Document:

NEITHER THIS DEBENTURE NOR THE SECURITIES
INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

	Original Issuance Date:  	 December 13, 2013	$100,000.00

 

	Debenture Number:	USFF – 59FF 101

  

US
FUEL CORPORATION

 

Secured Convertible Debenture

 

FOR VALUE RECEIVED,
US FUEL CORPORATION (hereinafter called the “Obligor”
or the “Company”), hereby promises to pay to 112359 FACTOR FUND,
LLC (the “Holder”) or its successors and assigns the principal sum of ONE HUNDRED THOUSAND DOLLARS
($100,000.00) in the form of cash or Obligor common stock on the terms and conditions
hereof on or before December 31, 2015 (the “Maturity Date”). Company has received $50,000 in cash from
Holder on the Original Issuance Date as consideration for this Debenture.

 

Interest.
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to the lesser of the minimum rate allowable
under law or EIGHT PERCENT (8%). Interest shall be calculated on the basis
of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder will be
paid to the Holder or its assignee in whose name this Debenture is registered on the records of the Obligor regarding registration
and transfers of Debentures at the option of the Obligor in cash, or converted into Common Stock at applicable Conversion Price
on the Trading Day immediately prior to the date paid provided that such shares are freely tradable by the Holder.

 

This Debenture is subject
to the following additional provisions:

 

Section 1.Conversion.

 

(a)Conversion
Procedure.

 

(i)This
Debenture shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and
from time to time, after the Effective Date (set forth above) (subject to the limitations on conversion set forth in Sections
1(b) and 1(c) hereof). The Debenture shall continue to be convertible on and after the Demand Date, until it is satisfied
in full. The number of shares of Common Stock issuable upon a conversion hereunder equals the quotient obtained by dividing
(x) the outstanding amount of this Debenture to be converted by (y) the Conversion Price (as defined in Section
1(c)(i)). The Obligor shall deliver Common Stock certificates to the Holder prior to the Fifth (5th) Trading
Day after a Conversion Date.

 

(ii)The Holder shall
effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit A (a “Conversion
Notice”). The date on which a Conversion Notice is delivered is the “Conversion Date.” Unless the
Holder is converting the entire principal amount outstanding under this Debenture, the Holder is not required to physically surrender
this Debenture to the Obligor in order to effect conversions. Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Debenture in an amount equal to the applicable conversion. The Holder and the Obligor shall maintain records
showing the principal amount converted and the date of such conversions. In the event of any dispute or discrepancy, the records
of the Holder shall be controlling and determinative in the absence of manifest error.

 

(b)Certain Conversion
Restrictions. A Holder may not convert this Debenture to the extent such conversion would result in the Holder, together with
any affiliate thereof, beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 4.99% of the then issued and outstanding shares of Common Stock, including shares issuable upon conversion
of this Debenture held by such Holder after application of this Section. Since the Holder will not be obligated to report to the
Obligor the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue
would result in the issuance of shares of Common Stock in excess of 4.99% of the then outstanding shares of Common Stock without
regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority
and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and
to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion
of the principal amount of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder
has delivered a Conversion Notice for a principal amount of this Debenture that, without regard to any other shares that the Holder
or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Obligor shall
notify the Holder of this fact and shall honor the conversion for the maximum principal amount permitted to be converted on such
Conversion Date in accordance with the periods described in Section 1(a)(i) and, at the option of the Holder, either retain
any principal amount tendered for conversion in excess of the permitted amount hereunder for future conversions or return such
excess principal amount to the Holder. The provisions of this Section may be waived by a Holder (but only as to itself and not
to any other Holder) upon not less than 65 days prior notice to the Obligor. Other Holders shall be unaffected by any such waiver.

 

    	PAGE 1

    	 

    

 

(c)Conversion
Price and Adjustments to Conversion Price.

 

(i)The “Conversion
Price” in effect on any Conversion Date shall be equal to 100% of the average of the five (5) lowest closing market prices
for the Common Stock for the thirty (30) Trading Days preceding conversion. All market and trading prices shall be the prices as
posted on the OTCQB or on the principal US National Stock Exchange or other electronic stock trading platform upon which the Company
may at that time be listed.

 

(ii) In case of any
reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other
securities, cash or property, the Holder shall have the right thereafter to, at its option, (A) convert the then outstanding principal
amount and any other amounts then owing hereunder in respect of this Debenture into the shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange,
and the Holder of this Debenture shall be entitled upon such event to receive such amount of securities, cash or property as the
shares of the Common Stock of the Obligor into which the then outstanding principal amount and any other amounts then owing hereunder
in respect of this Debenture could have been converted immediately prior to such reclassification or share exchange would have
been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Debenture, plus all other amounts
due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive
reclassifications or share exchanges.

 

(iii)All calculations
under this Section 1 shall be rounded up to the nearest $0.0001 or whole share.

 

(iv)If (A) the Obligor
shall declare a dividend (or any other distribution) on the Common Stock; (B) the Obligor shall declare a special nonrecurring
cash dividend on or a redemption of the Common Stock; (C) the Obligor shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval
of any stockholders of the Obligor shall be required in connection with any reclassification of the Common Stock, any consolidation
or merger to which the Obligor is a party, any sale or transfer of all or substantially all of the assets of the Obligor, of any
compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or (E) the Obligor shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Obligor; then, in each case,
the Obligor shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall
cause to be mailed to the Holder at its last address as it shall appear upon the stock books of the Obligor, at least twenty (20)
calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange, provided, that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to convert this Debenture during the 20-day calendar period commencing the date of such
notice to the effective date of the event triggering such notice.

 

    	PAGE 2

    	 

    

 

(d)Other Restrictions.

 

(i)Obligor shall
maintain a sufficient amount of authorized common shares to enable conversion of all amounts due under this Debenture.

 

(e)Other Provisions.

 

(i)The Obligor covenants
that all shares of Common Stock that shall be issuable pursuant to this Section 1 shall, upon issue, be duly and validly
authorized, issued and fully paid, and nonassessable.

 

(ii)Upon a conversion
hereunder the Obligor shall not be required to issue stock certificates representing fractions of shares of the Common Stock, but
may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the Closing Bid Price at such
time. If the Obligor elects not, or is unable, to make such a cash payment, the Holder shall be entitled to receive, in lieu of
the final fraction of a share, one whole share of Common Stock.

 

(iii)The issuance
of certificates for shares of the Common Stock on conversion of this Debenture shall be made without charge to the Holder thereof
for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided
that the Obligor shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate upon conversion in a name other than that of the Holder of such Debenture so converted and the
Obligor shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Obligor the amount of such tax or shall have established to the satisfaction of the Obligor that
such tax has been paid.

 

(iv)Nothing herein
shall limit a Holder's right to pursue actual damages for the Obligor’s failure to deliver certificates representing shares
of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in
each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

(v)The Obligor
shall bear the cost of legal opinion production, transfer agent fees, and equity issuance fees (collectively, the “Post-Closing
Expenses”), which amount shall be payable to Holder in the form of additional interest hereunder

 

(f)A “Default
Event” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary
or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):

 

(i)Any breach of
any provision of this Debenture or any Transaction Document by and between Holder and Obligor.

 

(ii)Withdrawal
from registration of the Obligor under the Exchange Act, voluntary or involuntary.

 

(iii)The Company
or any Subsidiary of the Company shall commence, or there shall be commenced against the Company or any Subsidiary of the Company
under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any
Subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors
dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company
or any Subsidiary of the Company or there is commenced against the Company or any Subsidiary of the Company any such bankruptcy,
insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any Subsidiary of the Company
is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or
the Company or any Subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the
like for it or any substantial part of its property which continues undischarged or unstayed for a period of forty-five (45) days;
or the Company or any Subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any
Subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally
as they become due; or the Company or any Subsidiary of the Company shall call a meeting of its creditors with a view to arranging
a composition, adjustment or restructuring of its debts; or the Company or any Subsidiary of the Company shall by any act or failure
to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action
is taken by the Company or any Subsidiary of the Company for the purpose of effecting any of the foregoing.

 

    	PAGE 3

    	 

    

 

(iv)The Company
or any Subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement
or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement
of the Company or any Subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall
hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable.

 

(v)The Obligor
fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation
to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Debenture, fails
to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares
of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Debenture as and when required by this Debenture,
the Obligor directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring or
issuing (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion
of or otherwise pursuant to this Debenture as and when required by this Debenture, or fails to remove (or directs its transfer
agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw
any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon
conversion of or otherwise pursuant to this Debenture as and when required by this Debenture (or makes any written announcement,
statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for seven
(7) business days after the Holder shall have delivered a Notice of Conversion.

 

(vi)Any dissolution,
liquidation, or winding up of Obligor or any substantial portion of its business, or any cessation of operations or admission by
Obligor that it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure
of the Obligor’s ability to continue as a “going concern” shall not be an admission that the Obligor cannot pay
its debts as they become due.

 

(vii)The Common
Stock shall cease to be quoted or listed for trading on any primary market for a period of five (5) consecutive trading days (including,
for example, any such failure in which a bid price is not quoted for the Obligor’s Common Stock for such period).

 

(g)Upon the occurrence
of any Default Event which remains uncured for more than thirty (30) days,

 

(i)all outstanding
principal, accrued interest, and, in consideration of the equity-based conversion discount afforded Holder hereunder, liquidated
damages equal to 200% of all outstanding principal and accrued interest due hereunder, shall be due and payable in full upon demand
of the Holder; and,

 

(ii)the Conversion
Price shall be automatically adjusted to the lesser of (x) $0.0005 per share or (y) 50% of the 30 Day VWAP. As used herein, the
term “30 Day VWAP” shall mean and refer to the lowest volume weighted average closing market price for the Common
Stock for the 30 trading days preceding conversion as posted on the OTCQB or on such US National Exchange upon which the Company
may be listed.

 

Section 2.Notices.
All notices under this Agreement shall be in writing and shall be (i) delivered in person, (ii) sent by telecopy, or (iii)
mailed, postage prepaid, either by registered or certified mail, return receipt requested, or overnight express carrier, addressed
in each case to the addresses set forth above, or to any other address or telecopy number as such party shall designate in a written
notice to the other. All notices sent pursuant to the terms of this Section shall be deemed received (i) if personally delivered,
then on the date of delivery; (ii) if sent by telecopy before 2:00 p.m. local time of the recipient, on the day sent if a business
day or if such day is not a business day or if sent after 2:00 p.m. local time of the recipient, then on the next business day;
(iii) if sent by overnight, express carrier, on the next business day immediately following the day sent; or (iv) if sent by registered
or certified mail, on the earlier of the third (3rd) business day following the day sent or when actually received. Any notice
by telecopy shall be followed by delivery of a copy of such notice on the next business day by overnight express carrier or by
hand.

 

    	PAGE 4

    	 

    

 

Section 3.Definitions.
For the purposes hereof, the following terms shall have the following meanings:

 

“Common Stock”
means the common stock, par value $0.001, of the Obligor and stock of any other class into which such shares may hereafter be changed
or reclassified.

 

“Conversion
Date” shall mean the date upon which the Holder gives the Obligor notice of its intention to effectuate a conversion
of this Debenture into shares of the Company’s Common Stock as outlined herein.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Underlying
Shares” means the shares of Common Stock issuable upon conversion of this Debenture.

 

Section 4.This
Debenture shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the
right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders
or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the
terms hereof.

 

Section 5.If
this Debenture is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for
and upon cancellation of the mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a
new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of evidence
of such loss, theft or destruction of such Debenture, and of the ownership hereof, and indemnity, if requested, all reasonably
satisfactory to the Obligor.

 

Section 6.Any
waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon
strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in
writing.

 

Section 7.Whenever
any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

 

Section 8.Notwithstanding
anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon conversion
pursuant to the terms hereof shall not exceed a number that, when added to the total number of shares of Common Stock deemed beneficially
owned by such Holder (other than by virtue of the ownership of securities or rights to acquire securities (including the Notes)
that have limitations on the Holder’s right to convert, exercise or purchase similar to the limitation set forth herein),
together with all shares of Common Stock deemed beneficially owned at such time (other than by virtue of the ownership of securities
or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the limitation set
forth herein) by the holder’s “affiliates” at such time (as defined in Rule 144 of the Act) (“Aggregation
Parties”) that would be aggregated for purposes of determining whether a group under Section 13(d) of the Securities
Exchange Act of 1934 as amended, exists, would exceed 4.9% of the total issued and outstanding shares of the Common Stock (the
“Restricted Ownership Percentage”).

 

Section 9.In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby. In
no event shall the amount of interest paid hereunder exceed the maximum rate of interest on the unpaid principal balance hereof
allowable by applicable law. If any sum is collected in excess of the applicable maximum rate, the excess collected shall be applied
to reduce the principal debt. If the interest actually collected hereunder is still in excess of the applicable maximum rate, the
interest rate shall be reduced so as not to exceed the maximum allowable under law.

 

    	PAGE 5

    	 

    

 

Section 10.Law;
Jurisdiction. This Debenture shall be governed by and interpreted in accordance with the laws of the State of New Jersey, without
regard to the principles of conflict of laws. The Obligor and the Holder expressly consent to the jurisdiction and venue of the
Superior Court of New Jersey, Bergen County, for any litigation between the parties.

 

Section 11.No
Jury Trial. The COMPANY hereto knowingly and voluntarily waives any and all
rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with,
this Note.

 

Section 12.Waiver.
The Company hereby waives any and all demands of any nature whatsoever, any and all notices of any nature whatsoever, dishonor,
presentment of any kind whatsoever, and protest of or in connection with this Debenture.

 

Section 13.Entire
Agreement. THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDES
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER HEREOF.

  

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- SIGNATURE PAGE
FOLLOWS] 

 

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IN WITNESS WHEREOF,
the Obligor has caused this Debenture to be duly executed by a duly authorized officer as of the date set forth above.

 

 

	US FUEL CORPORATION	 
	 	 	 
	 	 	 
	By:	 	 
	Print:	Harry Bagot 	 
	Title:	Chief Executive Officer	 

 

    	PAGE 7

    	 

    

 

EXHIBIT “A”

 

NOTICE OF CONVERSION

 

(To be executed by the Holder in order
to convert the Debenture)

 

The undersigned hereby
irrevocably elects to convert the below listed amount of the Debenture into Shares of Common Stock of US
FUEL CORPORATION, according to the conditions stated therein, as of the Conversion Date written below.

 

	Conversion Date:	 
	Applicable Conversion Price:	 
	Amount to be Converted:	$
	Amount of Debenture Unconverted:	$ 
	Shares of Common Stock to be Issued:	 
	Please issue the shares of Common Stock in the following name and to the following address:	 
	Issue to:	 
	
         Authorized Signature:
	 
	Name:	 
	Title:	 
	Phone Number:	 
	Broker DTC Participant Code:	 
	Account Number:	 

 

    	PAGE 8SECURITY
AGREEMENT

 

THIS SECURITY AGREEMENT
(the “Agreement”), is entered into and made effective as of DECEMBER 13, 2013, by and among US
FUEL CORPORATION, a Nevada corporation (“Company”), and Company’s undersigned subsidiaries (the “Subsidiaries”
and, collectively with the Company, the “Grantors”), in favor of 112359
FACTOR FUND, LLC (“the “Secured Party”).

 

WHEREAS, the
Secured Party holds that certain secured convertible debenture issued by the Company numbered USFF – 59FF 101 (“101
Debenture”) with an aggregate principal balance of $100,000;

 

WHEREAS, the
Secured Party has provided certain financial accommodations to Grantors, which accommodations Secured Party would not have provided
but for the agreement of Grantors hereunder; and,

 

WHEREAS, Grantors
have and will directly benefit from the financial accommodations provided by the Secured Party.

 

NOW, THEREFORE,
in consideration of the promises and the mutual covenants herein contained, and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1.

 

DEFINITIONS
AND INTERPRETATIONS

 

Section 1.1.Recitals.
The above recitals are true and correct and are incorporated herein, in their entirety, by this reference.

 

Section 1.2.Interpretations.
Nothing herein expressed or implied is intended or shall be construed to confer upon any person other than the Secured Party any
right, remedy or claim under or by reason hereof.

 

Section 1.3.Definitions.
All capitalized terms used in this Agreement and the recitals hereto and not defined herein shall have the meanings set forth in
the Securities Purchase Agreement, or in Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State
of New Jersey (the “Code”).

 

ARTICLE 2.

 

COLLATERAL

 

 Section 2.1. Grant of Security Interest.

 

(a)As collateral
security for all of the Obligations (as defined in Section 2.2 hereof), the Grantors hereby pledge and assign to the Secured
Party, and grant to the Secured Party for its benefit, a continuing security interest in and to the personal property described
on Exhibit A attached hereto (collectively, the “Collateral”).

 

(b)Simultaneously
with the execution and delivery of this Agreement, the Grantors shall make, execute, acknowledge, file, record and deliver to the
Secured Party such documents, instruments, and agreements, including, without limitation, financing statements, certificates, affidavits
and forms as may, in the Secured Party’s sole and exclusive judgment, be reasonably necessary to effectuate, complete or
perfect, or to continue and preserve, the security interest of the Secured Party in the Collateral.

 

Section 2.2Security
for Obligations. The security interest created hereby in the Collateral constitutes continuing collateral security for all
of the following obligations, whether now existing or hereinafter incurred (collectively, the “Obligations”):

 

any and all debts,
liabilities, obligations, covenants and duties owing by the Grantors to the Secured Party, including without limitation, now existing
or hereafter arising of every nature, type, and description, whether liquidated, unliquidated, primary, secondary, secured, unsecured,
direct, indirect, absolute, or contingent, and whether or not evidenced by a note, guaranty or other instrument, and any amendments,
extensions, renewals or increases thereof, and including any interest accruing thereon after insolvency, reorganization or like
proceeding relating to the Grantors, whether or not a claim for post-petition interest is allowed in such proceeding, and all costs
and expenses of the Secured Party incurred in the enforcement, collection or otherwise in connection with any of the foregoing,
including, but not limited to, reasonable attorneys’ fees and expenses and all obligations of any Grantors to the Secured
Party to perform acts or refrain from taking any action.

 

    	PAGE 1

    	 

    

 

Section 2.3. No
Assumption of Liability. The security interest in the Collateral is granted as security only and shall not subject the Secured
Party to, or in any way alter or modify any obligation or liability of any Grantors with respect to or arising out of the Collateral.

 

ARTICLE 3.

 

attorney-in-fact;
performance

 

 Section 3.1. Secured Party Appointed Attorney-In-Fact.

 

Each of the Grantors
hereby appoints the Secured Party as its attorney-in-fact, with full authority in the place and stead of the Grantors and in the
name of the Grantors or otherwise, exercisable after and during the continuance of an Event of Default, from time to time in the
Secured Party’s discretion to take any action and to execute any instrument which the Secured Party may reasonably deem necessary
to accomplish the purposes of this Agreement, including, without limitation, to (a) receive and collect all instruments made payable
to the Grantors representing any payments in respect of the Collateral or any part thereof and to give full discharge for the same;
(b) demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as and when the
Secured Party may determine, and (c) to facilitate collection, the Secured Party may notify account debtors and obligors on any
Collateral to make payments directly to the Secured Party. The foregoing power of attorney is a power coupled with an interest
and shall be irrevocable until all Obligations are paid and performed in full. The Grantors agree that the powers conferred on
the Secured Party hereunder are solely to protect the Secured Party’s interests in the Collateral and shall not impose any
duty upon the Secured Party to exercise any such powers.

 

 Section 3.2. Secured Party May Perform.

 

If the Grantors fail
to perform any agreement contained herein, the Secured Party, at its option, may itself perform, or cause performance of, such
agreement, and the expenses of the Secured Party incurred in connection therewith shall be included in the Obligations secured
hereby and payable by the Grantors under Section 8.3.

 

ARTICLE 4.

 

representations
and warranties

 

 Section 4.1. Authorization; Enforceability.

 

Each of the Grantors
represents and warrants that it has taken all action necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery, this Agreement shall constitute a valid and binding
obligation of the respective party, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights or by the principles governing the availability of equitable remedies.

 

 Section 4.2. Ownership of Collateral.

 

Each of the Grantors
represents and warrants that it is the legal and beneficial owner of the Collateral free and clear of any lien, security interest,
option or other charge or encumbrance (each, a “Lien”) except for Permitted Liens. For purposes of this Agreement,
“Permitted Liens” means: (a) the security interest created by this Agreement, (b) Liens in favor of the Secured
Party; (c) liens listed on the attached Schedule 4.2; and (d) inchoate Liens for taxes, assessments or governmental charges
or levies not yet due, as to which the grace period, if any, related thereto has not yet expired, or being contested in good faith
and by appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting
principles consistently applied (“GAAP”).

 

Section 4.3Location
of Collateral.

 

The Collateral is or
will be kept at the address(es) of each Grantor set forth on Schedule 4.3 attached hereto. Unless otherwise provided herein,
the Grantors will not remove any Collateral from such locations without the prior written consent of the Secured Party.

 

Section 4.4Location,
State of Incorporation and Name of Grantors.

 

Each Grantor principal
place of business; state of incorporation, organization or formation, organization id, and exact legal name is set forth on Schedule
4.4 attached hereto.

 

Section 4.5Priority
of Security Interest.

 

Subject only to the
Permitted Liens, the security interest granted to the Secured Party hereunder shall be a first priority security interest subject
to no other Liens and no financing statement, other than those in favor of the Secured Party or one of its affiliates, covering
any of the Collateral or any proceeds thereof is on file in any public office.

 

    	PAGE 2

    	 

    

 

ARTICLE 5.

 

default;
remedies

 

Section
5.1Events of Default. For purposes of this Agreement, the occurrence of one or more of the following after the date
hereof that continues for more than 30 days following written notice of default from the Secured Party to Grantors shall be deemed
an “Event of Default”:

 

(a)Payment
Default. If the Grantors shall fail to pay any amount due under any Transaction Document (as defined in subsection (l) below)
as and when due, or any fee or charge due and payable under any Transaction Document, as and when the same shall become due and
payable; or 

 

(b)Representations.
If any representation or warranty made by or on behalf of the Grantors, whether contained in this Agreement, or in any other document
or instrument between one or more of the Grantors and the Secured Party shall prove to have been false or incorrect in any material
respect when made; or 

 

(c)Voluntary
Insolvency Proceedings. If a Grantor that is not an Inactive Subsidiary shall (i) apply for or consent to or acquiesce in the
appointment of or the taking of possession by a receiver, liquidator, custodian or trustee of itself or of all or any part of its
property, (ii) admit in writing its inability, or be generally unable, to pay its debts as such debts become due, (iii) make a
general assignment for the benefit of its creditors, (iv) commence a voluntary case under the bankruptcy laws of the United States
of America (as now or hereafter in effect) or any similar foreign law, (v) file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, or (vi) take any action
for the purpose of effecting any of the foregoing; or

 

(d)Involuntary
Insolvency Proceedings. A proceeding or case shall be commenced, without the application or consent of a Grantor (that is not
an Inactive Subsidiary) in any court of competent jurisdiction, seeking (i) liquidation, reorganization, dissolution, winding-up
or composition or adjustment of debts of a Grantor, (ii) the appointment of a trustee, receiver, liquidator, custodian or the like
of a Grantor, or of all or any part of any of their assets, (iii) similar relief under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, and such proceeding or case shall continue undismissed, for a
period of forty five (45) days; or (iv) any order for relief against a Grantor, shall be entered in an involuntary case under bankruptcy
laws of the United States of America, or any similar foreign law, and shall continue undismissed for a period of forty five (45)
days; or

 

(e)Divestiture
of Assets. If any order, judgment, or decree shall be entered in any proceeding requiring a Grantor to divest itself of any
material part of its assets, and if, within forty-five (45) days after entry thereof (unless or until enforcement is sooner commenced),
such order, judgment or decree shall not have been discharged or execution thereof stayed pending appeal; or if, within ten (10)
days after the expiration of any such stay (unless or until enforcement is sooner commenced), such judgment, order or decree shall
not have been discharged; or

 

(f)Judgments
and Tax Liens. If one or more judgments, attachments, or tax liens exceeding $100,000 in the aggregate are entered against
a Grantor (that is not an Inactive Subsidiary), or against the Grantors’ property, and remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of thirty (30) days, or enforcement proceedings are commenced with respect to
any judgment, attachment, or tax lien against a Grantor; or

 

(g)Dissolution;
Suspension of Business. If a Grantor that is not an Inactive Subsidiary shall suspend or have suspended (voluntarily or involuntarily
and for whatever reason) the operation of a material portion of its business for a period of twenty (20) days or a Grantor dissolves
or otherwise ceases to exist; or 

(h)Indictment.
The indictment of a Grantor by any Governmental Authority the effect of which could be to restrain in any material way the conduct
by a Grantor of its business in the ordinary course; or

 

    	PAGE 3

    	 

    

 

(i)Lack
of Enforceability; Invalidity. Any material provision hereof or of any of the other agreements, documents, or instruments between
a Grantor and the Secured Party (together with this Agreement, collectively, the “Transaction Documents”) shall
for any reason cease to be valid, binding and enforceable with respect to any party hereto or thereto (other than Secured Party)
in accordance with its terms, or any such party shall challenge the enforceability hereof or thereof, or shall assert in writing,
or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Transaction
Documents has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest
provided for in any of the Transaction Documents shall cease to be a valid and perfected first priority security interest in any
of the Collateral purported to be subject thereto (except as otherwise permitted herein or therein); or

 

(j)Cross Default.
The occurrence of any default or event of default under any other agreement between the Secured Party and the Grantors, including,
without limitation, the Transaction Documents.

 

Section 5.2Method of Realizing
Upon the Collateral: Other Remedies.

 

If any Event of Default
shall have occurred and be continuing for more than 30 days following written notice of default from the Secured Party to the Grantors:

 

(a)The Secured
Party may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies
to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer
into the Secured Party’s name or into the name of its nominee or nominees (to the extent the Secured Party has not theretofore
done so) and thereafter receive, for the benefit of the Secured Party, all payments made thereon, give all consents, waivers and
ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require
the Grantors to assemble all or part of the Collateral as directed by the Secured Party and make it available to the Secured Party
at a place or places to be designated by the Secured Party that is reasonably convenient to both parties, and the Secured Party
may enter into and occupy any premises owned or leased by a Grantor where the Collateral or any part thereof is located or assembled
for a reasonable period in order to effectuate the Secured Party’s rights and remedies hereunder or under law, without obligation
to the Grantors in respect of such occupation, and (iii) without notice except as specified below and without any obligation
to prepare or process the Collateral for sale, (x) sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as the Secured Party may deem commercially reasonable, (y) accept the Collateral in partial
or full satisfaction of the Obligations in accordance with Sections 9-620 and 9-621 of the Code, and/or (z) lease, license
or dispose of the Collateral or any part thereof upon such terms as the Secured Party may deem commercially reasonable. The Grantors
agree that, to the extent notice of sale or any other disposition of the Collateral shall be required by law, at least ten (10)
days’ notice to the Grantors of the time and place of any public sale or the time after which any private sale or other disposition
of the Collateral is to be made shall constitute commercially reasonable notification. The Secured Party shall not be obligated
to make any sale or other disposition of any Collateral regardless of notice of sale having been given. The Secured Party may adjourn
any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. Each of the Grantors hereby waives any claims against the Secured
Party arising by reason of the fact that the price at which the Collateral may have been sold at a private sale was less than the
price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Secured
Party accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that
the Grantors may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof.
Each of the Grantors hereby acknowledges that (i) any such sale of the Collateral by the Secured Party may be made without
warranty, (ii) the Secured Party may specifically disclaim any warranties of title, possession, quiet enjoyment or the like,
and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness
of any such sale of Collateral.

 

(b)Any cash held
by the Secured Party as Collateral and all cash proceeds received by the Secured Party in respect of any sale of or collection
from, or other realization upon, all or any part of the Collateral shall be applied (after payment of any amounts payable to the
Secured Party pursuant to Section 8.3 hereof) by the Secured Party against, all or any part of the Obligations in such order
as the Secured Party shall elect in its sole and exclusive discretion. Any surplus of such cash or cash proceeds held by the Secured
Party and remaining after the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall
be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

 

    	PAGE 4

    	 

    

 

(c)In the event
that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Secured Party is
legally entitled, the Grantors shall be liable for the deficiency, together with interest thereon at the higher interest rate permitted
by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any
attorneys employed by the Secured Party to collect such deficiency.

 

(d)Each of the
Grantors hereby acknowledges that if the Secured Party complies with any applicable state, provincial, or federal law requirements
in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of
any sale or other disposition of the Collateral.

 

(e)The Secured
Party shall not be required to marshal any present or future collateral security (including, but not limited to, this 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, and all of the Secured Party’s rights hereunder and in respect of
such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing
or arising. To the extent that the Grantors lawfully may, the Grantors hereby agree that they will not invoke any law relating
to the marshaling of collateral which might cause delay in or impede the enforcement of the Secured Party’s rights under
this 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, the Grantors hereby irrevocably waive the benefits of all such laws.

 

Section 5.3Duties Regarding
Collateral.

 

The Secured Party shall
have no duty as to the collection or protection of the Collateral or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the Collateral actually in the Secured Party’s
possession.

 

Section 5.4License
Grant.

 

Each Grantor hereby
assigns, transfers, and conveys to the Secured Party, effective upon the occurrence of any Event of Default hereunder, the nonexclusive
right and license to use all Intellectual Property owned or used by the Company together with any goodwill associated therewith,
all to the extent necessary to enable the Secured Party to realize on the Collateral and any successor or assign to enjoy the benefits
of the Collateral. This right and license shall inure to the benefit of all successors, assigns and transferees of the Secured
Party and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure,
deed in lieu of foreclosure or otherwise.

 

ARTICLE 6.

 

AFFIRMATIVE
COVENANTS

 

So long as any of the
Obligations shall remain outstanding, unless the Secured Party shall otherwise consent in writing:

 

 Section 6.1. Existence, Properties, Etc.

 

(a)Each Grantor that
is not an Inactive Subsidiary shall do, or cause to be done, all things, or proceed with due diligence with any actions
or courses of action, that may be reasonably necessary (i) to maintain such Grantors’ due organization, valid existence
and good standing under the laws of its state of incorporation, and (ii) to preserve and keep in full force and effect all
qualifications, licenses and registrations in those jurisdictions in which the failure to do so could have a Material Adverse Effect
(as defined below), as determined by the Secured Party in its sole and exclusive discretion; and

 

(b) the Grantors
shall not do, or cause to be done, any act impairing the Grantors’ corporate power or authority (i) to carry on the
Grantors’ respective business as now conducted, and (ii) to execute or deliver this Agreement or any other document
delivered in connection herewith, including, without limitation, the First Debenture and the Second Debenture, as well as any other
loan instrument or UCC-1 Financing Statements pertaining thereto as required by the Secured Party (which debentures and any
other loan instruments collectively shall be referred to as the “Loan Instruments”) to which it is or will
be a party, or perform any of its obligations hereunder or thereunder. For purpose of this Agreement, the term “Material
Adverse Effect” shall mean any material and adverse effect, as determined by the Secured Party in its reasonable discretion,
whether individually or in the aggregate, upon (a) the Grantors’ assets, business, operations, properties or condition,
financial or otherwise; (b) the Grantors’ ability to make payment as and when due of all or any part of the Obligations;
or (c) the Collateral.

 

    	PAGE 5

    	 

    

 

 Section 6.2. Financial Statements and Reports.

 

The Grantors shall
furnish to the Secured Party within a reasonable time such financial data as the Secured Party may reasonably request.

 

 Section 6.3. Accounts and Reports.

 

The Grantors shall
maintain a standard system of accounting in accordance with GAAP, and provide, at their sole expense, to the Secured Party the
following:

 

(a)as soon as available,
a copy of any notice or other communication alleging any nonpayment or other material breach or default, or any foreclosure or
other action respecting any material portion of its assets and properties, received respecting any of the indebtedness of the Grantors
in excess of $50,000 (other than the Obligations), or any demand or other request for payment under any guaranty, assumption, purchase
agreement or similar agreement or arrangement respecting the indebtedness or obligations of others in excess of $50,000; and

 

(b)within fifteen
(15) days after the making of each submission or filing, a copy of any report, financial statement, notice or other document,
whether periodic or otherwise, submitted to the shareholders of a Grantor, or submitted to or filed by a Grantor with any governmental
authority involving or affecting (i) a Grantor that could reasonably be expected to have a Material Adverse Effect; (ii) the
Obligations; (iii) any part of the Collateral; or (iv) any of the transactions contemplated in this Agreement or the
Loan Instruments (except, in each case, to the extent any such submission, filing, report, financial statement, notice or other
document is posted on EDGAR Online).

 

 Section 6.4. Maintenance of Books and Records; Inspection.

 

Each of the Grantors
shall maintain its books, accounts and records in accordance with GAAP, and permit the Secured Party, its officers and employees
and any professionals designated by the Secured Party in writing, at any time during normal business hours and upon reasonable
notice to visit and inspect any of its properties (including but not limited to the Collateral), corporate books and financial
records, and to discuss its accounts, affairs and finances with any employee, officer or director thereof (it being agreed that,
unless an Event of Default shall have occurred and be continuing, there shall be no more than two (2) such visits and inspections
in any fiscal year).

 

 Section 6.5. Maintenance and Insurance.

 

(a)Each of the Grantors
shall maintain or cause to be maintained, at its own expense, all of its material assets and properties in good working order and
condition, ordinary wear and tear excepted, making all necessary repairs thereto and renewals and replacements thereof.

 

(b)The Grantors shall
maintain or cause to be maintained, at their own expense, insurance in form, substance and amounts (including deductibles), which
the Grantors deems reasonably necessary to the Grantors’ business, (i) adequate to insure all assets and properties
of the Grantors of a character usually insured by persons engaged in the same or similar business against loss or damage resulting
from fire or other risks included in an extended coverage policy; (ii) against public liability and other tort claims that
may be incurred by the Grantors; (iii) as may be required by applicable law and (iv) as may be reasonably requested by Secured
Party, all with financially sound and reputable insurers.

 

 Section 6.6. Contracts and Other Collateral.

 

Each of the Grantors
shall perform all of its obligations under or with respect to each instrument, receivable, contract and other intangible included
in the Collateral to which such Grantors is now or hereafter will be party on a timely basis and in the manner therein required,
including, without limitation, this Agreement, except to the extent the failure to so perform such obligations would not reasonably
be expected to have a Material Adverse Effect.

 

 Section 6.7. Defense of Collateral, Etc.

 

Each of the Grantors
shall defend and enforce its right, title and interest in and to any part of: (a) the Collateral; and (b) if not included
within the Collateral, those assets and properties whose loss would reasonably be expected to have a Material Adverse Effect, each
against all manner of claims and demands on a timely basis to the full extent permitted by applicable law (other than any such
claims and demands by holders of Permitted Liens).

 

    	PAGE 6

    	 

    

 

 Section 6.8. Taxes and Assessments.

 

Each of the Grantors
shall (a) file all material tax returns and appropriate schedules thereto that are required to be filed under applicable law,
prior to the date of delinquency (taking into account any extensions of the original due date), (b) pay and discharge all
material taxes, assessments and governmental charges or levies imposed upon a Grantor, upon its income and profits or upon any
properties belonging to it, prior to the date on which penalties attach thereto, and (c) pay all material taxes, assessments
and governmental charges or levies that, if unpaid, might become a lien or charge upon any of its properties; provided,
however, that the Grantors in good faith may contest any such tax, assessment, governmental charge or levy described in
the foregoing clauses (b) and (c) so long as appropriate reserves are maintained with respect thereto if and to the extent required
by GAAP.

 

 Section 6.9. Compliance with Law and Other Agreements.

 

Each of the Grantors
shall maintain its business operations and property owned or used in connection therewith in compliance with (a) all applicable
federal, state and local laws, regulations and ordinances governing such business operations and the use and ownership of such
property, and (b) all agreements, licenses, franchises, indentures and mortgages to which a Grantor is a party or by which
such Grantors or any of its properties is bound, except where the failure to so comply would not reasonably be expected to have
a Material Adverse Effect.

 

 Section 6.10. Notice of Default.

 

The Grantors will immediately
notify the Secured Party of any event causing a substantial loss or diminution in the value of all or any material part of the
Collateral and the amount or an estimate of the amount of such loss or diminution. The Grantors shall promptly notify the Secured
Party of any condition or event which constitutes, or would constitute with the passage of time or giving of notice or both, an
Event of Default, and promptly inform the Secured Party of any events or changes in the financial condition of any Grantors occurring
since the date of the last financial statement of such Grantors delivered to the Secured Party, which individually or cumulatively
when viewed in light of prior financial statements, which might reasonably be expected to have a Material Adverse Effect on the
business operations or financial condition of the Grantors.

 

 Section 6.11. Notice of Litigation.

 

The Grantors shall
give notice, in writing, to the Secured Party of (a) any actions, suits or proceedings wherein the amount at issue is in excess
of $50,000, instituted by any persons against a Grantor, or affecting any of the assets of a Grantor, and (b) any dispute,
not resolved within fifteen (15) days of the commencement thereof, between a Grantor on the one hand and any governmental or regulatory
body on the other hand, which might reasonably be expected to have a Material Adverse Effect on the business operations or financial
condition of such Grantors.

 

Section 6.12.Changes
to Identity.

 

Each Grantor that is
not an Inactive Subsidiary will (a) give the Secured Party at least 30 days’ prior written notice of any change in such Grantors’
name, identity or organizational structure, (b) maintain its jurisdiction of incorporation, organization or formation as set forth
on Schedule 4.4 attached hereto, (c) immediately notify the Secured Party upon obtaining an organizational identification number,
if on the date hereof such Grantors did not have such identification number.

 

Section 6.13.Perfection
of Security Interests.

 

(a)Financing Statements.
The Grantors hereby irrevocably authorize the Secured Party, at its sole cost and expense, at any time and from time to time to
file in any filing office in any jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral
(x) as all assets of the Grantors or words of similar effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Code of such jurisdiction, or (y) as being of an equal or lesser scope or with greater
detail, and (ii) contain any other information required by Part 5 of Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement or amendment, including (x) whether such Grantors is an organization, the type of organization
and any organization identification number issued to such Grantors, and (y) in the case of a financing statement filed as a fixture
filing, a sufficient description of real property to which the Collateral relates. The Grantors agree to furnish any such information
to the Secured Party promptly upon request. The Grantors also ratify their authorization for the Secured Party to have filed in
any jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof. The Grantors acknowledge
that they are not authorized to file any financing statement or amendment or termination statement with respect to any financing
statement without the prior written consent of the Secured Party, which will not be withheld upon the payment of all amounts due
to the Secured Party under the Transaction Documents, and agree that they will not do so without the prior written consent of the
Secured Party. The Grantors acknowledge and agree that this Agreement constitutes an authenticated record.

 

    	PAGE 7

    	 

    

 

(b)Possession.
The Grantors (i) shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where
the Secured Party chooses to perfect its security interest by possession in addition to the filing of a financing statement; and
(ii) will, where the Collateral is in the possession of a third party, join with the Secured Party in notifying the third party
of the Secured Party’s security interest and obtaining an acknowledgment from the third party that it is holding the Collateral
for the benefit of the Secured Party.

 

(c)Control.
The Grantors will cooperate with the Secured Party in obtaining control with respect to any portion of the Collateral consisting
of (i) Investment Property, (ii) Letters of Credit and Letter-of-Credit Rights and (iii) electronic Chattel Paper.

 

(d)Marking of
Chattel Paper. The Grantors will not create any Chattel Paper without placing a legend on the Chattel Paper acceptable to the
Secured Party in all respects indicating that the Secured Party has a security interest in the Chattel Paper.

 

Section 6.14Notice
of Commercial Tort Claims. Attached as Schedule 6.14 is a list of all Commercial Tort Claims of the Grantors (as such
Schedule may be amended, modified or supplemented from time to time). If any Grantors shall at any time acquire a Commercial Tort
Claim, such Grantors shall immediately notify the Secured Party in a writing signed by such Grantors which shall (a) provide brief
details of said claim and (b) grant to the Secured Party a security interest in said claim and in the proceeds thereof, all upon
the terms of this Agreement, in such form and substance satisfactory to the Secured Party.

 

ARTICLE 7.

 

negative
covenants

 

So long as any of the
Obligations shall remain outstanding, unless the Secured Party shall otherwise consent in writing each Grantor covenants and agrees
that it shall not:

 

Section 7.1.Transfers,
Liens and Encumbrances.

 

(a)Sell, assign (by
operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose of any of the Collateral, except the
Grantors may (i) sell or dispose of Inventory in the ordinary course of business, and (ii) sell or dispose of assets the Grantors
have determined, in good faith, not to be useful in the conduct of its business, and (iii) sell or dispose of accounts in the course
of collection in the ordinary course of business consistent with past practice.

 

(b)Directly or indirectly
make, create, incur, assume or permit to exist any Lien in, to or against any part of the Collateral other than Permitted Liens.

 

Section 7.2.Restriction
on Redemption and Cash Dividends

 

Directly or indirectly,
redeem, repurchase or declare or pay any cash dividend or distribution on its capital stock without the prior express written consent
of the Secured Party.

 

Section 7.3.Incurrence
of Indebtedness.

 

Directly or indirectly,
incur or guarantee, assume or suffer to exist any indebtedness, other than the indebtedness evidenced by the Permitted Indebtedness.
“Permitted Indebtedness” means: (i) indebtedness in favor of the Secured Party or one of its affiliates; (ii)
indebtedness which is not secured by any assets of the Grantors; and (iii) indebtedness solely between the Grantors and/or one
of its domestic affiliates or subsidiaries, on the one hand, and the Grantors and/or one of its domestic affiliates or subsidiaries,
on the other which indebtedness is not secured by any assets of the Grantors or any of its subsidiaries, provided that (x) in each
case a majority of the equity of any such domestic subsidiary is directly or indirectly owned by the Grantors, such domestic subsidiary
is controlled by the Grantors and such domestic subsidiary has executed a security agreement in the form of this Agreement and
(y) any such loan shall be evidenced by an intercompany note that is pledged by a Grantor or its subsidiary, as applicable, as
collateral pursuant to this Agreement.

 

    	PAGE 8

    	 

    

 

Section 7.4.Places
of Business.

 

Change the location
of its chief place of business, chief executive office or any place of business disclosed to the Secured Party, unless such change
in location is to a different location within the United States and the Grantors provides notice to the Secured Party of new location
within 10 days’ of such change in location.

 

ARTICLE 8.

 

MISCELLANEOUS

 

 Section 8.1. Notices.

 

All notices or other
communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly
given on: (a) the date of delivery, if delivered in person or by nationally recognized overnight delivery service or (b) five (5) days
after mailing if mailed from within the continental United States by certified mail, return receipt requested to the party entitled
to receive the same. Any party may change its address by giving notice to the other party stating its new address. Commencing on
the tenth (10th) day after the giving of such notice, such newly designated address shall be such party’s
address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement.

 

 Section 8.2. Severability.

 

If any provision of
this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision
and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this
Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein.

 

 Section 8.3. Expenses.

 

In the event of an
Event of Default, the Grantors will pay to the Secured Party the amount of any and all reasonable out-of-pocket expenses, including
the reasonable fees and expenses of its counsel, which the Secured Party may incur in connection with: (a) the custody or
preservation of, or the sale, collection from, or other realization upon, any of the Collateral; (b) the exercise or enforcement
of any of the rights of the Secured Party hereunder or (c) the failure by a Grantor to perform or observe any of the provisions
hereof.

 

 Section 8.4. Waivers, Amendments, Etc.

 

The Secured Party’s
delay or failure at any time or times hereafter to require strict performance by a Grantor of any undertakings, agreements or covenants
shall not waive, affect, or diminish any right of the Secured Party under this Agreement to demand strict compliance and performance
herewith. Any waiver by the Secured Party of any Event of Default shall not waive or affect any other Event of Default, whether
such Event of Default is prior or subsequent thereto and whether of the same or a different type. None of the undertakings, agreements
and covenants of a Grantor contained in this Agreement, and no Event of Default, shall be deemed to have been waived by the Secured
Party, nor may this Agreement be amended, changed or modified, unless such waiver, amendment, change or modification is evidenced
by an instrument in writing specifying such waiver, amendment, change or modification and signed by the Secured Party in the case
of any such waiver, and signed by the Secured Party and the Grantors in the case of any such amendment, change or modification.
Further, no such document, instrument, and/or agreement purported to be executed on behalf of the Secured Party shall be binding
upon the Secured Party unless executed by a duly authorized representative of the Secured Party.

 

 Section 8.5. Continuing Security Interest.

 

This Agreement shall
create a continuing security interest in the Collateral and shall: (a) remain in full force and effect so long as any of the
Obligations shall remain outstanding; (b) be binding upon each Grantor and its successors and assigns; and (c) inure
to the benefit of the Secured Party and its successors and assigns. Upon the payment or satisfaction in full of the Obligations,
this Agreement and the security interest created hereby shall terminate, and, in connection therewith, each Grantor shall be entitled
to the return, at its expense, of such of the Collateral as shall not have been sold in accordance with this Agreement or otherwise
accepted or applied pursuant to the terms hereof and the Secured Party shall deliver to the Grantors such documents as the Grantors
shall reasonably request to evidence such termination.

 

    	PAGE 9

    	 

    

 

 Section 8.6. Independent Representation.

 

Each party hereto acknowledges
and agrees that it has received or has had the opportunity to receive independent legal counsel of its own choice and that it has
been sufficiently apprised of its rights and responsibilities with regard to the substance of this Agreement.

 

 Section 8.7. Applicable Law: Jurisdiction.

 

This Agreement shall
be governed by and interpreted in accordance with the laws of the State of New Jersey, without regard to the principles of conflict
of laws. Grantors and Secured Party expressly consent to the jurisdiction and venue of the Superior Court of New Jersey, Bergen
County, for any litigation between the parties, provided, however, that nothing herein shall prevent the Secured
Party from enforcing its rights and remedies (including, without limitation, by filing a civil action) with respect to the Collateral
and/or the Grantors in any other jurisdiction in which the Collateral and/or the Grantors may be located.

 

 Section 8.8. Waiver of Jury Trial.

 

AS A FURTHER INDUCEMENT
FOR THE SECURED PARTY TO MAKE FINANCIAL ACCOMMODATIONS TO THE COMPANIES OR ANY GRANTOR, EACH GRANTOR HEREBY WAIVES, TO THE FULLEST
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT
AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.

 

Section 8.9.Indemnification.

 

Except with respect
to the Secured Party’s gross negligence, willful misconduct or fraud, the Grantors shall indemnify, defend, and hold the
Secured Party, or any agent, employee, officer, attorney, or representative of the Secured Party, harmless of and from any claim
brought or threatened against the Secured Party or any such person so indemnified by: any Grantors; any other obligor or endorser
of the Obligations or any other person (as well as from attorneys' fees and expenses in connection therewith) on account of the
Secured Party's relationship with the Grantors, or any other obligor or endorser of the Obligations (each of which may be defended,
compromised, settled, or pursued by the Secured Party with counsel of the Secured Party's selection, but at the expense of the
undersigned).

 

Section 8.10.Right
of Set Off.

 

The Grantors hereby
grants to the Secured Party, a lien, security interest and right of setoff as security for all liabilities and obligations to the
Secured Party, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now
or hereafter in the possession, custody, safekeeping or control of the Secured Party or any of its affiliates, or any entity under
the control of the Secured Party, or in transit to any of them. At any time, without demand or notice, the Secured Party may set
off the same or any part thereof and apply the same to any liability or obligation of the Grantors even though unmatured and regardless
of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE SECURED PARTY TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF
WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE GRANTORS, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

Section 8.11.Secured
Party’s Right to Assign Agreement.

 

The Grantors acknowledges
and agrees that the Secured Party has the right to transfer and assign this Agreement and the Secured Party’s rights hereunder
to a third party without prior notice to the Grantors. The Grantors shall cooperate with the Secured Party in effecting any transfer
and assignment of this Agreement and shall sign any documentation requested by the Secured Party in connection therewith.

 

Section 8.12.Liability
of Grantors.

 

Notwithstanding any
provision herein or in any other Transaction Document and/or Loan Instrument, the Grantors, and each of them, are and shall be
jointly and severally liable for any and all Obligations (whether any such Obligation is specified as an obligation of the Grantors
or of any of them).

 

    	PAGE 10

    	 

    

 

Section 8.13.Waiver
of Claims.

 

The Grantors acknowledge
and agree that they have no offsets, defenses, claims, or counterclaims against the Secured Party or its officers, directors, employees,
attorneys, representatives, parents, affiliates, predecessors, successors, or assigns with respect to the Obligations or otherwise,
and that if the Grantors now has, or ever did have, any offsets, defenses, claims, or counterclaims against the Secured Party or
its officers, directors, employees, attorneys, representatives, affiliates, predecessors, successors, or assigns, whether known
or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of this Agreement,
all of them are hereby expressly WAIVED, and the Grantors hereby RELEASE the Secured Party and its officers, directors,
employees, attorneys, representatives, affiliates, predecessors, successors, and assigns from any liability therefor.

 

Section 8.14.Counterparts;
Facsimile Signatures. This Agreement may be executed and delivered by exchange of facsimile signatures of the Secured Party
and the Grantors, and those signatures need not be affixed to the same copy. This Agreement may be executed in any number of counterparts.

 

Section 8.15.Entire
Agreement.

 

This Agreement constitutes
the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject
matter hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

- SIGNATURE PAGE FOLLOWS]

 

    	PAGE 11

    	 

    

 

IN WITNESS WHEREOF the parties have
duly executed, or caused their duly authorized representative, to execute this Security Agreement as of the date first above
written.

 

	 	SECURED PARTY:
	 	112359 FACTOR FUND, LLC
	 	 	 
	 	 	 
	 	By:	 
	 	Name:	Mary Carroll
	 	Title:	Manager

 

	US FUEL CORPORATION	 
	 	 	 
	 	 	 
	By:	 	 
	Name: 	Harry Bagot 	 
	Title:	Chief Executive Officer	 
	 	 	 
	SUBSIDIARIES:	 

 

    	PAGE 12

    	 

    

 

EXHIBIT A TO SECURITY
AGREEMENT

 

DEFINITION
OF COLLATERAL

 

For the purpose of
securing prompt and complete payment and performance by the Grantors of all of the Obligations, each Grantor unconditionally and
irrevocably hereby grants to the Secured Party a continuing security interest in and to, and lien upon, the following “Collateral”
of such Grantors (all capitalized terms used herein and not defined in the Agreement shall have the respective meanings ascribed
thereto in the UCC):

 

All personal property
of such Grantors, wherever located and whether now or hereinafter existing and whether now owned or hereafter acquired, of every
kind and description, tangible or intangible, including without limitation, all:

 

1.Goods;

 

2. Inventory, including,
without limitation, all goods, merchandise and other personal property which are held for sale or lease, or are furnished or to
be furnished under any contract of service or are raw materials, work-in-process, supplies or materials used or consumed in the
Grantors’ business, and all products thereof, and all substitutions, replacements, additions or accessions therefor and thereto;
and any cash or non-cash Proceeds of all of the foregoing;

 

3. Equipment, including,
without limitation, all machinery, equipment, furniture, parts, tools and dies, of every kind and description, of the Grantors
(including automotive equipment and motor vehicles), now owned or hereafter acquired by the Grantors, and used or acquired for
use in the business of the Grantors, together with all accessions thereto and all substitutions and replacements thereof and parts
therefor and all cash or non-cash Proceeds of the foregoing;

 

4.Fixtures, including,
without limitation, all goods which are so related to particular real estate that an interest in them arises under real estate
law and all accessions thereto, replacements thereof and substitutions therefor, including, but not limited to, plumbing, heating
and lighting apparatus, mantels, floor coverings, furniture, furnishings, draperies, screens, storm windows and doors, awnings,
shrubbery, plants, boilers, tanks, machinery, stoves, gas and electric ranges, wall cabinets, appliances, furnaces, dynamos, motors,
elevators and elevator machinery, radiators, blinds and all laundry, refrigerating, gas, electric, ventilating, air-refrigerating,
air-conditioning, incinerating and sprinkling and other fire prevention or extinguishing equipment of whatsoever kind and nature
and any replacements, accessions and additions thereto, Proceeds thereof and substitutions therefor;

 

5.Instruments (including
promissory notes);

 

6.Documents;

 

7.Accounts, including,
without limitation, all Contract Rights and accounts receivable, health-care-insurance receivables, and license fees; any other
obligations or indebtedness owed to the Grantors from whatever source arising; all rights of Grantors to receive any payments in
money or kind; all guarantees of Accounts and security therefor; all cash or non-cash Proceeds of all of the foregoing; all of
the right, title and interest of Grantors in and with respect to the goods, services or other property which gave rise to or which
secure any of the accounts and insurance policies and proceeds relating thereto, and all of the rights of the Grantors as an unpaid
seller of goods or services, including, without limitation the rights of stoppage in transit, replevin, reclamation and resale
and all of the foregoing, whether now existing or hereafter created or acquired;

 

8. Contracts and
Contract Rights, including, to the extent not included in the definition of Accounts, all rights to payment or performance under
a contract not yet earned by performance and not evidenced by an Instrument or Chattel Paper;

 

9. Chattel Paper
(whether tangible or electronic);

 

10.Deposit Accounts
(and in and to any deposits or other sums at any time credited to each such Deposit Account);

 

11.Money, cash
and cash equivalents;

 

12.Letters of Credit
and Letter-of-Credit Rights (whether or not the Letter of Credit is evidenced by a writing);

 

13.Commercial Tort
Claims;

 

    	PAGE 13

    	 

    

 

14.Securities Accounts,
Security Entitlements, Securities, Financial Assets and all other Investment Property, including, without limitation, all ownership
or membership interests in any subsidiaries or affiliates (whether or not controlled by the Grantors);

 

15.General Intangibles,
including, without limitation, all Payment Intangibles, tax refunds and other claims of the Grantors against any governmental authority,
and all choses in action, insurance proceeds, goodwill customer lists, formulae, permits, research and literary rights, and franchises.

 

16.Farm Products;

 

17.All books and
records and information (including all ledger sheets, files, computer programs, tapes and related data processing software) evidencing
an interest in or relating to any of the foregoing and/or to the operation of the Grantors’ business, and all rights of access
to such books and records, and information, and all property in which such books and records, and information are stored, recorded
and maintained.

 

18.To the extent
not already included above, all Supporting Obligations, and any and all cash and non-cash Proceeds, products, accessions, and/or
replacements of any of the foregoing, including proceeds of insurance covering any or all of the foregoing.

 

    	PAGE 14

    	 

    

 

SCHEDULE 1

 

(Subsidiaries and Affiliates)

 

 

 

 

 

 

 

 

 

 

    	PAGE 15

    	 

    

 

SCHEDULE 4.2

 

(Permitted Liens)

 

 

 

 

 

 

    	PAGE 16

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