Document:

Exhibit 10.1

 

	Principal Amount: $1,000,000	Issue Date: October 25, 2022
	 	 

PROMISSORY NOTE (this “Note”)

 

FOR VALUE
RECEIVED, SCHMITT INDUSTRIES, INC., an Oregon corporation (hereinafter called the “Borrower” or the “Company”)
(Trading Symbol: SMIT), hereby promises to pay to the order of Sententia Capital Management, LLC, a New York limited liability company,
or its registered assigns (the “Holder”), in the form of lawful money of the United States of America, the principal sum of
$1,000,000.00 (the “Principal Amount”), and to pay interest on the unpaid Principal Amount hereof at the rate of twelve percent
(12%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable,
whether at maturity or upon acceleration or by prepayment or otherwise, as further provided herein. The maturity date shall be the earlier
of (a) one (1) year from the Issue Date, subject to two (2) six-month extensions at the option of the Company, or (b) the occurrence of
an Event of Default (the “Maturity Date”), and is the date upon which the Principal Amount and any accrued and unpaid interest
and other fees, shall be due and payable.

 

This Note may not be prepaid or repaid in whole or in part
except as otherwise explicitly set forth herein.

 

Any Principal
Amount or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) twenty two percent (22%)
per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid (“Default Interest”).
Interest and Default Interest shall be computed on the basis of a 365-day year and the actual number of days elapsed.

 

All payments
due hereunder shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder
shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed
to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding
day which is a business day.

 

As used in
this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in
the city of New York, New York are authorized or required by law or executive order to remain closed; provided,
for the avoidance of doubt, that no such commercial banks shall be considered to be authorized or required by law or executive order to
remain closed as a result of “stay at home”, “shelter-in-place”, “non-essential employee” or other
similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long
as the electronic funds transfer systems (including for wire transfers) of such commercial banks are generally open for sue by customers
on such day.

 

This Note
is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights
or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

 

The following terms shall also apply to this Note:

 

ARTICLE I. PREPAYMENT AND GENERAL PROVISIONS

 

1.1  
Prepayment. At any time prior to the date that an Event of Default occurs under this Note, the Borrower shall have
the right, exercisable on five (5) days prior written notice to the Holder of the Note, to prepay the outstanding Principal Amount and
any interest then due under this Note in accordance with this Section 1.1, without premium or penalty. Any notice of prepayment hereunder
(an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state:
(1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be five (5) days from the
date of the Optional Prepayment Notice (the “Optional Prepayment Date”). On the Optional Prepayment Date, the Borrower shall
make payment of the amounts designated below to or upon the order of the Holder as specified by the Holder in writing to the Borrower.
If the Borrower delivers an Optional Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder of the Note
as provided in this Section 1.1, then the Borrower shall forever forfeit its right to prepay any part of the Note pursuant to this Section
1.1.

 

     

     

    

 

1.2  
Repayment from Proceeds. If, at any time prior to the full repayment of this Note, the Company receives cash proceeds
from any source or series of related or unrelated sources, including but not limited to, from payments from customers, the issuance of
equity or debt, the conversion of outstanding warrants of the Borrower, the issuance of securities pursuant to an equity line of credit
of the Borrower or the sale of assets, the Borrower shall, within one (1) business day of Borrower’s receipt of such proceeds, inform
the Holder of or publicly disclose such receipt, following which the Holder shall have the right in its sole discretion to require the
Borrower to immediately apply up to 100% of such proceeds to repay all or any portion of the outstanding Principal Amount and interest
(including any Default Interest) then due under this Note. Failure of the Borrower to comply with this provision shall constitute an Event
of Default.

 

1.3  
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or
substantially all of the assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into
any other Person (as defined below) or Persons when the Borrower is not the survivor shall be deemed to be an Event of Default pursuant
to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount
equal to the Default Amount (as defined in this Note). “Person” shall mean any individual, corporation, limited liability
company, partnership, association, trust or other entity or organization.

 

ARTICLE II. RANKING AND
CERTAIN COVENANTS

 

2.1  
Ranking and Security. The indebtedness evidenced by this Note and the payment of the principal, interest, fees, penalties
or other amounts due or payable hereunder shall be Senior (as hereinafter defined) to, and have priority in right of payment over, all
indebtedness of the Company, now outstanding or hereinafter incurred. “Senior” as used herein shall be deemed to mean that,
in the event of any default in the payment of the obligations represented by this Note (after giving effect to "cure" provisions,
if any) or of any liquidation, insolvency, bankruptcy, reorganization, or similar proceedings relating to the Company, all sums payable
on this Note shall first be paid in full, with interest, if any, before any payment is made upon any other indebtedness, now outstanding
or hereinafter incurred, and, in any such event, any payment or distribution of any character which shall be made in respect of any other
indebtedness of the Company, shall be paid over to the Holder for application to the payment hereof, unless and until the obligations
under this Note (which shall mean the principal and other obligations arising out of, premium, if any, interest on, and any costs and
expenses payable under, this Note) shall have been paid and satisfied in full.

 

2.2  
Other Indebtedness. So long as the Borrower shall have any obligation under this Note, the Borrower shall not (directly
or indirectly through any Subsidiary or affiliate) incur or suffer to exist or guarantee any indebtedness that is senior to or pari passu
with (in priority of payment and performance) the Borrower’s obligations hereunder.

 

2.3  
Restriction on Stock Repurchases and Debt Repayments. So long as the Borrower shall have any obligation under this Note,
the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange
for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of
the Borrower or any warrants, rights or options to purchase or acquire any such shares, or repay any pari passu or subordinated indebtedness
of Borrower.

 

2.4 
3(a)(10) Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement
structured in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act (a “3(a)(10)
Transaction”). In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(10) Transaction
while this Note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than
$25,000, will be assessed and will become immediately due and payable to the Holder at its election in the form of a cash payment or added
to the balance of this Note (under Holder's and Borrower's expectation that this amount will tack back to the Issue Date).

 

    2

     

    

 

2.5 
Preservation of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, (a) change the nature of its business;

 

(b) sell, divest, change the
structure of any material assets other than in the ordinary course of business; (c) enter into a Variable Rate Transaction; or (d) enter
into any merchant cash advance transactions. In addition, so long as the Borrower shall have any obligation under this Note, the Borrower
shall maintain and preserve, and cause each of its subsidiaries to maintain and preserve, its existence, rights and privileges, and become
or remain, and cause each of its subsidiaries (other than dormant subsidiaries that have no or minimum assets) to become or remain, duly
qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.

 

2.6 
Use of Proceeds. The proceeds of the Note shall be used exclusively for working capital of the Borrower and its subsidiaries
in accordance with the Approved Budget, in form and substance acceptable to Holder, to be prepared by the Company and furnished to the
Holder setting forth the expenditures and revenues of the Company as set forth on the budget approved by the parties (“Approved
Budget”). Borrower shall not pay any expenses save those set forth in the Approved Budget. The Approved Budget reflects, on a line-item
basis, anticipated cash receipts and expenditures on a weekly basis and includes all necessary and required expenses that Borrower expects
to incur each month of the Approved Budget. The Approved Budget shall be revised by the end of each month during the term of the Note,
and shall remain subject to the consent of the Holder. Not later than the second business day of each week commencing with the second
week of the period covered by the Approved Budget, Borrower shall provide Holder with a variance report, reflecting on a line-item basis,
actual cash disbursements and revenues for the preceding week and the percentage variance (“Variance Percent”) of such actual
disbursements and revenues from those reflected in the Approved Budget for that period. Any disbursement by Borrower other than for budgeted
amounts as set forth in the Approved Budget shall constitute an Event of Default under the Note unless Holder has agreed to the those
changes in writing; provided, however, Borrower may make payments in exceeds of the total budgeted disbursements so long as the Variance
Percent of the aggregate of all actual disbursements for each week shall not exceed ten percent (10%) of the budgeted disbursements for
that week (“Allowed Disbursement Variance”). Any amount included in the Approved Budget that is not incurred or paid during
a particular week shall be permitted to be carried over into subsequent weeks of the Approved Budget. The foregoing shall be tested each
week pursuant to a variance report delivered by Borrower to Holder on the Wednesday of each week reflecting on a line-item basis Borrower’s
actual performance compared to the Approved Budget for the applicable period after Closing and the Variance Percent of Borrower’s
actual results from those reflected

 

2.7 
Fees. In addition to the terms above, the Company shall be pay the fees to the Holder set forth below:

 

(a) Commitment Fee: Three percent (3%) of the
Principal Amount of the Note shall be deemed earned at the Issue Date and added to the Principal Amount.

 

(b) Exit Fee:
Two percent (2%) of the Principal Amount shall be deemed earned at Maturity and added to the Principal Amount.

 

(c) Extension
Fee: Three percent (3%) of the Principal Amount shall be deemed earned at the exercise of each six-month extension and added to the
Principal.

 

(d) Monitor
Fee: The Company shall pay to the Holder ten thousand dollars ($10,000.00) per year paid in cash as a monitor fee.

 

2.8      
Security Agreement and Subsidiary Guarantee. Borrower, its subsidiaries and the Holder shall enter into a Security Agreement,
dated as of the date hereof (the “Security Agreement”) and a Subsidiary Guarantee, dated as of the date hereof (the “Subsidiary
Guarantee”, and together with the Security Agreement and this Note, the “Transaction Documents”).

 

2.9      
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note.

 

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ARTICLE III. EVENTS OF
DEFAULT

 

It shall be considered an event of
default if any of the following events listed in this Article III (each, an “Event of Default”) shall occur (whatever the
reason for such event and whether such event 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):

 

3.1  
Failure to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or interest thereon when due
on this Note, whether at maturity, upon acceleration or otherwise, or fails to fully comply with Section 1.2 of this Note.

 

3.2    
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such
a receiver or trustee shall otherwise be appointed.

 

3.3  
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed for a
period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.4    
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary
of the Borrower.

 

3.5      
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.6     
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

3.7       
Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).

 

3.8     
Cross-Default. The declaration of an event of default by any lender or other extender of credit to the Company under any
notes, loans, agreements or other instruments of the Company evidencing any indebtedness of the Company (including those filed as exhibits
to or described in the Company’s filings with the SEC), after the passage of all applicable notice and cure or grace periods.

 

3.9     
Variable Rate Transactions. The Borrower consummates a variable rate transaction at any time on or after the Issue Date.

 

3.10  
Rights and Remedies Upon an Event of Default.

 

Upon the
occurrence of any Event of Default specified in this Article III, this Note shall become immediately due and payable, and the Borrower
shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Amount then outstanding plus
accrued interest (including any Default Interest) through the date of full repayment multiplied by 22% (collectively the “Default
Amount”), as well as all costs, including, without limitation, legal fees and expenses, of collection, all without demand, presentment
or notice, all of which hereby are expressly waived by the Borrower.

 

Upon the
payment in full of the Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with
such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives
full payment pursuant to this Section 3.13. No such rescission or annulment shall affect any subsequent Event of Default or impair any
right consequent thereon.

 

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ARTICLE IV. MISCELLANEOUS

 

4.1   
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall
be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice
is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

If to the Borrower, to:

 

SCHMITT INDUSTRIES, INC.

2765 N.W. Nicolai Street

Portland, Oregon 97210

Attention: Philip Bosco, CFO

e-mail: pbosco@schmitt-ind.com

 

If to the Holder:

 

Sententia
Capital Management, LLC

Attention: Michael Zapata

e-mail: mzapata@sententiacapital.com

 

4.2  
Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and
the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.3  
Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. The Borrower shall not assign this Note or any rights or obligations hereunder without the
prior written consent of the Holder. The Holder may assign its rights hereunder without the consent of the Borrower.

 

4.4  
Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.

 

    5

     

    

 

4.5  
Governing Law; Venue;
Attorney’s Fees. This Note shall be
governed by and
construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws. Any action brought
by either party against the other concerning the transactions contemplated by this Note or any other agreement, certificate, instrument
or document contemplated hereby shall be brought only in the Court of Chancery of the State of Delaware or, to the extent such court does
not have subject matter jurisdiction, the United States District Court for the District of Delaware or, to the extent that neither of
the foregoing courts has jurisdiction, the Superior Court of the State of Delaware. The Borrower hereby irrevocably waives any objection
to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or
based upon forum non conveniens. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED
HEREBY. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action
or proceeding in connection with this Note or any other agreement, certificate, instrument or document contemplated hereby or thereby
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
The prevailing party in any action or dispute brought in connection with this the Note or any other agreement, certificate, instrument
or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and
costs.

 

4.6  
Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding Principal
Amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest,
the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty.

 

4.7     
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy
at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by
the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach
of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without
any bond or other security being required.

 

4.8     
Construction; Headings. This Note shall be deemed to be jointly drafted by the Company and all the Holder and shall not
be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part
of, or affect the interpretation of this Note.

 

4.9     
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce any right
or remedy under this Note. Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed and provided that
the total liability of the Company under this Note for payments which under the applicable law are in the nature of interest shall not
exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing,
in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under the applicable
law in the nature of interest that the Company may be obligated to pay under this Note exceed such Maximum Rate. It is agreed that if
the maximum contract rate of interest allowed by applicable law and applicable to this Note is increased or decreased by statute or any
official governmental action subsequent to the Issue Date, the new maximum contract rate of interest allowed by law will be the Maximum
Rate applicable to this Note from the effective date thereof forward, unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Holder with respect to indebtedness
evidenced by this the Note, such excess shall be applied by the Holder to the unpaid principal balance of any such indebtedness or be
refunded to the Company, the manner of handling such excess to be at the Holder’s election.

 

4.10  
Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule
of law (including any judicial ruling), then such provision shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision of this Note.

 

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4.11   
Dispute Resolution. In the case of a dispute as to any prepayment amount or Default Amount, Issue, Closing or Maturity Date,
or the applicable prepayment amount(s) (as the case may be), the Borrower or the Holder shall submit the disputed determinations or arithmetic
calculations via facsimile (i) within one (1) business day after receipt of the applicable notice giving rise to such dispute to the Borrower
or the Holder or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to
such dispute. If the Holder and the Borrower are unable to agree upon such determination or calculation within one (1) business day of
such disputed determination or arithmetic calculation (as the case may be) being submitted to the Borrower or the Holder, then the Borrower
shall, within one (1) business day, submit the disputed arithmetic calculation of any prepayment amount or Default Amount, to an independent,
outside accountant selected by the Holder that is reasonably acceptable to the Borrower. The Borrower shall cause at its expense the investment
bank or the accountant to perform the determinations or calculations and notify the Borrower and the Holder of the results no later than
one (1) business day from the time it receives such disputed determinations or calculations. Such investment bank’s or accountant’s
determination or calculation shall be binding upon all parties absent demonstrable error.

 

[signature page follows]

 

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IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer on October 25, 2022.

 

SCHMITT INDUSTIRES, INC.

 

	By: /s/ Philip Bosco
	       Name: Philip Bosco
	       Title: Chief Financial OfficerExhibit 10.2

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT, dated
as of October 25, 2022 (this “Agreement”), is among SCHMITT INDUSTRIES, INC., an Oregon corporation (together with
its successors and assigns, the “Company”), Schmitt Measurement Systems, Inc.,
an Oregon corporation (together with its successors and assigns, “SMS”) and Ample
Hills Acquisition LLC, a New York limited liability company (together with its successors and assigns, “Ample Hills”
and together with SMS, the “Subsidiaries”) (the Company and the Subsidiaries, together with any other debtor parties
joined hereto from time to time as provided herein, collectively, the “Debtors”, and each individually, a “Debtor”),
and Sententia Capital Management LLC, a New York limited liability company, (together with
his or its successors and assigns, the “Secured Party”), as the holder of that certain Promissory Note, dated as of
the date hereof, issued by the Company in the original aggregate principal amount of $1,000,000 on the date hereof (the “Note”).

 

W I T N E S S E T H:

 

WHEREAS, the Secured Party
has agreed to extend the loan to the Company evidenced by the Note;

 

WHEREAS, pursuant to a certain
Subsidiary Guarantee, dated as of the date hereof (the “Guarantee”), the Subsidiaries agreed to guarantee and act as
surety for payment of such Note; and

 

WHEREAS, in order to induce
the Secured Party to extend the loans evidenced by the Note, each Debtor has agreed to execute and deliver to the Secured Party this Agreement
and to grant the Secured Party a security interest in all assets of such Debtor to secure the prompt payment, performance and discharge
in full of all of the Company’s obligations under the Note and the Subsidiaries’ obligations under the Guarantee.

 

NOW, THEREFORE, in consideration
of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:

 

1.       Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel paper”,
“commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC.

 

    1 

     

    

 

(a)       “Collateral”
means the collateral in which the Secured Party is granted a security interest by this Agreement and which shall include the following
personal property of each Debtor, whether presently owned or existing or hereafter acquired or coming into existence, wherever situated,
and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any
tort claims in connection therewith, and all dividends, interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for, any or all of the Pledged Securities
(as defined below) and/or Pledged Interests (as defined below):

 

(i)       All
goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever
situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements
therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with any
Debtor’s businesses and all improvements thereto; and (B) all inventory;

 

(ii)       All
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, stock or
other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, Pledged Interests, licenses,
distribution and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed
by any Debtor), computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights,
goodwill, Intellectual Property and income tax refunds;

 

(iii)       All
accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to
each account, including any right of stoppage in transit;

 

(iv)       All
documents, letter-of-credit rights, instruments and chattel paper;

 

(v)       All
commercial tort claims;

 

(vi)       All
deposit accounts and all cash (whether or not deposited in such deposit accounts);

 

(vii)       All
investment property;

 

(viii)       All
supporting obligations; and

 

(ix)       All
files, records, books of account, business papers, and computer programs;

 

(x)       All
insurance proceeds;

 

    2 

     

    

 

(xi)       All
cryptocurrency and other blockchain assets;

 

(xii)       All
causes and rights of action, remedies, privileges, settlements, judicial and arbitration judgments and awards, indemnities, Liens, warranties,
or guaranties payable from time to time with respect to, or Lien or other security for, any of the foregoing; and

 

(xiii)       the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(xii) above.

 

Without limiting the
generality of the foregoing, the “Collateral” shall include all investment property and general intangibles respecting
ownership and/or other equity interests owned, directly or indirectly, by any Debtor, including, without limitation, the shares of capital
stock and the other equity interests previously disclosed to the Secured Party (as the same may be modified from time to time pursuant
to the terms hereof), and any other shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of
any Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each case,
all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable or distributed
in respect of, or exchanged for, any of the foregoing, and all rights arising under or in connection with the Pledged Securities and Pledged
Interests, including, but not limited to, all dividends, interest and cash.

 

Notwithstanding the
foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes void
by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such
applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided, however,
that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the extent
permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.

 

(b)       “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights arising under
the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation,
all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other source
or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common
law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision
thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and
(vii) all causes of action for infringement of the foregoing.

 

    3 

     

    

 

(d)       “Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and such other
instruments or documents as the Secured Party deems necessary or appropriate in order to effect any pledge or assignment of any instrument
as contemplated hereunder, as determined by the Secured Party in its sole discretion.

 

(e)       “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or
that are now or may be hereafter contracted or acquired, or owing to, of the Company and the other Debtors to the Secured Party, including,
without limitation, all obligations under this Agreement, the Note, the Guarantee and any other instruments, agreements or other documents
executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Secured Party as
a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from
time to time. Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation:
(i) principal of, and interest on the Note and the loans represented thereby; (ii) any and all other fees, indemnities, costs, obligations
and liabilities of the Company and the other Debtors from time to time under or in connection with this Agreement, the Note, the Guarantee
and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all
amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that
the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Debtor.

 

(f)       “Organizational
Documents” means with respect to any Debtor, the documents by which such Debtor was organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation for
preferred stock or other forms of preferred equity) and which relate to the internal governance of such Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).

 

    4 

     

    

 

(g)       “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(j).

 

(h)       “Pledged
Securities” shall have the meaning ascribed to such term in Section 4(i).

 

(i)       “UCC”
means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that defined
terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed in its broadest
sense. Accordingly, if there are, from time to time, changes to defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones shall be controlling.

 

2.       Grant
of Security Interest in Collateral. As an inducement for the Secured Party to extend the loan as evidenced by the Note and to secure
the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, each Debtor hereby
unconditionally and irrevocably pledges, grants and hypothecates to the Secured Party a first lien in, and security interest upon, and
a right of set-off against all of its right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security
Interest” and, collectively, the “Security Interests”).

 

3.       Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, the Company shall deliver or cause to be delivered
to the Secured Party (a) any and all certificates and other instruments representing or evidencing the Pledged Securities and Pledged
Interests, and (b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements. The Company is, contemporaneously with the execution hereof, delivering to the Secured Party,
or has previously delivered to the Secured Party, a true and correct copy of each Organizational Document governing any of the Pledged
Securities and Pledged Interests.

 

4.       Representations,
Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure schedules
delivered to the Secured Party concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall
be deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with, the Secured Party as follows:

 

(a)Each
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement and
otherwise to carry out its obligations hereunder. The execution, delivery and performance by each Debtor of this Agreement and the filings
contemplated therein have been duly authorized by all necessary action on the part of such Debtor and no further action is required by
such Debtor. This Agreement has been duly executed by each Debtor. This Agreement constitutes the legal, valid and binding obligation
of each Debtor, enforceable against each Debtor in accordance with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors
and by general principles of equity.

 

    5 

     

    

 

(b)       Each
Debtor has no place of business or offices where their respective books of account and records are kept (other than temporarily at the
offices of its attorneys or accountants) or places where Collateral is stored or located each Debtor is the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property. None of such Collateral is in
the possession of any consignee, bailee, warehouseman, agent or processor.

 

(c)       Except
as set forth on Schedule A attached hereto, each Debtor is the sole owner of the Collateral being pledged by it pursuant to this
Agreement (except for non-exclusive licenses granted by any Debtor in the ordinary course of business), free and clear of any liens, security
interests, encumbrances, rights or claims, and are fully authorized to grant the Security Interests. Except as set forth on Schedule
B attached hereto, there is not on file in any governmental or regulatory authority, agency or recording office an effective financing
statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that will be filed in favor
of the Secured Party pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule B
attached hereto and except pursuant to this Agreement, as long as this Agreement shall be in effect, none of the Debtors shall execute
nor shall any of the Debtors knowingly permit to be on file in any such office or agency any other financing statement or other document
or instrument (except to the extent filed or recorded in favor of the Secured Party pursuant to the terms of this Agreement).

 

(d)       No
written claim has been received that any Collateral or any Debtor’s use of any Collateral violates the rights of any third party.
There has been no adverse decision to any Debtor’s claim of ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to any Debtor’s right to keep and maintain such Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of any Debtor, threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.

 

(e)       Each
Debtor shall at all times maintain its books of account and records relating to the Collateral at its chief executive office and its Collateral
at the locations of the Debtor and may not relocate such books of account and records or tangible Collateral unless it delivers to the
Secured Party at least 30 days prior to such relocation (i) written notice of such relocation and the new location thereof (which must
be within the United States) and (ii) evidence that appropriate financing statements under the UCC and other necessary documents have
been filed and recorded and other steps have been taken to perfect the Security Interests to create in favor of the Secured Party a valid,
perfected and continuing perfected first priority lien in the Collateral.

 

    6 

     

    

 

(f)       This
Agreement creates in favor of the Secured Party a valid first priority security interest in the Collateral, securing the payment and performance
of the Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder
in any Collateral which may be perfected by filing UCC financing statements shall have been duly perfected. Except for the filing of the
UCC financing statements referred to in the immediately following paragraph, the execution and delivery of deposit account control agreements
satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of each Debtor, and the delivery of
the certificates and other instruments provided in Section 3, no action is necessary to create, perfect or protect the security interests
created hereunder. Without limiting the generality of the foregoing, except for the filing of said financing statements, and the execution
and delivery of said deposit account control agreements, no consent of any third parties and no authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance
of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or (iii) the enforcement
of the rights of the Secured Party hereunder.

 

(g)       Each
Debtor hereby authorizes the Secured Party to file one or more financing statements under the UCC, with respect to the Security Interests,
with the proper filing and recording agencies in any jurisdiction deemed proper by it.

 

(h)       The
execution, delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational
Documents of any Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule
or regulation applicable to any Debtor or (ii) except as set forth on Schedule A, conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument
(evidencing any Debtor's debt or otherwise) or other understanding to which any Debtor is a party or by which any property or asset of
any Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors of any Debtor)
necessary for any Debtor to enter into and perform its obligations hereunder have been obtained.

 

(i)       The
capital stock and other equity interests of the Company, its Subsidiaries and their respective subsidiaries (the “Pledged Securities”)
represent all capital stock and other equity interests owned, directly or indirectly, by the Debtors. All of the Pledged Securities are
validly issued, fully paid and nonassessable, and each Debtor is the legal and beneficial owner of the Pledged Securities that it owns,
free and clear of any lien, security interest or other encumbrance. During the period in which the Note is outstanding, none of the Debtors
shall, without the prior written consent of the Secured Party, directly or indirectly, sell, offer, contract or grant any option to sell,
pledge, transfer or otherwise dispose of or transfer, any shares of their capital stock, options, rights or warrants to acquire shares
of capital stock or securities exchangeable or exercisable for or convertible into shares of capital stock.

 

    7 

     

    

 

(j)       The
ownership and other equity interests in partnerships and limited liability companies included in the Collateral (the “Pledged
Interests”) (i) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not
held in a securities account or by any financial intermediary, and as of the date hereof and (ii) are not evidenced by any certificates
as of the date hereof.

 

(k)       The
Debtors shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected first priority liens
and security interests in the Collateral in favor of the Secured Party until this Agreement and the Security Interest hereunder shall
be terminated pursuant to Section 14 hereof. Each Debtor hereby agrees to defend the same against the claims of any and all persons and
entities. Each Debtor shall safeguard and protect all Collateral for the account of the Secured Party. At the request of the Secured Party,
each Debtor will sign and deliver to the Secured Party at any time or from time to time one or more financing statements pursuant to the
UCC in form reasonably satisfactory to the Secured Party and will pay the cost of filing the same in all public offices wherever filing
is, or is deemed by the Secured Party to be, necessary or desirable to effect the rights and obligations provided for herein. Without
limiting the generality of the foregoing, the Debtors shall pay all fees, taxes and other amounts necessary to maintain the Collateral
and the Security Interests hereunder, and the Debtors shall obtain and furnish to the Secured Party from time to time, upon demand, such
releases and/or subordinations of claims and liens which may be required to maintain the first priority status of the Security Interests
hereunder.

 

(l)       Except
as set forth on Schedule A, no Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of
the Collateral (except for non-exclusive licenses granted by a Debtor in its ordinary course of business and sales of inventory by a Debtor
in its ordinary course of business) without the prior written consent of the Secured Party.

 

(m)       Each
Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.

 

    8 

     

    

 

(n)       Each
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter
acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation having
similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such entities
and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement cost
thereof. Each Debtor shall, as soon as practicable, cause each insurance policy issued in connection herewith to provide, and the insurer
issuing such policy to certify to the Secured Party, that (a) the Secured Party will be named as lender’s loss payee and additional
insured under each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever,
such insurer will promptly notify the Secured Party and such cancellation or change shall not be effective as to the Secured Party for
at least thirty (30) days after receipt by the Secured Party of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (c) the Secured Party will have the right (but no obligation) at its election to remedy any default in
the payment of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in the
Note) exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss payments in each instance
will be applied by the applicable Debtor to the repair and/or replacement of property with respect to which the loss was incurred to the
extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable to
the applicable Debtor; provided, however, that payments received by any Debtor after an Event of Default occurs and is continuing
or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Secured Party and, if received by such
Debtor, shall be held in trust for the Secured Party and immediately paid over to the Secured Party unless otherwise directed in writing
by the Secured Party. Copies of such policies or the related certificates, in each case, naming the Secured Party as lender loss payee
and additional insured shall be delivered to the Secured Party at least annually and at the time any new policy of insurance is issued.

 

(o)       Each
Debtor shall, within five (5) Business Days of obtaining knowledge thereof, advise the Secured Party promptly, in sufficient detail, of
any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value
of the Collateral or on the Secured Party’ security interest therein.

 

(p)Each
Debtor shall promptly execute and deliver to the Secured Party such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take such further action as the Secured Party may from time
to time request and may in its sole discretion deem necessary or appropriate to perfect, protect or enforce the Secured Party’ security
interest in the Collateral, including, without limitation, if applicable, the execution and delivery of a separate security agreement
with respect to each Debtor’s Intellectual Property (“Intellectual Property Security Agreement”) in which the
Secured Party on behalf of the Secured Party has been granted a security interest hereunder, in form and substance satisfactory to the
Secured Party, which Intellectual Property Security Agreement, other than as stated therein, shall be subject to all of the terms and
conditions hereof.

 

(q)       Each
Debtor shall permit the Secured Party and its representatives and agents to inspect the Collateral during normal business hours and upon
reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Secured Party
from time to time.

 

(r)       Each
Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral.

 

    9 

     

    

 

(s)       Each
Debtor shall promptly notify the Secured Party in sufficient detail upon becoming aware of any attachment, garnishment, execution or other
legal process levied against any Collateral and of any other information received by such Debtor that may materially affect the value
of the Collateral, the Security Interest or the rights and remedies of the Secured Party hereunder.

 

(t)       All
information heretofore, herein or hereafter supplied to the Secured Party by or on behalf of any Debtor with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.

 

(u)       Each
Debtor shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any rights
and franchises material to its business.

 

(v)       No
Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one),
legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written notice to
the Secured Party of such change and, at the time of such written notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

 

(w)       Except
in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold, sale or
return, sale on approval, or other conditional terms of sale without the consent of the Secured Party which shall not be unreasonably
withheld.

 

(x)       No
Debtor may relocate its chief executive office to a new location without providing 30 days prior written notification thereof to the Secured
Party and so long as, at the time of such written notification, such Debtor provides any financing statements or fixture filings necessary
to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

 

(y)       Each
Debtor was organized and remains organized solely under the laws of the state of its incorporation or formation.

 

(z)       
(i) The exact legal name of each Debtor is set forth above; (ii) no Debtor has any trade names except as set forth on Schedule C
attached hereto; (iii) no Debtor has used any name other than that stated in the preamble hereto or as set forth on Schedule C
for the preceding five years; and (iv) no entity has merged into any Debtor or been acquired by any Debtor within the past five years.

 

(aa)       At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or permit
possession by the secured party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral to
the Secured Party.

 

    10 

     

    

 

(bb)       Each
Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of the Secured Party regarding the
Pledged Interests consistent with the terms of this Agreement without the further consent of any Debtor as contemplated by Section 8-106
(or any successor section) of the UCC. Further, each Debtor agrees that it shall not enter into a similar agreement (or one that would
confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.

 

(cc)       Each
Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Secured Party, or, if such delivery is not
possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by
this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying
chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).

 

(dd)       If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through an account
control agreement, the applicable Debtor shall promptly cause such an account control agreement covering such investment property or deposit
account, as applicable, in form and substance in each case satisfactory to the Secured Party, to be entered into and delivered to the
Secured Party.

 

(ee)       To
the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured Party.

 

(ff)       To
the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Secured Party in notifying
such third party of the Secured Party’s security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Secured Party.

 

(gg)       If
any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Party in a writing
signed by such Debtor of the particulars thereof and grant to the Secured Party in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Secured Party.

 

(hh)       Each
Debtor shall promptly provide written notice to the Secured Party of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and proceeds
thereof, shall execute and deliver to the Secured Party an assignment of claims for such accounts and cooperate with the Secured Party
in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local
statute or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.

 

    11 

     

    

 

(ii)        Each
Debtor shall cause each subsidiary of such Debtor to immediately become a party hereto (an “Additional Debtor”), by
executing and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the
provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules for, or supplements
to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements
shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions,
good standing certificates, incumbency certificates, organizational documents, financing statements and other information and documentation
as the Secured Party may reasonably request. Upon delivery of the foregoing to the Secured Party, the Additional Debtor shall be and become
a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and to the same extent
as if it were an original signatory hereto and shall be deemed to have made the representations, warranties and covenants set forth herein
as of the date of execution and delivery of such Additional Debtor Joinder, and all references herein to the “Debtors” shall
be deemed to include each Additional Debtor.

 

(jj)Each Debtor
shall vote the Pledged Securities and Pledged Interests to comply with the covenants and agreements set forth herein and in the Note.

 

(kk)Each Debtor
shall register the pledge of the applicable Pledged Securities and Pledged Interests on the books of such Debtor. Each Debtor shall notify
each issuer of Pledged Securities and Pledged Interests to register the pledge of the applicable Pledged Securities and Pledged Interests
in the name of the Secured Party on the books of such issuer. Further, except with respect to certificated securities delivered to the
Secured Party, the applicable Debtor shall deliver to the Secured Party an acknowledgement of pledge (which, where appropriate, shall
comply with the requirements of the relevant UCC with respect to perfection by registration) signed by the issuer of the applicable Pledged
Securities and Pledged Interests, which acknowledgement shall confirm that: (a) it has registered the pledge on its books and records;
and (b) at any time directed by the Secured Party during the continuation of an Event of Default, such issuer will transfer the record
ownership of such Pledged Securities and Pledged Interests into the name of any designee of the Secured Party, will take such steps as
may be necessary to effect the transfer, and will comply with all other instructions of the Secured Party regarding such Pledged Securities
and Pledged Interests without the further consent of any Debtor.

 

(ll)In the event
that, upon an occurrence of an Event of Default, the Secured Party shall sell all or any of the Pledged Securities or Pledged Interests
to another party or parties (herein called the “Transferee”) or shall purchase or retain all or any of the Pledged
Securities or Pledged Interests, each Debtor shall, to the extent applicable: (i) deliver to the Secured Party or the Transferee, as the
case may be, the articles of incorporation, bylaws, minute books, stock certificate books, corporate seals, deeds, leases, indentures,
agreements, evidences of indebtedness, books of account, financial records and all other Organizational Documents and records of such
Debtor and its direct and indirect subsidiaries; (ii) use its best efforts to obtain resignations of the persons then serving as officers
and directors of such Debtor and its direct and indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals
that are required by any governmental or regulatory body in order to permit the sale of the Pledged Securities and/or Pledged Interests
to the Transferee or the purchase or retention of the Pledged Securities and/or Pledged Interests by the Secured Party and allow the Transferee
or the Secured Party to continue the business of such Debtor and its direct and indirect subsidiaries.

 

    12 

     

    

 

(mm)Without
limiting the generality of the other obligations of the Debtors hereunder, each Debtor shall promptly (i) cause to be registered at the
United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all
Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded
at the applicable office, and (iii) give the Secured Party notice whenever it acquires (whether absolutely or by license) or creates any
additional material Intellectual Property.

 

(nn)       Each
Debtor will from time to time, at the joint and several expense of the Debtors, promptly execute and deliver all such further instruments
and documents, and take all such further action as may be necessary or desirable, or as the Secured Party may reasonably request, in order
to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and
enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement,
including without limitation, intellectual property security agreements including without limitation, intellectual property security agreements.

 

(oo)       The
Debtors have provided a list of all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and
domain names owned by any Debtor as of the date hereof. The Debtors have provided lists all material licenses in favor of any Debtor for
the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtors
have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors have been duly recorded
at the United States Copyright Office.

 

(pp)       None
of the account debtors or other persons or entities obligated on any of the Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or any similar federal, state or local statute or rule in respect of such Collateral.

 

(qq)Until the
Obligations shall have been paid and performed in full, the Company covenants that it shall promptly direct any direct or indirect subsidiary
of the Company formed or acquired after the date hereof to enter into a Subsidiary Guarantee in favor of the Secured Party.

 

5.       Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence
of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is agreed
that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of the Secured Party’s
rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions
in the Organizational Documents or agreements to which any Debtor is subject or to which any Debtor is party.

 

    13 

     

    

 

6.        Defaults.
The following events shall be “Events of Default”:

 

(a)       The
occurrence of an Event of Default (as defined in the Note) under the Note;

 

(b)       Any
representation or warranty of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made;

 

(c)       The
failure by any Debtor to observe or perform any of its obligations hereunder for five (5) Business Days after delivery to such Debtor
of notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time
frame and such Debtor is using best efforts to cure same in a timely fashion; or

 

(d)       If
any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof
shall be contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority having jurisdiction
over any Debtor, seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any Debtor has any liability
or obligation purported to be created under this Agreement.

 

7.Duty To Hold In Trust.

 

(a)       Upon
the occurrence of any Event of Default and at any time thereafter, each Debtor shall, upon receipt of any revenue, income, dividend, interest
or other sums subject to the Security Interests, whether payable pursuant to the Note or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Party and shall forthwith
endorse and transfer any such sums or instruments, or both, to the Secured Party, pro-rata in proportion to their respective then-currently
outstanding principal amount of the Note for application to the satisfaction of the Obligations.

 

(b)       If
any Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares of
Pledged Securities, Pledged Interests or instruments representing Pledged Securities or and Pledged Interests acquired after the date
hereof, or any options, warrants, rights or other similar property or certificates representing a dividend, or any distribution in connection
with any recapitalization, reclassification or increase or reduction of capital, or issued in connection with any reorganization of such
Debtor or any of its direct or indirect subsidiaries) in respect of the Pledged Securities and/or Pledged Interests (whether as an addition
to, in substitution of, or in exchange for, such Pledged Securities or Pledged Interests or otherwise), such Debtor agrees to (i) accept
the same as the agent of the Secured Party; (ii) hold the same in trust on behalf of and for the benefit of the Secured Party; and (iii)
to deliver any and all certificates or instruments evidencing the same to the Secured Party on or before the close of business on the
fifth (5th) Business Day following the receipt thereof by such Debtor, in the exact form received together with the Necessary
Endorsements, to be held by the Secured Party subject to the terms of this Agreement as Collateral.

 

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8.Rights and Remedies Upon Default.

 

(a)       Upon
the occurrence of any Event of Default and at any time thereafter, the Secured Party shall have the right to exercise all of the remedies
conferred hereunder and under the Note, and the Secured Party shall have all the rights and remedies of a secured party under the UCC.
Without limitation, the Secured Party shall have the following rights and powers:

 

(i)       The
Secured Party shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall assemble
the Collateral and make it available to the Secured Party at places which the Secured Party shall reasonably select, whether at such Debtor's
premises or elsewhere, and make available to the Secured Party, without rent, all of such Debtor’s respective premises and facilities
for the purpose of the Secured Party taking possession of, removing or putting the Collateral in saleable or disposable form.

 

(ii)       Upon
notice to the Debtors by the Secured Party, all rights of each Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise be authorized
to receive and retain, shall cease. Upon such notice, the Secured Party shall have the right to receive any interest, cash dividends or
other payments on the Collateral and, at the option of the Secured Party, to exercise in such the Secured Party’s discretion all
voting rights pertaining thereto. Without limiting the generality of the foregoing, the Secured Party shall have the right (but not the
obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof, including, without limitation,
to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or any Debtor or any of its direct or indirect subsidiaries.

 

(iii)The Secured
Party shall have the right to operate the business of each Debtor using the Collateral and shall have the right to assign, sell, lease
or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times
and at such place or places, and upon such terms and conditions as the Secured Party may deem commercially reasonable, all without (except
as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to any Debtor or right of redemption
of a Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Secured Party,
may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and equities of any Debtor, which are hereby waived and released.

 

    15 

     

    

 

(iv)       The
Secured Party shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Secured Party and to enforce any Debtor’s rights against such account debtors and obligors.

 

(v)       The
Secured Party may (but is not obligated to) direct any financial intermediary or any other person or entity holding any investment property
to transfer the same to the Secured Party or its designee.

 

(vi)       The
Secured Party may (but is not obligated to) transfer any or all Intellectual Property registered in the name of any Debtor at the United
States Patent and Trademark Office and/or Copyright Office into the name of the Secured Party or any designee or any purchaser of any
Collateral.

 

(b)       The
Secured Party shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Secured Party may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Secured Party sells any of the Collateral on credit, each Debtor
will only be credited with payments actually made by the purchaser. In addition, each Debtor waives any and all rights that it may have
to a judicial hearing in advance of the enforcement of any of the Secured Party’s rights and remedies hereunder, including, without
limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.

 

(c)       For
the purpose of enabling the Secured Party to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, each Debtor hereby grants to the Secured Party an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to such Debtor) to use, license or sublicense following an Event of Default, any Intellectual Property now
owned or hereafter acquired by such Debtor, and wherever the same may be located, and including in such license access to all media in
which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout
thereof.

 

    16 

     

    

 

9.Applications of Proceeds. The
proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account of any insurance policy
insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding, storing, processing and preparing
for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred in connection therewith) of the
Collateral, to the reasonable attorneys’ fees and expenses incurred by the Secured Party in enforcing the Secured Party’s
rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of the Obligations
to the Secured Party (based on then-outstanding principal amounts of Note at the time of any such determination), and to the payment of
any other amounts required by applicable law, after which the Secured Party shall pay to the applicable Debtor any surplus proceeds. If,
upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured
Party are legally entitled, the Debtors will be liable for the deficiency, together with interest thereon, at the rate of 18% per annum
or the lesser amount permitted by applicable law (the “Default Rate”), and the reasonable fees of any attorneys employed
by the Secured Party to collect such deficiency. To the extent permitted by applicable law, each Debtor waives all claims, damages and
demands against the Secured Party arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to
the gross negligence or willful misconduct of the Secured Party as determined by a final judgment (not subject to further appeal) of a
court of competent jurisdiction.

 

10.       Securities
Law Provision. Each Debtor recognizes that the Secured Party may be limited in its ability to effect a sale to the public of all or
part of the Pledged Securities or Pledged Interests by reason of certain prohibitions in the Securities Act of 1933, as amended, or other
federal or state securities laws (collectively, the “Securities Laws”), and may be compelled to resort to one or more
sales to a restricted group of purchasers who may be required to agree to acquire the Pledged Securities or Pledged Interests for their
own account, for investment and not with a view to the distribution or resale thereof. Each Debtor agrees that sales so made may be at
prices and on terms less favorable than if the Pledged Securities or Pledged Interests were sold to the public, and that the Secured Party
has no obligation to delay the sale of any Pledged Securities and/or Pledged Interests for the period of time necessary to register the
Pledged Securities and/or Pledged Interests for sale to the public under the Securities Laws. Each Debtor shall cooperate with the Secured
Party in its attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration thereunder if
requested by the Secured Party) applicable to the sale of the Pledged Securities and/or Pledged Interests by the Secured Party.

 

11.       Costs
and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial releases
and/or termination statements related thereto or any expenses of any searches reasonably required by the Secured Party. The Debtors shall
also pay all other claims and charges which in the reasonable opinion of the Secured Party are reasonably likely to prejudice, imperil
or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Secured Party the
amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with the creation, perfection, protection, satisfaction, foreclosure, collection or enforcement
of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement and pay to the Secured
Party the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Secured Party may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the
rights of the Secured Party under the Note. Until so paid, any fees payable hereunder shall be added to the principal amount of the Note
and shall bear interest at the Default Rate.

 

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12.       Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability
for any reason. Without limiting the generality of the foregoing, (a) the Secured Party does not (i) have any duty (either before or after
an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral, or (ii)
have any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or performed by such Debtor thereunder. The Secured Party shall not
have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by
the Secured Party of any payment relating to any of the Collateral, nor shall the Secured Party be obligated in any manner to perform
any of the obligations of any Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under
any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to the Secured Party or to which the Secured Party may be entitled at any time or times.

 

13.       Security
Interests Absolute. All rights of the Secured Party and all obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement, the Note or any agreement entered into in connection with
the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Note or any other
agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release
or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any other security, for all or any
of the Obligations; (d) any action by the Secured Party to obtain, adjust, settle and cancel in its sole discretion any insurance claims
or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal
or equitable defense available to a Debtor, or a discharge of all or any part of the Security Interests granted hereby. Until the Obligations
shall have been paid and performed in full, the rights of the Secured Party shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations or bankruptcy. Each Debtor expressly waives presentment,
protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Party hereunder shall be deemed by final order of a court of competent jurisdiction
to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be
deemed to be otherwise due to any party other than the Secured Party, then, in any such event, each Debtor’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. Each
Debtor waives all right to require the Secured Party to proceed against any other person or entity or to apply any Collateral which the
Secured Party may hold at any time, or to marshal assets, or to pursue any other remedy. Each Debtor waives any defense arising by reason
of the application of the statute of limitations to any obligation secured hereby.

 

    18 

     

    

 

14.       Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Note have been
indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities of the Debtors
contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative and in full force
and effect regardless of the termination of this Agreement.

 

15.
       Power of Attorney; Further Assurances.

 

(a)        Each
Debtor authorizes the Secured Party, and does hereby make, constitute and appoint the Secured Party and its officers, agents, successors
or assigns with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of the Secured
Party or such Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts,
money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of
the Collateral that may come into possession of the Secured Party; (ii) to sign and endorse any financing statement pursuant to the UCC
or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications
and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt
for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses
respecting any Intellectual Property; and (vi) generally, at the option of the Secured Party, and at the expense of the Debtors, at any
time, or from time to time, to execute and deliver any and all documents and instruments and to do all acts and things which the Secured
Party deems necessary to protect, preserve and realize upon the Collateral and the Security Interests granted therein in order to effect
the intent of this Agreement and the Note all as fully and effectually as the Debtors might or could do; and each Debtor hereby ratifies
all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding. The
designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other
documents or agreements to which any Debtor is subject or to which any Debtor is a party. Without limiting the generality of the
foregoing, after the occurrence and during the continuance of an Event of Default, the Secured Party is specifically authorized to execute
and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property
with the United States Patent and Trademark Office and the United States Copyright Office.

 

(b)       On
a continuing basis, the Debtors will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction all such instruments, and take all such action as may reasonably be deemed necessary or advisable,
or as reasonably requested by the Secured Party, to perfect the Security Interests granted hereunder and otherwise to carry out the intent
and purposes of this Agreement, or for assuring and confirming to the Secured Party the grant or perfection of a perfected security interest
in all the Collateral under the UCC.

 

    19 

     

    

 

(c)       Each
Debtor hereby irrevocably appoints the Secured Party as such Debtor’s attorney-in-fact, with full authority in the place and instead
of such Debtor and in the name of such Debtor, from time to time in the Secured Party’s discretion, to take any action and to execute
any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, pertaining to the
filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral
without the signature of such Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as
“all assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Secured
Party. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding.

 

16.       Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Note).

 

17.       Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity, then the Secured Party shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or
affecting any of the Secured Party’ rights and remedies hereunder.

 

19.       Miscellaneous.

 

(a)       No
course of dealing between the Debtor and the Secured Party, nor any failure to exercise, nor any delay in exercising, on the part of the
Secured Party, any right, power or privilege hereunder or under the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.

 

(b)       All
of the rights and remedies of the Secured Party with respect to the Collateral, whether established hereby or by the Note or by any other
agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

 

(c)       This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtor and the Secured Party,
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.

 

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(d)       If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find
and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant
or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

(e)       No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

(f)       This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company and the
Debtor may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Secured Party (other
than by merger). The Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Purchase
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound, with
respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Party.”

 

(g)       Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry
out the provisions and purposes of this Agreement.

 

(h)       Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal
laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Except to the extent mandatorily governed
by the jurisdiction or situs where the Collateral is located, each Debtor agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and the Note (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the State of Delaware. Except to the extent mandatorily governed by the jurisdiction or situs where
the Collateral is located, each Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in the State of Delaware for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby.

 

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(i)       This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by pdf via email transmission,
such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such pdf via email signature were the original thereof.

 

(j)       Each
Debtor shall be liable for the obligations of the Debtors to the Secured Party hereunder.

 

(k)       The
Debtors shall indemnify, reimburse and hold harmless the Secured Party and its respective partners, members, shareholders, officers, directors,
employees and agents (and any other persons with other titles that have similar functions) (collectively, “Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including
fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee
in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in
limitation of, any other indemnification provision in the Note, the Purchase Agreement (as such term is defined in the Note) or any other
agreement, instrument or other document executed or delivered in connection herewith or therewith.

 

(l)       Nothing
in this Agreement shall be construed to subject the Secured Party to liability as a partner in
any Debtor or any if its direct or indirect subsidiaries that is a partnership or as a member in any Debtor or any of its direct or indirect
subsidiaries that is a limited liability company, nor shall the Secured Party be deemed to have
assumed any obligations under any partnership agreement or limited liability company agreement, as applicable, of any such Debtor or any
of its direct or indirect subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted for
such Debtor as a partner or member, as applicable, pursuant hereto.

 

    22 

     

    

 

(m)       To
the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent, approval
or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or compliance with
any provisions of any of the Organizational Documents, each Debtor hereby grants such consent and approval and waive any such noncompliance
with the terms of said documents.

 

[SIGNATURE PAGES FOLLOW]

 

    23

     

    

 

IN WITNESS WHEREOF, the parties
hereto have caused this Security Agreement to be duly executed on the day and year first above written.

 

	SCHMITT INDUSTRIES, INC.
	 
	 
	By: /s/ Philip Bosco
	     Name: Philip Bosco
	     Title: CFO
	 
	 
	SCHMITT MEASUREMENT SYSTEMS, INC.
	 
	 
	By: /s/ Philip Bosco
	     Name: Philip Bosco
	     Title: CFO
	 
	 
	AMPLE HILLS ACQUISITION LLC
	 
	 
	By: /s/ Philip Bosco
	     Name: Philip Bosco
	     Title: CFO

 

[Signature Page to Security Agreement]

  

     

     

    

 

	 	SECURED PARTY:
	 	 
	 	SENTENTIA CAPITAL MANAGEMENT LLC
	 	 
	 	 
	 	By:/s/ Michael Zapata
	 	Name: Michael Zapata
	 	Title: Managing Partner
	 	 
	 	 
	 	Notice Address:

 

 

[Signature Page to Security Agreement]

 

     

     

    

 

ANNEX A

to

SECURITY

AGREEMENT

 

[FORM OF] ADDITIONAL
DEBTOR JOINDER

 

Reference is made to that
certain Security Agreement dated as of October 25, 2022 (as amended, amended and restated, or otherwise modified from time to time, the
“Security Agreement”) made by and among SCHMITT INDUSTRIES, INC. an Oregon corporation, as a Debtor (together with
its successors and assigns, the “Company”), the other Debtors from time to time party thereto, SENTENTIA CAPITAL MANAGEMENT
LLC, a New York limited liability company, as the Secured Party named therein; capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in, or by reference in, the Security Agreement.

 

The undersigned hereby agrees
that upon delivery of this Additional Debtor Joinder (this “Joinder”) to the Secured Party referred to above, the undersigned
shall (a) be an Additional Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtors under the Security
Agreement as fully and to the same extent as if the undersigned was an original signatory thereto as a Debtor and (c) be deemed to have
made the representations and warranties set forth therein as a Debtor as of the date of execution and deliver of this Joinder. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE AGENT ON BEHALF OF THE SECURED PARTIES A SECURITY
INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS
SET FORTH THEREIN.

 

Attached hereto are supplemental
and/or replacement Disclosure Schedules to the Security Agreement, as applicable.

 

An executed copy of this Joinder
shall be delivered to the Secured Party, and the Secured Party may rely on the matters set forth herein on or after the date hereof. This
Joinder shall not be modified, amended or terminated without the prior written consent of the Secured Party.

 

    B-1

     

    

 

IN WITNESS WHEREOF, the undersigned
has caused this Joinder to be executed in the name and on behalf of the undersigned.

 

	 	ADDITIONAL DEBTOR
	 	 
	 	[Name of Additional Debtor]
	 	 
	 	By:_____________________________
	 	Name:
	 	Title:
	 	 
	 	Address:

 

		Dated:	

 

 

B-2

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