Document:

SECURITY
AGREEMENT

 

This SECURITY AGREEMENT
(this “Agreement”), dated as of December 31, 2013, is made by and between BeesFree, Inc., a Nevada corporation
(the “Company”), and BeesFree USA, Inc., a Delaware corporation and the Company’s wholly-owned subsidiary (“BeesFree
DE”, the Company and BeesFree DE, as the context dictates, collectively, the “Grantor”), and those signatories
hereto who are holders of certain notes described below in the aggregate principal amount of up to $2,000,000 (the “Noteholders”),
to be issued by the Company from time to time on and after the date hereof, as well as their endorsees, transferees and assigns
all upon terms set forth in that certain Securities Purchase Agreement, dated March 13, 2013 (the “Purchase Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, from
time to time on and after the date hereof, the Company may issue up to $2,000,000 of its 15% secured convertible notes
(as each may be at any time amended, extended, restated, renewed or modified, each a “Note,” and collectively, the
“Notes”) to subscribers for units offered by the Company upon the terms set forth in the Purchase Agreement;

 

WHEREAS, pursuant
to the terms of the Purchase Agreement, each purchaser of Notes has become a Noteholder and has agreed that in an Event of Default
(as defined in the Notes) the Requisite Holders (as defined herein) shall be required to appoint and authorize a collateral agent
(the “Collateral Agent”) to act for the benefit of the Noteholders prior to taking any actions to declare the Notes
due and payable or to foreclose on any Collateral securing the Notes: and

 

WHEREAS, it
is a condition precedent to the obligation of each of the Noteholders to purchase a Note that the Grantor shall have granted the
Noteholders a security interest in the Collateral (as hereinafter defined) as contemplated by this Agreement; and

 

WHEREAS, the
Grantor expects to realize direct and indirect benefits as a result of the sale of the Notes to the Noteholders and desires to
grant the Noteholders a security interest in the Collateral as contemplated by this Agreement.

 

NOW, THEREFORE,
for good and valuable consideration, the receipt and adequacy of which hereby is acknowledged, the parties agree as follows:

 

ARTICLE I – DEFINITIONS

 

1.1This Agreement
is the Security Agreement referred to in the Purchase Agreement and the Notes. As used in this Agreement, the following terms shall
have the meanings respectively set forth below:

 

“Agreement”
means this Security Agreement, and any extensions, modifications, renewals, restatements, supplements or amendments hereof.

 

    	1

    	 

    

 

“Bankruptcy Code”
means Chapter 11 of Title 11 of the United States Code, as amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.

 

“Collateral”
means substantially all of the Grantor’s now owned or hereafter acquired right, title and interest in and to the General
Assets, the Trademarks, the Patents and the Licenses. Without limiting the generality of the foregoing, “Collateral”
shall include any shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of the Grantor
that is obtained or acquired 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 foregoing securities, including, but not limited to, all dividends, interest and cash.

 

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

 

“Investment
Collateral” shall have the meaning set forth in Section 7.1 hereof.

 

“Licenses”
shall have the meaning set forth in Section 2.4 hereof.

 

“Patents”
shall have the meanings set forth in Section 2.3 hereof.

 

“Requisite
Holders” means, at any time of determination, a majority (i.e., at least 50.1%) of the aggregate principal amount of outstanding
Notes.

 

“Secured Obligations”
means any and all present and future obligations of the Grantor arising under or relating to the Notes or this Agreement, whether
due or to become due, matured or unmatured, or liquidated or unliquidated, including interest that accrues after the commencement
of any bankruptcy or insolvency proceeding by or against the Grantor. For the avoidance of doubt, the Secured Obligations shall
include the obligations of the Grantor to pay the fees and expenses of the Collateral Agent, if any, and to provide indemnity to
the Collateral Agent pursuant to Article XIII hereof.

 

“Trademarks”
shall have the meanings set forth in Section 2.2 hereof.

 

ARTICLE II –SECURITY INTERESTS

 

2.1Grant of
Security Interest in General Assets. To secure the complete and timely payment, performance and satisfaction of all of the
Secured Obligations, the Grantor hereby grants to the Noteholders, a first lien and security interest over all other security interests
with power of sale to the fullest extent permitted by applicable law, in all of the Grantor’s right, title and interest in
and to the Grantor’s now owned or otherwise existing and hereafter acquired or arising:

 

(a)accounts, contract
rights and all other forms of obligations owing to the Grantor arising out of the sale or lease of goods or the rendition of services
by the Grantor, irrespective of whether earned by performance, and any and all credit insurance, guarantees or security therefor;

 

    	2

    	 

    

 

(b)books and records,
including ledgers; records indicating, summarizing or evidencing the Grantor’s properties or assets or liabilities; all information
relating to the Grantor’s business operations or financial condition; and all other computer programs, disk or tape files,
printouts, runs or other computer prepared information;

 

(c)deposit accounts
(as that term is defined from time to time in the Uniform Commercial Code as in effect in the State of New York);

 

(d)all of the Grantor’s
general intangibles and other personal property (including contract rights, rights arising under common law, statutes or regulations,
chooses or things in action, commercial tort claims, blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, computer programs, information contained in computer disks or tapes, literature, reports, catalogs,
insurance premium rebates, tax refunds and tax refund claims);

 

(e)goods (as that
term is defined from time to time in the Uniform Commercial Code as in effect in the State of New York), including (i) all inventory,
including equipment held for lease, whether raw materials, in process or finished, all material or equipment usable in processing
the same and all documents of title covering any inventory, (ii) all equipment employed in connection with the Grantor’s
business, together with all present and future additions, attachments and accessions thereto and all substitutions therefor and
replacements thereof, and (iii) all vehicles;

 

(f)instruments and
other investment property (as such terms are defined from time to time in the Uniform Commercial Code as in effect in the State
of New York);

 

(g)negotiable collateral,
including all of the Grantor’s right, title and interest with respect to any letters of credit, letter of credit rights,
instruments, drafts, documents and chattel paper (as each term is defined from time to time in the Uniform Commercial Code as in
effect in the State of New York), and any and all supporting obligations in respect thereof;

 

(h)all parcels of
real property and the related improvements thereto (whether as owner, lessee or otherwise);

 

(i)money or other
assets of the Grantor that now or hereafter come into the possession, custody or control of the Grantor;

 

(j)the proceeds and
products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the foregoing,
and any and all of the foregoing, or other tangible or intangible property resulting from the sale, exchange, collection or other
disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof; and

 

    	3

    	 

    

 

(k) all of the Grantor’s
right, title and market in and to any shares of capital stock of any of its subsidiaries and the certificates representing any
such shares.

 

All of the items described in clauses (a)-(k)
in this Section 2.1 are hereinafter individually and/or collectively referred to as the “General Assets.”

 

2.2Grant of
Security Interest in Trademarks. To secure the complete and timely payment, performance and satisfaction of all of the Secured
Obligations, the Grantor hereby grants to the Noteholders, a security interest as and by way of a first lien and security interest
having priority over all other security interests, including with power of sale to the fullest extent permitted by applicable law,
in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or otherwise existing and hereafter
acquired or arising: (a) trademarks, trade names, registered trademarks, trademark applications, service marks, registered service
marks and service mark applications and (b) all renewals thereof, all income, royalties, damages and payments now and hereafter
due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements or dilutions thereof, the right to sue for past, present and
future infringements and dilutions thereof, the goodwill of the Grantor’s business symbolized by the foregoing and connected
therewith and all of the Grantor’s rights corresponding thereto throughout the world (all of the foregoing items described
in the foregoing clauses (a) and (b) in this Section 2.2, are hereinafter individually and/or collectively referred to as the “Trademarks”);
and (c) all proceeds of any and all of the foregoing, including, without limitation, license royalties and proceeds of the infringement
suits.

 

2.3Grant of
Security Interest in Patents. To secure the complete and timely payment, performance and satisfaction of all of the Secured
Obligations, the Grantor hereby grants to the Noteholders, a security interest as and by way of a first lien and security interest
having priority over all of other security interests, including with power of sale to the fullest extent permitted by applicable
law, in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or otherwise existing and
hereafter acquired or arising: (a) patents and patent applications and (b) all renewals thereof, all income, royalties, damages
and payments now and hereafter due and/or payable under and with respect to thereto, including, without limitation, payments under
all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof,
the right to sue for past, present and future infringements and dilutions thereof, the goodwill of the Grantor’s business
symbolized by the foregoing and connected therewith and all of the Grantor’s rights corresponding thereto throughout the
world (all of the foregoing items described in the foregoing clauses (a) and (b) in this Section 2.3, are hereinafter individually
and/or collectively referred to as the “Patents”); and (c) all proceeds of any and all of the foregoing, including
license royalties and proceeds of the infringement suits.

 

2.4Grant of
Security Interest in Trademark and Patent Licenses. To secure the complete and timely payment, performance and satisfaction
of all of the Secured Obligations, the Grantor hereby grants to the Noteholders, a security interest, as and by way of a first
lien and security interest having priority over all of other security interests, including with power of sale to the fullest extent
permitted by applicable law, in all of the Grantor’s right, title and interest in and to the Grantor’s now owned or
otherwise existing and hereafter acquired or arising: rights under or interests in any license agreements with any other party,
whether the Grantor is a licensee or licensor under any such license agreement, and the right to use the foregoing in connection
with the enforcement of the Noteholders’ rights under the Notes, including the right to prepare for sale and sell any and
all inventory now or hereafter owned by the Grantor and now or hereafter covered by such licenses (all of the foregoing are hereinafter
referred to collectively as the “Licenses”). Notwithstanding the foregoing provisions of this Section 2.4, the Licenses
shall not include any license agreement in effect as of the date hereof that by its terms expressly prohibits the grant of the
security contemplated by this Agreement; provided, however, that upon the termination of such prohibitions for any
reason whatsoever, the provisions of this Section 2.4 shall be deemed to apply thereto automatically.

 

    	4

    	 

    

 

2.5Title; Other
Liens. Except for the security interest granted to the holders of the Pari Passu Notes (as defined in the Notes) and the Noteholders
pursuant to this Agreement, the Grantor owns each of the General Assets, Trademarks, Patents and Licenses free and clear of any
and all liens, claims or security or adverse interests to all or any of the Trademarks, Patents and Licenses free on file or of
record in any public office, except as such as have been filed in favor of the holders of Pari Passu Notes and the Noteholders
pursuant to this Agreement.

 

ARTICLE III – FURTHER ASSURANCES

 

3.1At any time
and from time to time at the request of the Requisite Holders, or if a Collateral Agent has been appointed as provided herein,
the Collateral Agent, the Grantor shall execute and deliver to the Requisite Holders or Collateral Agent, as applicable, all such
financing statements and other instruments and documents in form and substance satisfactory to the Requisite Holders or Collateral
Agent, as applicable, as shall be necessary or desirable to fully perfect, when filed and/or recorded, the security interest in
the Collateral granted to the Noteholders pursuant to Article II of this Agreement. The Grantor hereby authorizes the Requisite
Holders or Collateral Agent, as applicable, without notice to the Grantor, to file any financing statement and amendments thereof
or continuations thereof, naming the Grantor as debtor and the Noteholders as the creditor. At any time and from time to time,
the Requisite Holders or Collateral Agent, as applicable, shall be entitled to file and/or record any or all such financing statements,
instruments and documents held by it, and any or all such further financing statements, documents and instruments, and to take
all such other actions, as the Requisite Holders or Collateral Agent, as applicable, may deem appropriate to perfect and to maintain
perfected the security interest granted to it for the benefit of the Noteholders in Article II of this Agreement. Before
and after the occurrence of any default under the Notes, at the Requisite Holders’ or Collateral Agent’s, as applicable,
request, the Grantor shall execute all such further financing statements, instruments and documents, and shall do all such further
acts and things, as may be deemed necessary or desirable by the Requisite Holders or Collateral Agent, as applicable, to create
and perfect, and to continue and preserve, an indefeasible security interest in the Collateral in favor of the Noteholders or the
priority thereof, including causing any such financing statements to be filed and/or recorded in the applicable jurisdiction.

 

    	5

    	 

    

 

 

ARTICLE IV – SECURITY AGREEMENT

 

4.1This
Agreement secures the payment of all of the Secured Obligations of the Grantor now or hereafter existing under the Notes, whether
for principal, interest, fees, expenses or otherwise, and all of the Secured Obligations of the Grantor now or hereafter existing
under this Agreement and provides for the application of proceeds from the Collateral, upon the occurrence of an Event of Default,
to satisfy the Secured Obligations, including the irrevocable right of the Collateral Agent to apply proceeds from Collateral to
the payment of any and all amounts owing to the Collateral Agent pursuant to any of the provisions of Article X or Article
XIII of this Agreement prior to making any payment to any or all of the Noteholders. 

 

ARTICLE V – EVENTS OF DEFAULT

 

5.1There
shall be an Event of Default (as defined in the Notes) hereunder upon the occurrence and during the continuance of an Event of
Default under any of the Notes.

 

ARTICLE VI – RIGHTS UPON EVENT
OF DEFAULT

 

6.1Upon the occurrence
and during the continuance of an Event of Default, upon the appointment of the Collateral Agent as set forth herein and in the
Purchase Agreement, the Collateral Agent shall have, in any jurisdiction where enforcement hereof is sought, in addition to all
other rights and remedies that the Collateral Agent may have under applicable law or in equity or under this Agreement, all rights
and remedies of a secured party under the Uniform Commercial Code as enacted in any jurisdiction. Without limiting the foregoing
and subject to the rights of the holders of Pari Passu Notes, and subject to the consent of the Requisite Holders, on behalf of
the Noteholders: (a) without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law) to or upon the Grantor or any other person (all of which demands, defenses, advertisements and notices
are hereby waived), may in such circumstances collect, receive, appropriate and realize upon any or all of the Collateral, and/or
may sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver any or all of the Collateral (or
contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s
board or office or elsewhere upon such terms and conditions as the Collateral Agent may deem advisable, for cash or on credit or
for future delivery without assumption of any credit risk; (b) shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase all or any part of the Collateral so sold, free of
any right or equity of redemption in the Grantor, which right or equity is hereby waived or released; and (c) shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable expenses
incurred therein or in connection with the care or safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Noteholders under this Agreement (including, without limitation, reasonable attorneys’ fees and expenses)
to the payment in whole or in part of the Secured Obligations, in such order as the Collateral Agent may elect, and only after
such application and after the payment by the Collateral Agent of any other amount required by any provision of law, need the Collateral
Agent account for the surplus, if any, to the Grantor. If any notice of a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other
disposition. The Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Secured Obligations and the reasonable fees and disbursements of any attorneys employed by the Collateral
Agent to collect such deficiency.

 

    	6

    	 

    

 

ARTICLE VII – VOTING RIGHTS; DIVIDENDS;
ETC.

 

7.1With respect to Grantor’s
right, title and interest to any Collateral consisting of securities, partnership interests, joint venture interests, investments
or the like (referred to collectively and individually in this Article VII and in Article VIII hereof as the “Investment
Collateral”), so long as no Event of Default occurs and remains continuing:

 

(a)the
Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Investment Collateral, or
any part thereof, for any purpose not inconsistent with the terms of this Agreement or the Notes; and

 

(b)the
Grantor shall be entitled to receive and to retain and use any and all dividends or distributions paid in respect of the Investment
Collateral.

 

ARTICLE VIII – RIGHTS DURING EVENT
OF DEFAULT

 

8.1With respect
to any Investment Collateral in the possession of the Grantor, so long as an Event of Default has occurred and is continuing and
subject to the rights of the holders of the Pari Passu Notes:

 

(a)at
the option of the Collateral Agent, all rights of the Grantor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section (a) of Article VII hereof, and to receive the dividends and distributions
which it would otherwise be authorized to receive and retain pursuant to Section (b) of Article VIII hereof, shall cease,
and all such rights thereupon shall become vested in the Collateral Agent for the benefit of the Noteholders which thereupon shall
have the sole right to exercise such voting and other consensual rights and to receive and to hold as pledged Investment Collateral
such dividends and distributions; and

 

(b)all
dividends and other distributions that are received by the Grantor contrary to the provisions of this Agreement shall be held in
trust for the benefit of the Collateral Agent on behalf of the Noteholders, shall be segregated from other funds of the Grantor
and forthwith shall be paid over to Collateral Agent for the benefit of the Noteholders as pledged Collateral in the same form
as so received (with any necessary endorsements).

 

ARTICLE IX – GENERAL REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

9.1The Grantor
represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this
Agreement, as follows:

 

    	7

    	 

    

 

(a)except
for the security interest granted to the holders of the Pari Passu Notes and the Noteholders herein, the Grantor is, and as to
Collateral acquired from time to time after the date hereof, the Grantor will be, the owner of all the Collateral free from any
lien, security interest, encumbrance or other right, title or interest of any person, and the Grantor shall defend the Collateral
against all claims and demands of all persons at any time claiming the same or any interest therein adverse to the Collateral Agent
for the benefit of the Noteholders;

 

(b)other
than as relate to the Pari Passu Notes, there is no financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) now on file or registered in any public office covering any interest of any kind in the Collateral,
or intended to cover any such interest that has not been terminated or released by the secured party named therein, and so long
as any Notes remain outstanding or any of the Secured Obligations of the Grantor remain unpaid, other than as relate to the Pari
Passu Notes the Grantor will not execute and there will not be on file in any public office any financing statement (or similar
statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security interest hereby granted to the Collateral Agent for the
benefit of the Noteholders;

 

(c) at
the Grantor’s own expense, the Grantor will keep the Collateral (i) in good condition at all times (normal wear and tear
excepted) and maintain same in accordance with all manufacturer’s specifications and requirements, and (ii) free and clear
of all liens and encumbrances, except for the liens granted to the holders of the Pari Passu Notes and those granted hereby; and
without the consent of the Collateral Agent, the Grantor will not sell, transfer, change the registration, if any, dispose of,
attempt to dispose of, substantially modify or abandon the Collateral or any part thereof other than sales of inventory in the
ordinary course of business and the disposition of obsolete or worn-out equipment in the ordinary course of business; and

 

(d) the
chief executive office and chief place of business of the Grantor is located at 2101 Vista Parkway, Suite 122, West Palm Beach,
FL 33411. The Grantor will not move its chief executive office and chief place of business until (i) it shall have given to the
Noteholders, of if a Collateral Agent has been appointed hereunder, the Collateral Agent, not less than 30 days’ prior written
notice of its intention to do so, clearly describing such new location and providing such other information in connection therewith
as the Requisite Holders or Collateral Agent, as applicable, may reasonably request, and (ii) with respect to such new location,
it shall have taken such action, satisfactory to the Requisite Holders or Collateral Agent, as applicable, to maintain the security
interest of the Noteholders in the Collateral.

 

ARTICLE X –COSTS AND EXPENSES

 

10.1 The Grantor
shall pay any and all reasonable costs and expenses incurred by the Collateral Agent, including, without limitation, reasonable
costs and expenses relating to all waivers, releases, discharges, satisfactions, modifications and amendments of this Agreement,
the administration and holding of the Collateral, insurance expenses, and the enforcement, protection and adjudication of the parties’
rights hereunder by the Collateral Agent, including, without limitation, the reasonable disbursements, expenses and fees of the
attorneys the Collateral Agent may retain, if any.

 

    	8

    	 

    

 

10.2All advances,
charges, costs and expenses, including reasonable attorneys' fees and disbursements (collectively, “Costs and Expenses”),
incurred or paid by the Collateral Agent in exercising any right, privilege, power or remedy conferred by this Agreement or in
the enforcement or attempted enforcement thereof, shall be secured hereby and shall become a part of the Secured Obligations and
shall be paid to the Collateral Agent by the Grantor. To the extent that the Costs and Expenses are not paid promptly by the Grantor,
the Collateral Agent may request each Noteholder to deposit with it, in proportion to their initially purchased respective principal
amounts of Notes, sufficient sums to cover the Costs and Expenses. To the extent Costs and Expenses are not paid to the Collateral
Agent by the Grantor or the Noteholders, the Collateral Agent, in addition to any other rights granted under this Agreement, is
hereby authorized to deduct the aggregate of unpaid Costs and Expenses from the Collateral or proceeds therefrom.

 

ARTICLE XI – CONTINUING EFFECT

 

11.1This Agreement
shall remain in full force and effect and continue to be effective should any petition be filed by or against the Grantor for liquidation
or reorganization, should the Grantor become insolvent or make an assignment for the benefit of creditors or should a receiver
or trustee be appointed for all or any significant part of the Grantor’s assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Collateral Agent, whether as
a “voidable preference,” “fraudulent conveyance” or otherwise, all as though such payment or performance
had not been made. In the event that any payment or any part thereof is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

ARTICLE XII – TERMINATION; RELEASE
OF THE GRANTOR

 

12.1This Agreement
shall be terminated and all Secured Obligations of the Grantor hereunder shall be released when all Secured Obligations of the
Grantor have been paid in full or upon such release of the Grantor's Secured Obligations hereunder or, with respect to any Note,
when such Note shall no longer be outstanding. Upon such termination, the Collateral Agent shall return any pledged Collateral
to the Grantor, or to the person or persons legally entitled thereto, and shall endorse, execute, deliver, record and file all
instruments and documents, and do all other acts and things reasonably required for the return of the Collateral to the Grantor,
or to the person or persons legally entitled thereto, and to evidence or document the release of the Collateral Agent's interests
arising for the benefit of the Noteholders under this Agreement, all as reasonably requested by, and at the sole expense of, the
Grantor.

 

    	9

    	 

    

 

ARTICLE XIII – 

COLLATERAL AGENT’S APPOINTMENT
AS ATTORNEY-IN-FACT

 

13.1Powers.
Upon the occurrence of an Event of Default, the Grantor hereby authorizes and empowers the Requisite Holders to appoint a Collateral
Agent, and any officer or agent of the Collateral Agent, with full power of substitution, as its attorney-in-fact with full irrevocable
power and authority in the place of the Grantor and in the name of the Grantor or in its own name, from time to time in the Collateral
Agent’s discretion so long as an Event of Default has occurred and is continuing, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to execute any instrument which may be necessary or desirable to
accomplish the purposes of this Agreement. Upon such appointment, Collateral Agent will execute a Joinder Agreement, substantially
in the form annexed hereto as Exhibit A, pursuant to which Collateral Agent shall become a party to this Agreement and shall be
fully bound by, and subject to, all of the terms and conditions that are applicable to Collateral Agent as stated herein. Except
with respect to those matters as to which the Collateral Agent is expressly required to act under the terms of this Article
XIII, the Collateral Agent may act or refrain from acting with the written consent of Requisite Holders, which Requisite Holders
shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Collateral
Agent; provided, however, that such direction shall not be in conflict with any rule of law or expose the Collateral
Agent to personal liability and the Collateral Agent may take any action deemed proper by the Collateral Agent, in its discretion,
which is not inconsistent with such direction or the terms of this Agreement.

 

Without limiting the
foregoing, so long as an Event of Default has occurred and is continuing and provided that the Collateral Agent has received instructions
from the Requisite Holders, subject to the prior rights of the Pari Passu Notes, the Collateral Agent shall have the right, without
notice to, or the consent of, the Grantor, to do any of the following on the Grantor’s behalf:

 

(a)to pay or discharge
any taxes or liens levied or placed on or threatened against the Collateral;

 

(b)to direct any
party liable for any payment under any of the Collateral to make payment of any and all amounts due or to become due thereunder
as the Collateral Agent direct;

 

(c)to ask for or
demand, collect, and receive payment of and receipt for, any payments due or to become due at any time in respect of or arising
out of any Collateral;

 

(d)to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to enforce any right in
respect of any Collateral;

 

(e)to defend any
suit, action or proceeding brought against the Grantor with respect to any Collateral;

 

    	10

    	 

    

 

(f)to settle, compromise
or adjust any suit, action or proceeding described in subsection (e) above and, to give such discharges or releases in connection
therewith as the Collateral Agent may deem appropriate;

 

(g)to assign any
Patent right included in the Collateral of Grantor (along with the goodwill of the business to which any such patent right pertains),
throughout the world for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole
discretion determine; and

 

(h)generally, to
sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral, and to take, at the
Collateral Agent’s option and the Grantor’s expense, any actions which the Collateral Agent deems necessary to protect,
preserve or realize upon the Collateral and the Noteholders’ liens on the Collateral and to carry out the intent of this
Agreement, in each case to the same extent as if the Collateral Agent were the absolute owner of the Collateral for all purposes.

 

13.2All acts done
under the foregoing authorization are hereby ratified and approved.

 

13.3Each Noteholder
agrees with all other Noteholders and the Collateral Agent (i) that it shall not, and shall not attempt to, exercise any rights
with respect to its security interest in the Collateral, other than pursuant to this Agreement, or take or institute any action
against the Collateral Agent or any of the other Noteholders in respect of the Collateral or its rights hereunder (other than any
such action arising from the breach of this Agreement) and (ii) that such Noteholder has no other rights with respect to the Collateral
other than as set forth in this Agreement and the other transaction documents.

 

ARTICLE XIV – COLLATERAL AGENT

 

14.1By their execution
of the Omnibus Signature Page to the Purchase Agreement and this Agreement, each of the Noteholders have agreed to appoint a Collateral
Agent upon an Event of Default and hereby authorize the Collateral Agent to exercise for the benefit of the Noteholders all rights,
powers and remedies provided to it under or pursuant to this Agreement, including all rights, powers and remedies upon an Event
of Default, subject always to the terms, conditions, limitations and restrictions provided in this Agreement. Except with respect
to those matters as to which the Collateral Agent is expressly required to act under the terms of this Article XIV, the Collateral
Agent may act or refrain from acting with the written consent of the Requisite Holders, which Requisite Holders shall have the
right to direct the time, method and place of conducting any proceeding for any remedy available to the Collateral Agent; provided,
however, that such direction shall not be in conflict with any rule of law or expose the Collateral Agent to personal liability,
and the Collateral Agent may take any action deemed proper by the Collateral Agent, in its discretion, which is not inconsistent
with such direction or the terms of this Agreement.

 

14.2The Collateral
Agent shall have no duties or responsibilities except those expressly set forth in this Agreement. Neither the Collateral Agent
nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action taken or
omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence
of any oversight or error of judgment or answerable for any loss, unless caused by its or their gross negligence or willful misconduct
as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of the Collateral
Agent shall be mechanical and administrative in nature; the Collateral Agent shall not have by reason of the Agreement or any other
transaction document a fiduciary relationship in respect of any Grantor or any Noteholder; and nothing in the Agreement or any
other transaction document, expressed or implied, is intended to or shall be so construed as to impose upon the Collateral Agent
any obligations in respect of the Agreement or any other transaction document except as expressly set forth herein and therein.

 

    	11

    	 

    

 

14.3. The Collateral
Agent shall not be responsible to the Grantor or any Noteholder for any recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in connection herewith, or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of the Agreement or any other transaction
document, or for the financial condition of the Grantor or the value of any of the Collateral, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions or conditions of the Agreement or any other transaction
document, or the financial condition of the Grantor, or the value of any of the Collateral, or the existence or possible existence
of any default or Event of Default under the Agreement, the Notes or any of the other transaction documents.

 

14.4. The Collateral
Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made
by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other transaction documents
and its duties thereunder, upon reasonable advice of counsel selected by it and upon all other matters pertaining to this Agreement
and the other transaction documents and its duties thereunder, upon advice of other experts selected by it. Anything to the contrary
notwithstanding and until such time as the Collateral Agent takes any action upon the instructions of the Requisite Holders, the
Collateral Agent shall have no obligation whatsoever to any Noteholder to assure that the Collateral exists or is owned by the
Grantor or is cared for, protected or insured or that the liens granted pursuant to the Agreement have been properly or sufficiently
or lawfully created, perfected, or enforced or are entitled to any particular priority.

 

14.5. Notwithstanding
anything in this Agreement to the contrary, none of the provisions of this Agreement shall be construed to require the Collateral
Agent to expend or risk its own funds or otherwise incur any liability (financial or otherwise) in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment
of such funds or indemnification satisfactory to it against such risk or liability is not assured to it. In no event shall the
Collateral Agent be liable (a) for any consequential, punitive or special damages or (b) for the acts or omissions of
its nominees, correspondents, designees, subagents or subcustodians. The Collateral Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control
of the Collateral Agent (including any act or provision of any present or future law or regulation or governmental authority, any
act of God or war, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility).

 

    	12

    	 

    

 

14.6The Collateral
Agent shall not be required or bound to make any investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, entitlement order, approval or other paper or document. The Collateral
Agent may execute any of the powers under this Agreement or perform any duties hereunder either directly or by or through agents,
attorneys, custodians or nominees appointed with due care, and shall not be responsible or liable for the acts or omissions, including
any willful misconduct or gross negligence, on the part of any agent, attorney, custodian or nominee so appointed.

 

14.7The Grantor agrees to be responsible
to indemnify and hold the Collateral Agent and its directors, employees, officers, agents, successors and assigns harmless from
and against any and all losses, claims, damages, liabilities and expenses, including reasonable costs of investigation and reasonable
counsel fees and expenses that may be imposed on the Collateral Agent or incurred by it in connection with its acceptance of its
appointment as the Collateral Agent hereunder or the performance of its duties hereunder, except as a result of the Collateral
Agent’s gross negligence or willful misconduct. Such indemnity includes all losses, damages, liabilities and expenses (including
reasonable counsel fees and expenses) incurred in connection with any litigation (whether at the trial or appellate levels) arising
from this Agreement or involving the subject matter hereof. The indemnification provisions contained in this Section 14.7 are in
addition to any other rights any of the indemnified parties may have by law or otherwise and shall survive the termination of this
Agreement or the resignation or removal of the Collateral Agent.

 

14.8Any corporation or other entity
whatsoever into which the Collateral Agent may be merged or converted or with which it may be consolidated, any corporation or
other entity whatsoever resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party or
any corporation or other entity whatsoever succeeding to the business of the Collateral Agent shall be the successor of the Collateral
Agent hereunder without the execution or filing of any paper with any party hereto except where an instrument of transfer or assignment
is required by law to effect such succession.

 

14.9The Collateral
Agent may generally engage in any kind of business with any Noteholder as if it had not entered into this Agreement. The Collateral
Agent and its affiliates and their officers, directors, employees, and agents (including legal counsel) may hereafter be engaged
in one or more transactions with any Noteholder or may act as trustee, agent or representative of any Noteholder, or otherwise
be engaged in other transactions with such parties (collectively, the “Other Activities”). Without limiting
the forgoing, Collateral Agent and its affiliates and their officers, directors, employees, and agents (including legal counsel)
shall not be responsible to account to any Noteholder for such other activities.

 

14.10The Collateral
Agent may resign and be discharged of its duties hereunder at any time by giving written notice of such resignation to the other
parties hereto, stating the date such resignation is to take effect. Within twenty (20) days of the giving of such notice, a successor
collateral agent shall be appointed by the Requisite Holders; provided, however, that if the Noteholders are unable
so to agree upon a successor within such time period, and notify the Collateral Agent during such period of the identity of the
successor collateral agent, the successor collateral agent may be a person designated by the Collateral Agent, and any and all
fees of such successor collateral agent shall be the joint and several obligation of the Noteholders. The Collateral Agent shall
continue to serve until the effective date of the resignation or until its successor accepts the appointment and receives the Collateral
held by the Collateral Agent but shall not be obligated to take any action hereunder. The Collateral Agent may deposit any Collateral
with the Supreme Court of the State of New York for New York County or any such other court in New York State that accepts such
Collateral. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor collateral agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring
agent and the retiring agent shall be discharged from its duties and obligations under the Agreement.  After any retiring
agent’s resignation or removal hereunder as agent, the provisions of the Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was agent.

 

    	13

    	 

    

 

ARTICLE XV – GOVERNING LAW

 

15.1THIS AGREEMENT
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS TO
BE PERFORMED WHOLLY WITHIN SUCH JURISDICTION.

 

ARTICLE XVI – ASSIGNMENT

 

16.1This Agreement
shall create a continuing security interest in the Collateral and shall be binding upon the Grantor and the Grantor’s successors
and assigns; inure, together with the rights and remedies of the Collateral Agent hereunder, in favor of the Noteholders and their
successors, transferees and assigns; and be severable in the event that one or more of the provisions herein is determined to be
illegal or unenforceable. Without limiting the generality of the foregoing, the Noteholders may assign or otherwise transfer any
portion of their Notes, in accordance with the terms of the Notes, to any other person or entity, and such other person or entity
shall thereupon become vested with all the benefits and obligations in respect thereof granted to the Noteholders (including the
beneficial interest in the rights and benefits granted to the Collateral Agent for the benefit of the Noteholders) herein or otherwise.
The Grantor shall promptly provide the Collateral Agent with notice of any such assignment or transfer of a Note by any Noteholder.

 

ARTICLE XVII – AMENDMENT 

 

17.1The terms of this Agreement
may be amended only with the written consent of the Requisite Holders and the written consent of the Collateral Agent, if any.

 

ARTICLE XVIII-MISCELLANEOUS.

 

18.1 No course of dealing
between the Grantor and the Noteholders, nor any failure to exercise, nor any delay in exercising, on the part of the Noteholders,
any right, power or privilege hereunder or under the Notes 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.

 

18.2 All of the rights
and remedies of the Noteholders with respect to the Collateral, whether established hereby or by the Notes or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

 

    	14

    	 

    

 

18.3. 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.

 

18.4 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.

 

18.5.The Noteholders,
Grantor and Collateral Agent agree that all proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (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 City of New
York, Borough of Manhattan. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of Manhattan 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.

 

18.6 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 facsimile 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 facsimile signature were the original thereof.

 

    	15

    	 

    

 

18.7Nothing
in this Agreement shall be construed to subject Collateral Agent or any Noteholder to liability as a partner in Grantor or any
if its direct or indirect subsidiaries that is a partnership or as a member in Grantor or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Collateral Agent or any Noteholder be deemed to have assumed any obligations under
any partnership agreement or limited liability company agreement, as applicable, of any such Grantor or any of its direct or indirect
subsidiaries or otherwise, unless and until any such Noteholder exercises its right to be substituted for such Grantor as a partner
or member, as applicable, pursuant hereto.

 

18.9 Any notice or
other communication under the provisions of this Agreement shall be given in writing and delivered in person, by reputable overnight
courier or delivery service, by facsimile machine (receipt confirmed) with a copy sent by first class mail on the date of transmissions,
or by registered or certified mail, return receipt requested, directed to such party’s addresses set forth below (or to any
new address of which any party hereto shall have informed the others by the giving of notice in the manner provided herein):

 

In the case
of the Collateral Agent, to:

 

To the address and telecopier number
provided by the Collateral Agent to the Grantor upon his, her or its appointment

 

In the case of the Noteholder,
to:

 

To the address and telecopier
number set forth on

the Omnibus signature
page to the Purchase Agreement.

 

In the case of Grantor,
to:

 

BeesFree,
Inc.

2101 Vista
Parkway, Suite 122

West Palm
Beach, FL 33411

Attn: CEO

Telecopy
No.: (561) 939-4861

 

    	16

    	 

    

 

 

With a copy (that shall not constitute
notice) to:

 

Steven D. Uslaner,
Esq.

Littman Krooks,
LLP

655 Third Avenue,
20th Floor

New York, NY
10017

Telecopy No.: (212)
490-2990

 

 

[Remainder of page intentionally left
blank]

 

    	17

    	 

    

 

IN WITNESS WHEREOF,
the undersigned have executed this Security Agreement by its duly authorized officer as of the date first written above.

 

 

BEESFREE, INC.

 

By: /S/ JOSEPH FASCIGLIONE

Name: Joseph Fasciglione

Title: Interim Chief Financial
Officer

BEESFREE USA, INC.

 

By: /S/ JOSEPH FASCIGLIONE

Name: Joseph Fasciglione

Title: President

 

 

NOTEHOLDERS

 

See Omnibus Signature Page to Purchase
Agreement for Noteholders’ Signatures

 

    	18

    	 

    

 

EXHIBIT A

 

BEESFREE, INC. 

 

JOINDER AGREEMENT AND SIGNATURE PAGE

 

TO SECURITY AGREEMENT

 

 

This JOINDER AGREEMENT
AND SIGNATURE PAGE is entered into as of ____________ ___ 201__, by ____________________________________ (the “Collateral
Agent”), for the purpose of becoming a party to that certain Security Agreement, dated December 31, 2013, by and among
BeesFree, Inc., a Nevada corporation, BeesFree USA, Inc., a Delaware corporation, and the investor signatories thereto (the “Noteholders”)
(the “Security Agreement”).

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the parties have
agreed as follows (with all capitalized terms not otherwise defined herein having the meaning ascribed to them in the Security
Agreement):

 

		1.	By executing and delivering this Joinder Agreement and Signature Page, and having been appointed
to serve as Collateral Agent by the Requisite Holders, the Collateral Agent acknowledges that Collateral Agent is now a party to
the Security Agreement and agrees and acknowledges that as such will be subject to the terms, conditions and obligations of the
Security Agreement relating to its duties as Collateral Agent for the benefit of the Noteholders.

 

		2.	The Collateral Agent represents and warrants that the Collateral Agent has reviewed, understands
and agrees to the terms of the Security Agreement and that by signing this Agreement the Collateral Agent agrees to be, and shall
be, bound by the provisions of the Security Agreement, and shall be a party to the Security Agreement as Collateral Agent, and
shall have the rights and obligations as set forth therein.

 

		3.	This Joinder shall be binding upon and enforceable by the Company, BeesFree DE, the Noteholders
and Collateral Agent and their respective successors, heirs and assigns.

 

		4.	This Joinder may be executed in separate counterparts each of which shall be an original and all
of which taken together shall constitute one and the same agreement.

 

		5.	This Agreement shall be construed in accordance with and governed by the law of the State of New
York (without regard to choice of law provisions thereof).

 

Collateral Agent agrees that this signature
page may be attached to any counterpart of the Security Agreement.

 

[Signature Page to Follow]

    	19

    	 

    

 

IN WITNESS WHEREOF,
the undersigned hereby executes the Joinder Agreement as of the date first above written.

 

 

 

_______________________

Name:

Title:

 

Accepted:

 

BEESFREE,
INC.

 

By: ___________________________

Name:

Title:

BEESFREE USA, INC.

 

By: ___________________________

Name:

Title:

 

    	2015% SENIOR SECURED CONVERTIBLE NOTE

 

 

 

THIS NOTE AND THE SECURITIES OBTAINABLE
UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), OR THE SECURITIES
LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

15% SENIOR
SECURED CONVERTIBLE NOTE

 

	No. BEES -[   ]	December 31, 2013
	U.S. $ _____________	 

 

FOR VALUE RECEIVED,
the undersigned, BeesFree, Inc., a Nevada corporation (the “Company”), hereby unconditionally promises to pay ____________________
(the “Holder”), on the Maturity Date (as defined in Section 1 hereof, unless otherwise converted pursuant to
Section 3 hereof) to the order of the Holder, in lawful money of the United States of America and in immediately available
funds, the principal amount of _____________________ ($________) Dollars (the “Principal Amount”). Interest shall accrue
the rate of 15% per annum (“Interest”) based on a 360 day year, shall compound quarterly and shall be payable on the
Maturity Date (as defined below) or converted pursuant to Section 3 hereof. The Company shall be entitled to prepay this Note at
any time prior to the Maturity Date by providing holder no less than 30 days prior notice of such prepayment. Holder may elect
to convert all or a portion of the Principal Amount and accrued Interest in accordance with the provisions of Section 3 hereof
prior to prepayment. Any prepayment made by Company will be applied first toward accrued Interest and once the Interest is fully
paid, towards the Principal Amount.

 

This Note is one of
a series of 15% senior secured convertible notes of like tenor and ranking made by the Company in favor of certain investors and
issued, from time to time (collectively, the “Notes”), pursuant to that certain Securities Purchase Agreement by and
between the Company and certain investors, including the Holder, dated as of December 31, 2013, including all attachments, schedules
and exhibits thereto (the “Securities Purchase Agreement”). Capitalized terms used and not otherwise defied herein
shall have the meanings set forth in the Securities Purchase Agreement. Each of the Notes shall rank equally without preference
or priority of any kind over one another, and all payments on account of Principal Amount and Interest with respect to any of the
Notes shall be applied ratably and proportionately on the outstanding Notes on the basis of the Principal Amount of the outstanding
indebtedness represented thereby.

 

    	 

    	 

    

 

1.Maturity;
Acceleration. Unless otherwise converted in accordance with the provisions of Section 3, this Note shall mature on December
31, 2015  (such date, the “Maturity Date”). On the Maturity Date, unless, and to the extent, previously converted
in accordance with the provisions of Section 3 hereof, any and all outstanding Principal Amount and accrued and unpaid Interest
due and owing under the Note shall be immediately paid by the Company.

 

2.Seniority;
Security Interest.  (a) The indebtedness evidenced by this Note and the payment of the Principal Amount and Interest shall
be Senior (as hereinafter defined) to, and have priority in right of payment over, all indebtedness of Company, other than the
Company’s existing secured indebtedness in the principal amount of $735,000, which will rank pari passu with the Notes (the
“Pari Passu Notes’).  “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, along with the sums payable on the Pari Passu Notes, before any
payment is made upon any other indebtedness now outstanding or hereinafter incurred.

 

(b) This Note is secured
by a second lien and security interest in all of the assets of the Company and its wholly-owned subsidiary, BeesFree USA, Inc.
(“Subsidiary”) pursuant to the terms of a certain Security Agreement dated as of December 31, 2013 (the “Security
Agreement”), by the Company in favor of the Holders. By its execution of the Securities Purchase Agreement, the Holder has
authorized the Requisite Holders (as defined herein) to appoint a collateral agent to act on behalf of the Holder and other holders
of the Notes (the “Agent”), and in such capacity to enter into the Security Agreement, as the same may be amended,
modified, restated or supplemented from time to time, and to exercise for the benefit of the Holder and other holders of the Notes
all rights, powers and remedies provided to it, under or pursuant to the Security Agreement including, without limitation, those
available upon an Event of Default (as defined in Section 4 hereof).

 

3.Conversion.

 

(a)Conversion
Price and Optional Conversion. The Holder shall have the right, at its option, to convert all or a portion of the Principal
Amount and accrued Interest of this Note into shares of the Company’s Common Stock (the “Conversion Shares”)
at a conversion price equal to $1.00 per share (the “Conversion Price”), subject to adjustment as set forth in Section
8). The Holder shall exercise its right to convert this Note by delivering to the Company a written notice setting forth its election
to convert (a “Conversion Notice”) in the form attached hereto as Exhibit A and surrendering this Note. Upon
receipt of the Conversion Notice and the surrender of this Note, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Holder, and in such name or names as the Holder may designate, a certificate or certificates
for the full number of Conversion Shares so converted upon conversion of this Note. Such certificate or certificates shall be deemed
to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such
securities as of the date of delivery of the Conversion Notice, notwithstanding that the certificate or certificates representing
such securities shall not actually have been delivered or that the stock transfer books of the Company shall then be closed. In
the event that the Principal Amount of this Note exceeds the amount being converted, the Company shall, upon such conversion execute
and deliver to the Holder a new Note for the Principal Amount of this Note surrendered which is not being converted.

 

    	2

    	 

    

 

(b)Delivery
of Stock Certificates, etc. on Conversion. The Company agrees that, upon receipt of the Conversion Notice as specified in Section
3(a) above, the Conversion Shares issueable upon conversion of this Note shall be deemed to be issued to the Holder hereof
as the record owner of such shares as of the close of business on the date on which delivery of the Conversion Notice shall have
occurred. As soon as practicable after the conversion of this Note in full or in part, and in any event within five (5) business
days thereafter (“Conversion Share Delivery Date”), the Company at its expense (including the payment by it
of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate
or certificates for the number of duly and validly issued, fully paid and non-assessable shares of Common Stock to which such Holder
shall be entitled on such conversion, together with any other stock or other securities and property (including cash, where applicable)
to which such Holder is entitled upon such exercise pursuant to Section 3(a) or otherwise. No fractional shares of Common
Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Company shall round the
number of shares to be issued upon exercise up to the nearest whole number of shares. The Company understands that a delay in the
delivery of the Conversion Shares after the Conversion Share Delivery Date could result in economic loss to the Holder. As compensation
to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance
of Conversion Shares upon conversion of this Note the proportionate amount of $100 per business day after the Conversion Share
Delivery Date for each $10,000 of Conversion Price of Conversion Shares for which this Note is converted which are not timely delivered.
The Company shall pay any payments incurred under this Section in immediately available funds upon demand. Furthermore, in addition
to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery
of the Conversion Shares by the Conversion Share Delivery Date, the Holder may revoke all or part of the relevant Note conversion
by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to the conversion of the relevant portion of this Note, except that the liquidated damages described
above shall be payable through the date notice of revocation or rescission is given to the Company.

 

(c)Buy-In.
In addition to any other rights available to the Holder, if the Company fails to deliver to a Holder the Conversion Shares as required
pursuant to this Note, and the Holder or a broker on the Holder’s behalf, purchases (in an open market transaction or otherwise)
shares of common stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which the Holder was entitled
to receive from the Company (a “Buy-In”), then the Company shall pay in cash to the Holder (in addition to any
remedies available to or elected by the Holder) the amount by which (A) the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (B) the aggregate Conversion Price of the Conversion Shares
required to have been delivered together with interest thereon at a rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Holder
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of Conversion
Price of Conversion Shares to have been received upon conversion of this Note, the Company shall be required to pay the Holder
$1,000, plus interest. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In.

 

    	3

    	 

    

 

(d)Rights
as a Stockholder. Unless and until this Note is converted in accordance with the terms hereof, Holder shall not be entitled
to vote or receive distributions or be deemed the holder of Conversion Shares or any other securities of the Company which may
at any time be issuable upon the conversion of this Note for any purpose, nor shall anything contained herein be construed to confer
upon Holder, as such, any of the rights of a stockholder of the Company or any right to vote as a stockholder of the Company or
upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of equity securities of the Company, reclassification of equity securities of the Company,
consolidation, merger, transfer of assets or otherwise) or to receive notice of meetings, or to receive distributions or subscription
rights or otherwise unless and until this Note is converted in accordance with the terms hereof.

 

(e)Holder’s
Exercise Limitations.  The Company shall not effect any conversion of this Note, and a Holder shall not have the right
to convert any portion of this Note, pursuant to this Section 3 or otherwise, to the extent that after giving effect to such issuance
after conversion as set forth on the applicable Conversion Notice, the Holder (together with the Holder’s affiliates, and
any other persons acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in
excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares
of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable
upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of
Common Stock which would be issuable upon (i) conversion of the remaining, non-converted portion of this Note beneficially owned
by the Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or non-converted portion of any other
convertible securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of
this Section 3(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder
that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 3(e) applies,
the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any affiliates)
and of which portion of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Conversion
Notice shall be deemed to be the Holder’s determination of whether this Note is convertible (in relation to other securities
owned by the Holder together with any affiliates) and of which portion of this Note is convertible, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.
  In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 3(e), in determining
the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected
in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent
public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number
of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two business
days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this Note, by the Holder or its affiliates since the date as of which such number of outstanding shares
of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon
conversion of this Note. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 3(e), provided that the Beneficial Ownership Limitation in no event
exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock upon conversion of this Note held by the Holder and the provisions of this Section 3(e) shall continue to apply.
 Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The
provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 3(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.

 

    	4

    	 

    

 

4.Events
of Default. The term “Event of Default” shall mean any of the events set forth in this Section 4:

 

(a)the
Company shall default in the payment of Principal Amount or Interest under this Note within five (5) days following such time of
becoming due, whether by maturity or acceleration;

 

(b)failure
by the Company to perform or observe in any material respect any covenant or agreement of the Company contained in this Note,  which
remains uncured for a period of fifteen (15) days from the date the Company is notified of such default;

 

(c)there
shall be a dissolution, termination of existence, suspension or discontinuance of the Company’s business for a continuous
period of 20 days;

 

(d)if
the Company shall:

 

(i)admit
in writing its inability to pay its debts generally as they become due;

 

(ii)file
a petition in bankruptcy or a petition to take advantage of any insolvency act;

 

(iii)convey
any material portion of the assets of the Company to a trustee, mortgage or liquidating agent or make an assignment for the benefit
of creditors;

 

(iv)consent
to the appointment of a receiver, trustee, custodian or similar official, for the Company or any material portion of the property
or assets of the Company;

 

(v)on
a petition in bankruptcy filed against it, be adjudicated a bankrupt; or

 

(vi)file
a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law or statute
of the United States of America or any State, district or territory thereof;

 

    	5

    	 

    

 

(e)if
a court of competent jurisdiction shall enter an order, judgment, or decree appointing, without the consent of the Company, a receiver
of the whole or any substantial part of the Company’s assets, and such order, judgment or decree shall not be vacated or
set aside or stayed within 60 days from the date of entry thereof; or

 

(f)if,
under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody
or control of the whole or any substantial part of the Company’s assets and such custody or control shall not be terminated
or stayed within 60 days from the date of assumption of such custody or control.

 

If any Event of Default
described in clause (d) of this Section 4 shall occur, the Principal Amount of this Note, together with all accrued and unpaid
Interest, shall automatically be and become immediately due and payable, without notice or demand.

 

If any Event of Default
(other than any Event of Default described in clause (d) of this Section 4) shall occur for any reason, whether voluntary or involuntary,
the Agent, acting on behalf of the Holder and other holders of the Notes, may, upon written notice to the Company, declare all
or any portion of the outstanding Principal Amount, together with all accrued and unpaid Interest, to be due and payable, whereupon
the full unpaid Principal Amount hereof, together with all accrued and unpaid Interest shall be so declared due and payable shall
be and become immediately due and payable if default is not cured by the Company within 10 business days of receipt of written
notice, without further notice, demand, or presentment.

 

5.Remedies.
Subject to the terms of the Security Agreement, in case any one or more of the Events of Default specified in Section 4 hereof
shall have occurred and be continuing, the Agent, acting on behalf of the Holder and other holders of the Note, may proceed to
protect and enforce the Holder’s rights either by suit in equity and/or by action at law, whether for the specific performance
of any covenant or agreement contained in this Note or in aid of the exercise of any power granted in this Note or may proceed
to enforce the payment of all sums due upon this Note or to enforce any other legal or equitable right of the Holder.

 

    	6

    	 

    

 

6.Affirmative
Covenants. The Company covenants and agrees that, while any amounts under this Note are outstanding, it shall:

 

(a)Do
all things necessary to preserve and keep in full force and effect its corporate existence, including, without limitation, all
licenses or similar qualifications required by it to engage in its business in all jurisdictions in which it is at the time so
engaged; and continue to engage in business of the same general type as conducted as of the date hereof; and continue to conduct
its business substantially as now conducted or as otherwise permitted hereunder;

 

(b)Pay
and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income or
profits or in respect of its property before the same shall become delinquent or in default, which, if unpaid, might reasonably
be expected to give rise to liens or charges upon such properties or any part thereof, unless, in each case, the validity or amount
thereof is being contested in good faith by appropriate proceedings and the Company has maintained adequate reserves with respect
thereto in accordance with GAAP;

 

(c)Comply
in all material respects with all federal, state and local laws and regulations, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations and requirements applicable to it of all governmental bodies, departments, commissions,
boards, companies or associations insuring the premises, courts, authorities, officials or officers which are applicable to the
Company or any of its properties, except where the failure to so comply would not have a Material Adverse Effect (as defined in
this Section 6);

 

(d)Keep
proper records and books of account with respect to its business activities, in which proper entries, reflecting all of their financial
transactions, are made in accordance with GAAP;

 

(e)Keep
all of its properties adequately insured at all times with responsible insurance carriers against loss or damage by fire and other
hazards, and maintain adequate insurance at all times with responsible insurance carriers against liability on account of damage
or injury to persons and property.

 

For purposes hereof,
“Material Adverse Effect” shall be an event, matter, condition or circumstance which has or would reasonably be expected
to have a material adverse effect on the business, operations, economic performance, assets, financial condition, material agreements
or results of operations of the Company and its subsidiaries, taken as a whole.

 

7.Negative
Covenants. The Company covenants and agrees that while any amount of this Note is outstanding it will not directly or indirectly:

 

(a)Declare
or pay, directly and indirectly, any cash dividends with respect to any shares of its capital stock (including without limitation
any preferred stock; provided, however, nothing in this Section 7 shall prohibit the cumulative accrual of dividends on the Company’s
issued and outstanding shares of Series A and Series B Preferred Stock or prevent the redemption of the Series A Preferred Stock
in accordance with its terms and the payment of accrued dividends thereon upon such redemption), without first obtaining the prior
written consent of the holders of more than fifty one percent (51%) of the outstanding principal of the Notes (the “Requisite
Holders”);

 

    	7

    	 

    

 

(b)Sell,
transfer, discount or otherwise dispose of any claim or debt owing to it, including, without limitation, any notes, accounts receivable
or other rights to receive payment, except for reasonable consideration and in the ordinary course of business;

 

(c)Incur,
guarantee, assume or otherwise become responsible for (directly or indirectly) any indebtedness for borrowed money that is senior
to, or pari passu with, the Notes, without first obtaining the prior written consent of the Requisite Holders; provided,
however, that the foregoing shall not prohibit the Company from incurring such indebtedness from sources other than
the Holders on a pari passu basis without the consent of the Requisite Holders where the total amount of such indebtedness, inclusive
of that held by the Holders in the aggregate, does not exceed $2,000,000; or

 

(d)Create,
incur, assume or permit to exist any lien on any property or assets now owned or hereafter acquired by it or its Subsidiary or
on any income or revenues or rights in respect of any thereof that is senior to the Notes.

 

8.Adjustments.

 

(a)Stock Dividends
and Splits. In case the Company shall at any time (A) declare any dividend or distribution on its Common Stock or other securities
of the Company other than the Series A Preferred Stock or Series B Preferred Stock, (B) split or subdivide the outstanding Common
Stock, (C) combine the outstanding Common Stock into a smaller number of shares, or (D) issue by reclassification of its Common
Stock any shares or other securities of the Company, then in each such event the Conversion Price shall be adjusted proportionately
so that the Holders shall be entitled to receive the kind and number of shares or other securities of the Company which such Holders
would have owned or have been entitled to receive after the happening of any of the events described above had the Note been converted
immediately prior to the happening of such event (or any record date with respect thereto). Such adjustment shall be made whenever
any of the events listed above shall occur. An adjustment made to the Conversion Price pursuant to this Section 8(a) shall become
effective immediately after the effective date of the event.

 

(b)Mergers, Consolidations,
Etc. In case of any merger of the Company with or into any other corporation (other than a merger in which the Company is the
surviving or continuing corporation and which does not result in any reclassification, conversion, or change of the outstanding
shares of Common Stock), then lawful provision shall be made so that Holders shall thereafter have the right to convert the Notes
into the kind and amount of shares of stock and/or other securities or property receivable upon such merger by a Holder of the
number of shares of Common Stock into which such Notes might have been converted immediately prior to such consolidation or merger.
Such provision shall also provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 8. The foregoing provisions of this Section 8(b) shall similarly apply to successive mergers.

 

    	8

    	 

    

 

(c)Sales or Conveyances.
In case of any sale or conveyance to another person or entity, other than a subsidiary of the Company, of the property of the Company
as an entirety, or substantially as an entirety or a material part of the property of the Company, in connection with which shares
or other securities or cash or other property shall be issuable, distributable, payable, or deliverable for outstanding shares
of Common Stock, then, lawful provision shall be made so that the Holders shall thereafter have the right to convert the Notes
into the kind and amount of shares of stock or other securities or property that shall be issuable, distributable, payable, or
deliverable upon such sale or conveyance with respect to each share of Common Stock immediately prior to such conveyance.

 

(d)If the Common
Stock shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for
in Section 8(a), or by a reorganization, merger, consolidation, or sale of assets other than as provided for in Section 8(b) hereof),
then, and in each event, an appropriate revision to the Conversion Price shall be made and provisions shall be made (by adjustments
of the Conversion Price or otherwise) so that the Holder shall have the right thereafter to convert the Note into the kind and
amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders
of the number of shares of Common Stock into which the Note might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as provided herein.

 

(e)Calculations.
All calculations under this Section 8 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may
be. For purposes of this Section 8, the number of shares of Common Stock deemed to be issued and outstanding as of a given
date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

(f)Voluntary Adjustment
By Company. The provisions of this Section 8 shall similarly apply to successive, stock dividends, stock spits or combinations,
reclassifications, exchanges, substitutions, dilutive Issuances or other events.

 

9.Amendments
and Waivers. The terms of this Note may be amended and the observance of any term of this Note may be waived (either generally
or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Requisite
Holders, except with respect to the Maturity Date and the Conversion Price, which can only be amended with the Holder’s consent.

 

    	9

    	 

    

 

10.Notices.

 

(a)Any
notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Securities Purchase Agreement.

 

(b)Any
party may give any notice, request, consent or other communication under this Note using any other means (including personal delivery,
messenger service, telecopy, first class mail or electronic mail), but no such notice, request, consent or other communication
shall be deemed to have been duly given unless and until it is actually received by the party for whom it is intended. Any party
may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the
other parties notice in the manner set forth in this Section 10.

 

11.Severability.
The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render
that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof,
in all other respects, shall remain valid and enforceable.

 

12.Governing
Law. This Note shall be governed by and construed under the laws of the State of New York applicable to agreements made and
to be performed entirely within such jurisdiction.

 

13.Waivers.
The non-exercise by either party of any of its rights hereunder in any particular instance shall not constitute a waiver thereof
in that or any subsequent instance.

 

14.Attorneys’
Fees; Costs. If any Event of Default occurs, the Company promises to pay all costs of enforcement and collection, including
but not limited to, Holder’s attorneys’ fees, whether or not any action or proceeding is brought to enforce the provisions
hereof.

 

15.Successor
and Assigns. This Note shall be binding upon the Company and its successors and permitted assigns and shall inure to the benefit
of the Holder and its successors and assigns. The Company may not assign or delegate any of its duties or obligations under this
Note without the written consent of the Holder.

 

[Signature page to Follow]

 

    	10

    	 

    

 

IN WITNESS WHEREOF,
the Company has caused its duly authorized officers to execute this Note as of the date first written above.

 

 

	 	COMPANY:  
	 	 	 
	 	BEESFREE, INC. 
	 	 	 
	 	 	 
	 	By:	 
	 	      	Name:
	 	      	Title
	 	 	 

 

    	11

    	 

    

 

Optional Conversion
Notice

 

 

______________________,
the registered holder of this 15% Senior Secured Convertible Note, issued ________, 2013, hereby gives notice of the conversion
of __________ of the outstanding principal and accrued interest due under this Note into Common Stock of BeesFree, Inc. at a conversion
price equal to $1.00 per share.

 

 

Holder:

 

______________________________________________

(Print Name)

 

__________________________________________________

Signature

 

Date: ________________

 

 

    	12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}]]