SEC Contract Filing

Filing Date: 2018-10-04

Document Content:
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>7
<FILENAME>exh_104.htm
<DESCRIPTION>SECURITY AGREEMENT
<TEXT>
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<P STYLE="margin: 0; text-align: right"><B>Exhibit 10.4</B></P>

<P STYLE="margin: 0; text-align: right"><B>&nbsp;</B></P>

<P STYLE="margin: 0; text-align: left"></P>

<P STYLE="font-size: 10pt; line-height: 13.3pt; text-align: center; margin: 0pt 0"><B>SECURITY AGREEMENT</B></P>

<P STYLE="font-size: 10pt; line-height: 13.3pt; text-align: center; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"><FONT STYLE="letter-spacing: 0.05pt"><B>THIS
SECURITY AGREEMENT </B>(this &ldquo;<U>Agreement</U>&rdquo;), is entered into as of September 28, 2018 (the &ldquo;<U>Effective
Date</U>&rdquo;), by and between <B>PRECISION THERAPEUTICS INC.</B>, a Delaware corporation (the &ldquo;<U>Borrower</U>&rdquo;),
and <B>L2 Capital, LLC</B>, a Kansas limited liability company (the &ldquo;<U>Secured Party</U>&rdquo;). All capitalized terms
not otherwise defined herein shall the meanings ascribed to them in that certain Securities Purchase Agreement and Note (as defined
below) by and between Borrower and the Secured Party of even date (the &ldquo;<U>Purchase Agreement</U>&rdquo;).</FONT></P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: center; margin: 0pt 0"><FONT STYLE="letter-spacing: -0.05pt">RECITALS</FONT></P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: center; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"><B>WHEREAS</B>, the Secured
Party has loaned monies to Borrower, as more particularly described in the Purchase Agreement and as evidenced by the 8% Senior
Secured Promissory Note in the principal amount of up to US$2,013,635.75 issued by Borrower to the Secured Party (the &ldquo;<U>Note</U>&rdquo;);</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"><B>WHEREAS</B>, the term
&ldquo;<U>Secured Party</U>&rdquo; or &ldquo;<U>Secured Parties</U>&rdquo; as used in this Agreement shall mean, collectively,
all holders of the Note, including those persons who become holders of Note subsequent to the date hereof; and</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"><FONT STYLE="letter-spacing: -0.05pt"><B>WHEREAS</B>,
this Agreement is being executed and delivered by Borrower to the Secured Party to secure payment by the Borrower to the Secured
Parties under the terms of the Note.</FONT></P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0"><B>NOW, THEREFORE</B>,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties hereto hereby
agrees as follows:</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Obligations
Secured</U>. This Agreement secures, in part, the prompt payment and performance of:</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 0.5in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 1in; margin: 0pt 0">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the obligations of the Borrower from time to time arising under the Transaction Documents, this Agreement or otherwise with respect
to the due and prompt payment of (i) the principal of and premium, if any, and interest, penalties, on and all other amounts due
to Secured Party under, the Note (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees,
costs, attorneys&rsquo; fees and disbursements, reimbursement obligations, contract causes of action, expenses and indemnities,
whether primary, secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising,
fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower under or with respect
to the Transaction Documents; and</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 1in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; line-height: 13.8pt; text-align: justify; text-indent: 1in; margin: 0pt 0">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
all other covenants, duties, debts, obligations and liabilities of any kind of the Borrower under or with respect to the Transaction
Documents or any other document made, delivered or given in connection with the Transaction Documents, in each case whether evidenced
by a note or other writing, whether allowed in any bankruptcy, insolvency,</P>

<P S