded treatment substantially equal to that which the Bank accords its own property, and (ii) not extend
to matters beyond the control of the Bank, including acts of God, war, insurrection, riot or governmental actions. In addition,
any failure of the Bank to preserve or protect any rights with respect to the Collateral against prior or third parties, or to
do any act with respect to preservation of the Collateral, not so requested by the Debtor, shall not be deemed a failure to exercise
reasonable care in the custody or preservation of the Collateral. Debtor shall have the sole responsibility for taking such action
as may be necessary, from time to time, to preserve all rights of Debtor and the Bank in the Collateral against prior or third
parties. Without limiting the generality of the foregoing, where Collateral consists in whole or in part of securities, Debtor
represents to, and covenants with, the Bank that Debtor has made arrangements for keeping informed of changes or potential changes
affecting the securities (including rights to convert or subscribe, payment of dividends, reorganization or other exchanges, tender
offers and voting rights), and Debtor agrees that the Bank shall have no responsibility or liability for informing Debtor of any
such or other changes or potential changes or for taking any action or omitting to take any action with respect thereto.

 

2.5       Other
Actions as to any and all Collateral. Within ten (10) days of written notice from Bank, Debtor further agrees to take any
other action reasonably requested by the Bank to ensure the attachment, perfection and first priority of, and the ability of the
Bank to enforce, the security interest of the Bank, for its own benefit and as agent for its Affiliates, in any and all of the
Collateral including (a) causing the Bank’s name to be noted as secured party on any certificate of title for a titled good
if such notation is a condition to attachment, perfection or priority of, or ability of the Bank to enforce, the security interest
of the Bank, for its own benefit and as agent for its Affiliates, in such Collateral, (b) complying with any provision of any
statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Bank to enforce, the security interest of the Bank, for its own benefit and as agent
for its Affiliates, in such Collateral, (c) obtaining governmental and other third party consents and approvals, including any
consent of any licensor, lessor or other Person obligated on Collateral, (d) obtaining waivers from mortgagees and landlords in
form and substance satisfactory to the Bank (provided, however, such waivers shall only be required from the mortgagees and landlords
of the Debtor’s main offices located in Orlando, Florida, unless otherwise required by Bank in its sole and absolute discretion),
and (e) taking all actions required by the UCC in effect from time to time or by other law, as applicable in any relevant UCC
jurisdiction, or by other law as applicable in any foreign jurisdiction. Debtor further agrees to indemnify and hold the Bank
harmless against claims of any Persons not a party to this Security Agreement concerning disputes arising over the Collateral.

 

2.6       Collateral
in the Possession of a Warehouseman or Bailee. If any of the Collateral at any time is in the possession of a warehouseman
or bailee, Debtor shall promptly notify the Bank thereof, and shall promptly obtain a Collateral Access Agreement.

 

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

 

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

 

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

 

Section
3        REPRESENTATIONS AND WARRANTIES.

 

Debtor
makes the following representations and warranties to the Bank:

 

3.1       Debtor
Organization and Name. Debtor is a corporation duly organized, existing and in good standing under the laws of the State of
Delaware, with full and adequate power to carry on and conduct its business as presently conducted and each of its Subsidiaries
is validly existing and in good standing under the laws of the jurisdiction of its incorporation. Debtor and each of its Subsidiaries
are duly licensed or qualified in all foreign jurisdictions wherein the nature of its activities requires such qualification or
licensing. The Organizational Identification Number of Debtor is 2867192. The exact legal name of each Debtor is as set forth
in the first paragraph of this Security Agreement, and each Debtor and its Subsidiaries currently do not conduct, nor have they,
during the last five (5) years, conducted business under any other name or trade name.

 

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

 

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

 

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

 

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

 

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

 

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

 

3.8       Place
of Business. The principal place of business and books and records of Debtor is set forth in the preamble to this Security
Agreement, and the location of all Collateral, if other than at such principal place of business, is as set forth on the Debtor’s
information certificates provided in connection herewith, and Debtor shall promptly notify the Bank of any change in such locations.
Debtor will not remove or permit the Collateral to be removed from such locations without the prior written consent of the Bank,
except for Inventory sold in the usual and ordinary course of the Debtor’s business.

 

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

 

    	Page 9

    	 	 	 

    

 

Section
4       AFFIRMATIVE COVENANTS.

 

4.1       Debtor
Existence. Debtor shall at all times preserve and maintain (a) its existence and good standing in the jurisdiction of its
incorporation, and (b) its qualification to do business and good standing in each jurisdiction where the nature of its business
makes such qualification necessary (other than such jurisdictions in which the failure to be qualified or in good standing could
not reasonably be expected to have a Material Adverse Effect), and shall at all times continue as a going concern in the business
which the Debtor is presently conducting.

 

4.2       Compliance
With Laws. Debtor shall comply, and cause each Subsidiary to comply, in all respects, including the conduct of its business
and operations and the use of the Collateral, with all applicable laws, rules, regulations, decrees, orders, judgments, licenses
and permits, except where failure to comply could not reasonably be expected to have a Material Adverse Effect.

 

4.3       Payment
of Taxes and Liabilities. Debtor shall pay, and cause each Subsidiary to pay, and discharge, prior to delinquency and before
penalties accrue thereon, all property and other taxes, and all governmental charges or levies against it or any of the Collateral,
as well as claims of any kind which, if unpaid, could become a Lien on any of its property; provided that the foregoing shall
not require any Debtor or any Subsidiary to pay any such tax or charge so long as it shall contest the validity thereof in good
faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP
and, in the case of a claim which could become a Lien on any of the Collateral, such contest proceedings stay the foreclosure
of such Lien or the sale of any portion of the Collateral to satisfy such claim.

 

4.4       Maintain
Property. Debtor shall at all times maintain, preserve and keep the Collateral, in good repair, working order and condition,
normal wear and tear excepted, and shall from time to time make all needful and proper repairs, renewals, replacements, and
additions thereto so that at all times the efficiency thereof shall be fully preserved and maintained. Debtor shall permit the
Bank to examine and inspect such Collateral, at all reasonable times.

 

4.5       Maintain
Insurance. Debtor shall at all times maintain, and cause each Subsidiary to maintain, with insurance companies reasonably
acceptable to the Bank, such insurance coverage as may be required by any law or governmental regulation or court decree or order
applicable to it and such other insurance, to such extent and against such hazards and liabilities, including credit insurance
maintained with a company acceptable to Bank, employers’, public and professional liability risks, as is customarily maintained
by companies similarly situated, and shall have insured amounts no less than, and deductibles no higher than, are reasonably acceptable
to the Bank. Debtor shall furnish to the Bank a certificate setting forth in reasonable detail the nature and extent of all insurance
maintained by the Debtor, which shall be reasonably acceptable in all respects to the Bank. Debtor shall cause each issuer of
an insurance policy to provide the Bank with an endorsement (i) showing the Bank as loss payee with respect to each policy of
property or casualty insurance; and (ii) providing that notice will be given to the Bank in accordance with industry standard
principles prior to any cancellation of, material reduction or change in coverage provided by or other material modification to
such policy. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, the existing insurance
maintained by the Debtor, evidence of which has been provided to Bank, has been approved by the Bank and is acceptable in all
respects, and Bank shall not require any changes to such insurance or require any additional coverages other than to add Bank
as mortgagee as to casualty and additional insured as to liability coverage.

 

    	Page 10

    	 	 	 

    

 

In
the event any Debtor either fails to provide the Bank with evidence of the insurance coverage required by this Section or at any
time hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay any premium in whole
or in part relating thereto, then the Bank, without waiving or releasing any obligation or default by any Debtor hereunder, may,
at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay such premiums
and take any other action with respect thereto, which the Bank deems advisable. This insurance coverage (a) may, but need not,
protect any Debtor’s interests in such property, including the Collateral, and (b) may not pay any claim made by, or against,
any Debtor in connection with such property, including the Collateral. Any Debtor may later cancel any such insurance purchased
by the Bank, but only after providing the Bank with evidence that the Debtor has obtained the insurance coverage required by this
Section. If the Bank purchases insurance for the Collateral, the Debtor will be responsible for the costs of that insurance, including
interest and any other charges that may be imposed with the placement of the insurance, until the effective date of the cancellation
or expiration of the insurance. The costs of the insurance may be added to the principal amount of the Loans owing hereunder.
The costs of the insurance may be more than the cost of the insurance the Debtor may be able to obtain on its own.

 

4.6       Collateral
Records. If requested in writing by Bank, Debtor shall keep full and accurate books and records relating to the Collateral
and shall mark such books and records to indicate the Bank’s Lien in the Collateral including placing a legend, in form
and content acceptable to the Bank, on all Chattel Paper (unless otherwise required by Bank, excluding certificates of title with
respect to vehicles owned by Debtor) created by the Debtor indicating that the Bank has a Lien in such Chattel Paper.

 

Section
5        REMEDIES.

 

Upon
the occurrence of an event of default under any of the Obligations or any default in the payment or performance of any of the
covenants, conditions and agreements contained in this Security Agreement (an “Event of Default”), the Bank shall
have all rights, powers and remedies set forth in this Security Agreement or the other Loan Documents or in any other written
agreement or instrument relating to any of the Obligations or any security therefor, as a secured party under the UCC or as otherwise
provided at law or in equity. Without limiting the generality of the foregoing, the Bank may, at its option upon the occurrence
of an Event of Default, declare its commitments to the Debtor to be terminated and all Obligations to be immediately due and payable,
or, if provided in the Loan Documents, all commitments of the Bank to the Debtor shall immediately terminate and all Obligations
shall be automatically due and payable, all without demand, notice or further action of any kind required on the part of the Bank.
Debtor hereby waives any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in connection
with the enforcement of Bank’s rights under the Loan Documents, and hereby consents to, and waives notice of release, with
or without consideration, of any Collateral, notwithstanding anything contained herein or in the Loan Documents to the contrary;
provided, however, the Bank shall give Debtor prompt notice of the taking of any such Collateral. In addition to the foregoing:

 

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

    	Page 11

    	 	 	 

    

 

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

 

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

 

    	Page 12

    	 	 	 

    

 

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

 

5.5       Additional
Remedies. The Bank shall have the right and power to:

 

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

 

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

 

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

 

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

 

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

 

    	Page 13

    	 	 	 

    

 

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

 

(g)       vote
the Collateral;

 

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

 

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

 

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

 

5.6       Attorney-in-Fact.
Debtor hereby irrevocably makes, constitutes and appoints the Bank (and any officer of the Bank or any Person designated by the
Bank for that purpose) as the Debtor’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in the Debtor’s
name, place and stead, with full power of substitution, to (i) take such actions as are permitted in this Security Agreement,
(ii) execute such financing statements and other documents and to do such other acts as the Bank may require to perfect and preserve
the Bank’s security interest in, and to enforce such interests in the Collateral, and (iii) carry out any remedy provided
for in this Security Agreement, including endorsing the Debtor’s name to checks, drafts, instruments and other items of
payment, and proceeds of the Collateral, executing change of address forms with the postmaster of the United States Post Office
serving the address of the Debtor, changing the address of the Debtor to that of the Bank, opening all envelopes addressed to
the Debtor and applying any payments contained therein to the Obligations. The Debtor hereby acknowledges that the constitution
and appointment of such proxy and attorney-in-fact are coupled with an interest and are irrevocable. Debtor hereby ratifies and
confirms all that such attorney-in-fact may do or cause to be done by virtue of any provision of this Security Agreement.

 

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

 

    	Page 14

    	 	 	 

    

 

5.8       Application
of Proceeds. The Bank will within three (3) Business Days after receipt of cash or solvent credits from collection of items
of payment, proceeds of Collateral or any other source, apply the whole or any part thereof against the Obligations secured hereby.
The Bank shall further have the exclusive right to determine how, when and what application of such payments and such credits
shall be made on the Obligations, and such determination shall be conclusive upon the Obligors. Any proceeds of any disposition
by the Bank of all or any part of the Collateral may be first applied by the Bank to the payment of expenses incurred by the Bank
in connection with the Collateral, including attorneys’ fees and legal expenses as provided for in Section 6.13 hereof.

 

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

 

Section
6        MISCELLANEOUS.

 

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

 

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

 

    	Page 15

    	 	 	 

    

 

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

 

6.4       FORUM
SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS SECURITY
AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF BROWARD COUNTY, THE STATE OF
FLORIDA OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA; PROVIDED THAT NOTHING IN THIS SECURITY AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE THE BANK FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. DEBTOR
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF BROWARD COUNTY, STATE OF FLORIDA AND OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. DEBTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF FLORIDA. DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

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

 

6.6       Assignability.
The Bank may at any time assign the Bank’s rights in this Security Agreement, the other Loan Documents, the Obligations,
or any part thereof and transfer the Bank’s rights in any or all of the Collateral, and the Bank thereafter shall be relieved
from all liability with respect to such Collateral. This Security Agreement shall be binding upon the Bank and Debtor and their
respective legal representatives and successors. All references herein to the Debtor shall be deemed to include any successors,
whether immediate or remote. In the case of a joint venture or partnership, the term “Debtor” shall be deemed to include
all joint venturers or partners thereof, who shall be jointly and severally liable hereunder.

 

    	Page 16

    	 	 	 

    

 

6.7       Binding
Effect. This Security Agreement shall become effective upon execution by the Debtor and the Bank. If this Security Agreement
is not dated or contains any blanks when executed by the Debtor, the Bank is hereby authorized, without notice to the Debtor,
to date this Security Agreement as of the date when it was executed by the Debtor, and to complete any such blanks according to
the terms upon which this Security Agreement is executed.

 

6.8       Governing
Law. This Security Agreement shall be delivered and accepted in and shall be deemed to be a contract made under and governed
by the internal laws of the State of Florida (but giving effect to federal laws applicable to national banks) applicable to contracts
made and to be performed entirely within such state, without regard to conflict of laws principles.

 

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

 

6.10       Time
of Essence. Time is of the essence in making payments of all amounts due the Bank under this Security Agreement and in the
performance and observance by the Debtor of each covenant, agreement, provision and term of this Security Agreement.

 

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

 

6.12       Notices.
Except as otherwise provided herein, Debtor waives all notices and demands in connection with the enforcement of the Bank’s
rights hereunder. All notices, requests, demands and other communications provided for hereunder shall be in writing and addressed
as follows:

 

	If
    to the Debtor:	7380
    Sand Lake Road, Suite 500
	 	Orlando,
    Florida 32819
	 	 
	If
    to the Bank:	HSBC
    BANK USA, N.A.
	 	2929
    Walden Avenue, C-111
	 	Depew,
    New York 14043
	 	Attention:
    Commercial Banking

 

or,
as to each party, at such other address as shall be designated by such party in a written notice to each other party complying
as to delivery with the terms of this subsection. All notices addressed as above shall be deemed to have been properly given (i)
if served in person, upon acceptance or refusal of delivery; (ii) if mailed by certified or registered mail, return receipt requested,
postage prepaid, on the third (3rd) day following the day such notice is deposited in any post office station or letter box; or
(iii) if sent by recognized overnight courier, on the first (1st) day following the day such notice is delivered to such carrier.
No notice to or demand on the Debtor in any case shall entitle the Debtor to any other or further notice or demand in similar
or other circumstances.

 

    	Page 17

    	 	 	 

    

 

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

 

[CONTINUES
ON THE FOLLOWING PAGE]

 

    	Page 18

    	 	 	 

    

 

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

 

	 	DEBTOR:
	 	 
		CODA
    OCTOPUS GROUP, INC., a Delaware corporation
	 	 	 
		By:	 
	 	 	Mike
    Midgley, Acting Chief Financial Officer
		 	 
		BANK:
	 	 
		HSBC
    BANK USA, N.A
	 	 	 
		By:	 
	 	 	Joseph
A. Davis, Senior Vice President

 

    	Page 19

    	 	 	 

    

 

	STATE
    OF FLORIDA	)
	 	)
    SS:
	COUNTY
    OF _____________	)

 

The
foregoing instrument was acknowledged before me this ____ day of April, 2017, by Mike Midgley, as Acting Chief Financial Officer
of CODA OCTOPUS GROUP, INC., a Delaware corporation, on behalf of the corporation, who is personally known to me or who has produced
a _______________________ identification, and who did take an oath.

 

	 	_________________________________________________	 
	 	Print
    or Stamp Name: _______________________________	 
	 	Notary
    Public, State of Florida	 
	 	Commission
    No.:___________________________________	 
	 	My
    Commission Expires:_____________________________	 

 

	STATE
    OF FLORIDA	)
	 	)
    SS:
	COUNTY
OF _____________	)

 

The
foregoing instrument was acknowledged before me this ______ day of April, 2017, by Joseph A. Davis, as Senior Vice President of
HSBC BANK USA, N.A., on behalf of the bank. He is known to me personally or has produced a driver’s license as identification.

 

	 	_________________________________________________	 
	 	Print
    or Stamp Name: _______________________________	 
	 	Notary
    Public, State of Florida	 
	 	Commission
    No.:___________________________________	 
	 	My
    Commission Expires:_____________________________	 

 

    	Page 20

    	 	 	 

    

 

Exhibit
A

 

Permitted
Liens

 

    	Page 21

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