Exhibit 10.2

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”), dated as of February 26, 2018, is
executed by Jaguar Health, Inc., a Delaware corporation (“Debtor”), in favor of
Chicago Venture Partners, L.P., a Utah limited partnership (“Secured Party”).

 

A.            Debtor has issued to Secured Party a certain Secured Promissory
Note of even date herewith, as may be amended from time to time, in the original
face amount of $2,240,909.00 (the “Note”).

 

B.            In order to induce Secured Party to extend the credit evidenced by
the Note, Debtor has agreed to enter into this Agreement and to grant Secured
Party a security interest in the Collateral (as defined below).

 

NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:

 

1.             Definitions and Interpretation. When used in this Agreement, the
following terms have the following respective meanings:

 

“Collateral” has the meaning given to that term in Section 2 hereof.

 

“Effective Date” means the date on which Secured Party: (a) purchases the
Hercules Debt from Hercules pursuant to the purchase option set forth in
Section 4 of the Subordination Agreement; or (b) Debtor repays the Hercules Debt
in full.

 

“Hercules” means Hercules Technology Growth Capital, Inc., a Maryland
corporation.

 

“Hercules Debt” means all amounts owing to Hercules pursuant to the Hercules
Loan Agreement and all other related documentation.

 

“Hercules Loan Agreement” means that certain Loan and Security Agreement dated
August 18, 2015 entered into by and between Debtor and Hercules, as amended.

 

“Intellectual Property” means all patents, trademarks, service marks, trade
names, copyrights, trade secrets, licenses (software or otherwise),
information,  know-how,  inventions, discoveries, published and unpublished
works of authorship, processes, any and all other proprietary rights, and all
rights corresponding to all of the foregoing throughout the world, now owned and
existing or hereafter arising, created or acquired.

 

“Lien” shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such
property or the income therefrom, including, without limitation, the interest of
a vendor or lessor under a conditional sale agreement, capital lease or other
title retention agreement, or any agreement to provide any of the foregoing, and
the filing of any financing statement or similar instrument under the UCC or
comparable law of any jurisdiction.

 

“Obligations” means (a) all loans, advances, future advances, debts, liabilities
and obligations, howsoever arising, owed by Debtor to Secured Party or any
affiliate of Secured Party of every kind and description, now existing or
hereafter arising, created by the Note, this Agreement, that certain Securities
Purchase Agreement of even date herewith, entered into by and between Debtor and
Secured Party (the “Purchase Agreement”), any other Transaction Documents (as
defined in the Purchase Agreement), or any modification or amendment to any of
the foregoing, (b) all reasonable and

 

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documented out-of-pocket costs and expenses, including reasonable and documented
attorneys’ fees, incurred by Secured Party or any affiliate of Secured Party in
connection with the Note or in connection with the collection or enforcement of
any portion of the indebtedness, liabilities or obligations described in the
foregoing clause (a) to the extent requested to be reimbursed by the Debtor
pursuant to the terms of the Transaction Documents, (c) the payment of all other
sums, with interest thereon, advanced in accordance herewith to protect the
security of this Agreement, and (d) the performance of the covenants and
agreements of Debtor contained in this Agreement and all other Transaction
Documents.

 

“Permitted Indebtedness” means (a) indebtedness of Debtor in favor of Secured
Party arising under this Agreement or any other Transaction Document;
(b) indebtedness to trade creditors incurred in the ordinary course of business,
including indebtedness incurred in the ordinary course of business with
corporate credit cards; (c) indebtedness consisting of financing of insurance
premiums incurred in the ordinary course of business; (d) other indebtedness in
an amount not to exceed $250,000 at any time outstanding; (e) indebtedness
consisting of capital leases and purchase money debt in an amount not to exceed
$300,000 at any time outstanding; (f) reimbursement obligations in connection
with letters of credit that are secured by cash and issued on behalf of Debtor
or a subsidiary thereof in an amount not to exceed $300,000 at any time
outstanding; and (g) extensions, refinancings and renewals of any items of
Permitted Indebtedness, provided that the principal amount is not increased or
the terms modified to impose materially more burdensome terms upon Debtor.

 

“Permitted Liens” means (a) Liens for taxes, fees, assessment or other
governmental charges or levies, either not yet delinquent or being contested in
good faith and by appropriate proceedings for which adequate reserves have been
established; (b) Liens in favor of Secured Party under this Agreement or arising
under the other Transaction Documents; (c) Liens securing claims or demands of
materialmen, artisans, mechanics, carriers, warehousemen, landlords and other
like persons arising in the ordinary course of Debtor’s business and imposed
without action of such parties; provided, that the payment thereof is not yet
required; (d) Liens arising from judgments, decrees or attachments in
circumstances which do not constitute an Event of Default hereunder; (e) the
following deposits, to the extent made in the ordinary course of business: 
deposits under worker’s compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds; (f) Liens on equipment or software or other
Intellectual Property constituting purchase money Liens;  (g) leasehold
interests in leases or subleases and licenses granted in the ordinary course of
business and not interfering in any material respect with the business of the
licensor; (h) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties that are promptly paid on or
before the date they become due; (i) Liens on insurance proceeds securing the
payment of financed insurance premiums that are promptly paid on or before the
date they become due (provided that such Liens extend only to such insurance
proceeds and not to any other property or assets); (j) statutory and common law
rights of set-off and other similar rights as to deposits of cash and securities
in favor of banks, other depository institutions and brokerage firms;
(k) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business so
long as they do not materially impair the value or marketability of the related
property; (l) customary liens securing capital leases on the assets financed
thereby; (m) liens on cash securing letters of credit; and (n) Liens incurred in
connection with the extension, renewal or refinancing of indebtedness secured by
Liens of the type described in clauses (a) through (n) above; provided, that any
extension, renewal or replacement Lien shall be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness
being extended, renewed or refinanced (as may have been reduced by any payment
thereon) does not increase.

 

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“Subordination Agreement” means that certain Subordination and Option Agreement
of even date herewith entered into by and among Hercules, Secured Party and
Debtor.

 

“UCC” means the Uniform Commercial Code as in effect in the state whose laws
would govern the security interest in, including without limitation the
perfection thereof, and foreclosure of the applicable Collateral.

 

Unless otherwise defined herein, all terms defined in the UCC have the
respective meanings given to those terms in the UCC.

 

2.             Grant of Security Interest. As security for the Obligations,
Debtor hereby pledges to Secured Party and grants to Secured Party a security
interest in all right, title, interest, claims and demands of Debtor in and to
the property described in Schedule A hereto, and all replacements, proceeds,
products, and accessions thereof (collectively, the “Collateral”).
Notwithstanding anything herein to the contrary, the foregoing grant of security
interest shall not be effective until the Effective Date at which time such
grant of security interest will immediately and automatically become effective
without the need for any further action by Debtor or Secured Party.

 

3.             Authorization to File Financing Statements. Debtor hereby
irrevocably authorizes Secured Party at any time on or after the Effective Date
to file with the Secretary of State of the State of Delaware (as well as any
other state (if any) in which Debtor incorporates while the Obligations remain
outstanding) any financing statements or documents having a similar effect and
amendments thereto that provide any other information required by the Uniform
Commercial Code (or similar law of any non-United States jurisdiction, if
applicable) of such state or jurisdiction for the sufficiency or filing office
acceptance of any financing statement or amendment, including whether Debtor is
an organization, the type of organization and any organization identification
number issued to Debtor. Debtor agrees to furnish any such information to
Secured Party promptly upon Secured Party’s request.

 

4.             General Representations and Warranties. Debtor represents and
warrants to Secured Party that (a) Debtor is the owner of the Collateral and
that no other person has any right, title, claim or interest (by way of Lien or
otherwise) in, against or to the Collateral, other than Permitted Liens, (b) so
long as the Effective Date has occurred, upon the filing of UCC-1 financing
statements with the Delaware Secretary of State, Secured Party shall have a
perfected first-position security interest in the Collateral to the extent that
a security interest in the Collateral can be perfected by such filing, except
for Permitted Liens, (c) Debtor has received at least a reasonably equivalent
value in exchange for entering into this Agreement, (d) Debtor is not insolvent,
as defined in any applicable state or federal statute, nor will Debtor be
rendered insolvent by the execution and delivery of this Agreement to Secured
Party; and (e) as such, this Agreement is a valid and binding obligation of
Debtor, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditor rights and by general principles of equity.

 

5.             Additional Covenants.  Commencing on the date hereof, Debtor
hereby agrees not to grant a security interest in any of its assets without
Secured Party’s prior written consent. Commencing upon and following the
occurrence of the Effective Date, Debtor hereby agrees:

 

5.1.         to perform all acts that may be necessary to maintain, preserve,
protect and perfect in the Collateral, the Lien granted to Secured Party
therein, and the perfection and priority of such Lien solely to the extent
(i) Debtor determines to do so in the exercise of its business judgment or
(ii) with respect to perfection, such perfection is required hereunder;

 

5.2.         to procure, execute (including endorse, as applicable), and deliver
from time to time any endorsements, assignments, and financing statements
reasonably deemed necessary or appropriate by Secured Party to perfect, maintain
and protect Secured Party’s Lien hereunder and the priority thereof;

 

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5.3.         to provide at least fifteen (15) days prior written notice to
Secured Party of any of the following events: (a) any changes or alterations of
Debtor’s name, (b) any changes with respect to Debtor’s address or principal
place of business, and (c) the formation of any subsidiaries of Debtor;

 

5.4.         upon the occurrence of an Event of Default (as defined in the Note)
under the Note and, solely during the existence thereof, at Secured Party’s
request, to endorse (up to the outstanding amount under such promissory notes at
the time of Secured Party’s request), assign and deliver any promissory notes
and all other instruments, documents, or writings included in the Collateral to
Secured Party, accompanied by such instruments of transfer or assignment duly
executed in blank as Secured Party may from time to time specify;

 

5.5.         not to sell or otherwise dispose, or offer to sell or otherwise
dispose, of the Collateral or any interest therein (other than inventory in the
ordinary course of business);

 

5.6.         not to, directly or indirectly, allow, grant or suffer to exist any
Lien upon any of the Collateral, other than Permitted Liens;

 

5.7.         not to incur any indebtedness (other than Permitted Indebtedness)
without Secured Party’s prior written consent;

 

5.8.         not to grant any license or sublicense under any of its
Intellectual Property, or enter into any other agreement with respect to any of
its Intellectual Property, except in the ordinary course of Debtor’s business;

 

5.9.         to the extent commercially reasonable and in Debtor’s good faith
business judgment: (a) to file and prosecute diligently any material patent,
trademark or service mark applications pending as of the date hereof or
hereafter until all Obligations (other than contingent and indemnification
obligations) shall have been paid in full, (b) to make application on unpatented
but patentable material inventions and on trademarks and service marks, (c) to
preserve  and maintain all rights in all of its material Intellectual Property,
and (d) to ensure that all of its material Intellectual Property is and remains
enforceable. Any and all costs and expenses incurred in connection with each of
Debtor’s obligations under this Section 5.9 shall be borne by Debtor. Debtor
shall not knowingly and unreasonably abandon any right to file a material
patent, trademark or service mark application, or abandon any pending patent
application, or any other of its material Intellectual Property, without the
prior written consent of Secured Party except for Intellectual Property that
Debtor determines, in the exercise of its good faith business judgment, is not
or is no longer material to its business; and

 

5.10.       upon the reasonable request of Secured Party at any time or from
time to time, and at the sole cost and expense (including, without limitation,
reasonable attorneys’ fees) of Debtor, Debtor shall take all actions and execute
and deliver any and all instruments, agreements, assignments, certificates
and/or documents reasonably required by Secured Party to collaterally assign any
and all of Debtor’s material patent, copyright and trademark registrations and
applications now owned or hereafter acquired to and in favor of Secured Party.

 

6.             Authorized Action by Secured Party.  Commencing upon and
following the occurrence of the Effective date, Debtor hereby irrevocably
appoints Secured Party as its attorney-in-fact (which appointment is coupled
with an interest) and agrees that Secured Party may perform solely during the
existence of an Event of Default (but Secured Party shall not be obligated to
and shall incur no liability to Debtor or any third party for failure so to do)
any act which Debtor is obligated by this Agreement to perform, and, solely
during the existence of an Event of Default, to exercise such rights and powers
as Debtor might exercise with respect to the Collateral, including the right to
(a) collect by legal proceedings or otherwise and endorse, receive and receipt
for all dividends, interest, payments, proceeds and other sums and property now
or hereafter payable on or on account of the Collateral; (b) enter into any

 

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extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (c) make any compromise or settlement, and take any
action Secured Party deems advisable, with respect to the Collateral, including
without limitation bringing a suit in Secured Party’s own name to enforce any
Intellectual Property; (d) endorse Debtor’s name on all applications, documents,
papers and instruments necessary or desirable for Secured Party in the use of
any Intellectual Property; (e) grant or issue any exclusive or non-exclusive
license under any Intellectual Property to any person or entity; (f) assign,
pledge, sell, convey or otherwise transfer title in or dispose of any
Intellectual Property to any person or entity; (g) cause the Commissioner of
Patents and Trademarks, United States Patent and Trademark Office (or as
appropriate, such equivalent agency in foreign countries) to issue any and all
patents and related rights and applications to Secured Party as the assignee of
Debtor’s entire interest therein; (h) file a copy of this Agreement with any
governmental agency, body or authority, including without limitation the United
States Patent and Trademark Office and, if applicable, the United States
Copyright Office or Library of Congress, at the sole cost and expense of Debtor;
(i) insure, process and preserve the Collateral; (j) pay any indebtedness of
Debtor relating to the Collateral; (k) execute and file UCC financing statements
and other documents, certificates, instruments and agreements with respect to
the Collateral or as otherwise required or permitted hereunder; and (l) take any
and all appropriate action and execute any and all documents and instruments
that may be necessary or useful to accomplish the purposes of this Agreement.
The powers conferred on Secured Party under this Section 6 are solely to protect
its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Secured Party shall be accountable only for the
amounts that it actually receives as a result of the exercise of such powers,
and neither Secured Party nor any of its stockholders, directors, officers,
managers, employees or agents shall be responsible to Debtor for any act or
failure to act, except with respect to Secured Party’s own gross negligence or
willful misconduct. Nothing in this Section 6 shall be deemed an authorization
for Debtor to take any action that it is otherwise expressly prohibited from
undertaking by way of other provision of this Agreement.

 

7.             Default and Remedies.

 

7.1.         Default. Following the occurrence of the Effective Date, Debtor
shall be deemed in default under this Agreement upon the occurrence and
continuation of an Event of Default.

 

7.2.         Remedies. Upon the occurrence and continuation of any such Event of
Default following the occurrence of the Effective Date, Secured Party shall have
the rights of a secured creditor under the UCC, all rights granted by this
Agreement and by law, including, without limiting the foregoing, (a) the right
to require Debtor to assemble the Collateral and make it available to Secured
Party at a place to be designated by Secured Party, and (b) the right to take
possession of the Collateral, and for that purpose Secured Party may enter upon
premises on which the Collateral may be situated and remove the Collateral
therefrom. Debtor hereby agrees that fifteen (15) days’ notice of a public sale
of any Collateral or notice of the date after which a private sale of any
Collateral may take place is reasonable. In addition, Debtor waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of
any of Secured Party’s rights and remedies hereunder, including, without
limitation, Secured Party’s right following an Event of Default to take
immediate possession of Collateral and to exercise Secured Party’s rights and
remedies with respect thereto. Secured Party may also have a receiver appointed
to take charge of all or any portion of the Collateral and to exercise all
rights of Secured Party under this Agreement. Secured Party may exercise any of
its rights under this Section 7.2 without demand or notice of any kind. The
remedies in this Agreement, including without limitation this Section 7.2, are
in addition to, not in limitation of, any other right, power, privilege, or
remedy, either in law, in equity, or otherwise, to which Secured Party may be
entitled. No failure or delay on the part of Secured party in exercising any
right, power, or remedy will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right hereunder. All of Secured Party’s rights and
remedies, whether evidenced by this Agreement or by any other agreement,
instrument or document shall be cumulative and may be exercised singularly or
concurrently.

 

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

 

7.4.         Marshalling. Secured Party shall not be required to marshal any
present or future Collateral for, or other assurances of payment of, the
Obligations or to resort to such Collateral or other assurances of payment in
any particular order, and all of its rights and remedies hereunder and in
respect of such Collateral and other assurances of payment shall be cumulative
and in addition to all other rights and remedies, however existing or arising.
To the extent that it lawfully may, Debtor hereby agrees that it will not invoke
any law relating to the marshalling of Collateral which might cause delay in or
impede the enforcement of Secured Party’s rights and remedies under this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, Debtor hereby irrevocably waives the benefits
of all such laws.

 

7.5.         Application of Collateral Proceeds. Following the occurrence of the
Effective Date, the proceeds and/or avails of the Collateral, or any part
thereof, and the proceeds and the avails of any remedy hereunder (as well as any
other amounts of any kind held by Secured Party at the time of, or received by
Secured Party after, the occurrence of an Event of Default) shall be paid to and
applied as follows:

 

(a)           First, to the payment of reasonable and documented out-of-pocket
costs and expenses, including all amounts expended to preserve the value of the
Collateral, of foreclosure or suit, if any, and of such sale and the exercise of
any other rights or remedies, and of all proper fees, expenses, liability and
advances, including reasonable legal expenses and attorneys’ fees, incurred or
made hereunder by Secured Party;

 

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(b)           Second, to the payment to Secured Party of the amount then owing
or unpaid on the Note (to be applied first to accrued interest and fees and
second to outstanding principal) and all amounts owed under any of the other
Transaction Documents or other documents included within the Obligations; and

 

(c)           Third, to the payment of the surplus, if any, to Debtor, its
successors and assigns, or to whosoever may be lawfully entitled to receive the
same.

 

In the absence of final payment and satisfaction in full of all of the
Obligations (other than contingent and indemnification obligations), Debtor
shall remain liable for any deficiency.

 

8.             Miscellaneous.

 

8.1.         Notices. Any notice required or permitted hereunder shall be given
in the manner provided in the subsection titled “Notices” in the Purchase
Agreement, the terms of which are incorporated herein by this reference.

 

8.2.         Non-waiver. No failure or delay on Secured Party’s part in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right.

 

8.3.         Amendments and Waivers. This Agreement may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by Debtor and Secured Party. Each waiver or consent under any provision
hereof shall be effective only in the specific instances for the purpose for
which given.

 

8.4.         Assignment. This Agreement shall be binding upon and inure to the
benefit of Secured Party and Debtor and their respective successors and assigns;
provided, however, that Debtor may not sell, assign or delegate rights and
obligations hereunder without the prior written consent of Secured Party.

 

8.5.         Cumulative Rights, etc. The rights, powers and remedies of Secured
Party under this Agreement shall be in addition to all rights, powers and
remedies given to Secured Party by virtue of any applicable law, rule or
regulation of any governmental authority, or the Note, all of which rights,
powers, and remedies shall be cumulative and may be exercised successively or
concurrently without impairing Secured Party’s rights hereunder. Debtor waives
any right to require Secured Party to proceed against any person or entity or to
exhaust any Collateral or to pursue any remedy in Secured Party’s power.

 

8.6.         Partial Invalidity. If any part of this Agreement is construed to
be in violation of any law, such part shall be modified to achieve the objective
of the parties to the fullest extent permitted and the balance of this Agreement
shall remain in full force and effect.

 

8.7.         Expenses. Debtor shall pay on demand all reasonable and documented
out-of-pocket fees and expenses incurred following the occurrence of the
Effective Date, including reasonable and documented attorneys’ fees and
expenses, incurred by Secured Party in connection with the custody, preservation
or sale of, or other realization on, any of the Collateral or the enforcement or
attempt to enforce any of the Obligations which are not performed as and when
required by this Agreement.

 

8.8.         Entire Agreement. This Agreement, the Note, and the other
Transaction Documents, taken together, constitute and contain the entire
agreement of Debtor and Secured Party with respect to this particular matter and
supersede any and all prior agreements, negotiations, correspondence,

 

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understandings and communications between the parties, whether written or oral,
respecting the subject matter hereof.

 

8.9.         Governing Law; Venue. Except as otherwise specifically set forth
herein, the parties expressly agree that this Agreement shall be governed solely
by the laws of the State of Utah, without giving effect to the principles
thereof regarding the conflict of laws; provided, however, that enforcement of
Secured Party’s rights and remedies against the Collateral as provided herein
will be subject to the UCC. The provisions set forth in the Purchase Agreement
to determine the proper venue for any disputes are incorporated herein by this
reference.

 

8.10.       Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE
RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY
AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY
APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO
ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND
TRIAL BY JURY.

 

8.11.       Purchase Agreement; Arbitration of Disputes. By executing this
Agreement, each party agrees to be bound by the terms, conditions and general
provisions of the Purchase Agreement and the other Transaction Documents,
including without limitation the Arbitration Provisions (as defined in the
Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

 

8.12.       Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute one instrument. Any electronic copy of a party’s executed counterpart
will be deemed to be an executed original.

 

8.13.       Further Assurances. Debtor shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as Secured
Party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

8.14.       Time of the Essence. Time is expressly made of the essence with
respect to each and every provision of this Agreement.

 

[Remainder of page intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, Secured Party and Debtor have caused this Agreement to be
executed as of the day and year first above written.

 

 

SECURED PARTY:

 

 

 

CHICAGO VENTURE PARTNERS, L.P.

 

 

 

By:

Chicago Venture Management, L.L.C.,

 

 

its General Partner

 

 

 

 

By: CVM, Inc., its Manager

 

 

 

 

By:

/s/ John M. Fife

 

 

John M. Fife, President

 

 

 

DEBTOR:

 

 

 

JAGUAR HEALTH, INC.

 

 

 

 

 

By:

/s/ Lisa Conte

 

Name:

Lisa Conte

 

Title:

President and CEO

 

[Signature Page to Security Agreement]

 

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SCHEDULE A

TO SECURITY AGREEMENT

 

All right, title, interest, claims and demands of Debtor in and to all of
Debtor’s assets owned as of the date hereof and/or acquired by Debtor at any
time while the Obligations are still outstanding, including without limitation,
the following property:

 

1.                                      All equity interests in all wholly- or
partially-owned subsidiaries of Debtor.

 

2.                                      All customer accounts, insurance
contracts, and clients underlying such insurance contracts.

 

3.                                      All goods and equipment now owned or
hereafter acquired, including, without limitation, all laboratory equipment,
computer equipment, office equipment, machinery, fixtures, vehicles, and any
interest in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located;

 

4.                                      All inventory now owned or hereafter
acquired, including, without limitation, all merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
including such inventory as is temporarily out of Debtor’s custody or possession
or in transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above, and
Debtor’s books relating to any of the foregoing;

 

5.                                      All accounts receivable, contract
rights, general intangibles, healthcare insurance receivables, payment
intangibles and commercial tort claims, now owned or hereafter acquired,
including, without limitation, all patents, patent rights and patent
applications (including without limitation, the inventions and improvements
described and claimed therein, and (a) all reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, (b) all income,
royalties, damages, proceeds and payments now and hereafter due or payable under
or with respect thereto, including, without limitation, damages and payments for
past or future infringements thereof, (c) the right to sue for past, present and
future infringements thereof, and (d) all rights corresponding thereto
throughout the world), trademarks and service marks (and applications and
registrations therefor), inventions, discoveries, copyrights and mask works (and
applications and registrations therefor), trade names, trade styles, software
and computer programs including source code, trade secrets, methods, published
and unpublished works of authorship, processes, know how, drawings,
specifications, descriptions, and all memoranda, notes, and records with respect
to any research and development, goodwill, license agreements, information, any
and all other proprietary rights, franchise agreements, blueprints, drawings,
purchase orders, customer lists, route lists, infringements, claims, computer
programs, computer disks, computer tapes, literature, reports, catalogs, design
rights, income tax refunds, payments of insurance and rights to payment of any
kind and whether in tangible or intangible form or contained on magnetic media
readable by machine together with all such magnetic media, and all rights
corresponding to all of the foregoing throughout the world, now owned and
existing or hereafter arising, created or acquired;

 

6.                                      All now existing and hereafter arising
accounts, contract rights, royalties, license rights and all other forms of
obligations owing to Debtor arising out of the sale or lease of goods, the
licensing of technology or the rendering of services by Debtor (subject, in each
case, to the contractual rights of third parties to require funds received by
Debtor to be expended in a particular manner), whether or not earned by
performance, and any and all credit insurance, guaranties, and other security
therefor, as well as all merchandise returned to or reclaimed by Debtor and
Debtor’s books relating to any of the foregoing;

 

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7.                                      All accounts, documents, cash, deposit
accounts, letters of credit, letter of credit rights, supporting obligations,
certificates of deposit, instruments, chattel paper, electronic chattel paper,
tangible chattel paper and investment property, including, without limitation,
all securities, whether certificated or uncertificated, security entitlements,
securities accounts, commodity contracts and commodity accounts, and all
financial assets held in any securities account or otherwise, wherever located,
now owned or hereafter acquired and Debtor’s books relating to the foregoing;

 

8.                                      All other assets, goods and personal
property of Debtor, wherever located, whether tangible or intangible, and
whether now owned or hereafter acquired; and

 

9.                                      Any and all claims, rights and interests
in any of the above and all substitutions for, additions and accessions to and
proceeds and products thereof, including, without limitation, insurance,
condemnation, requisition or similar payments and the proceeds thereof.

 

Notwithstanding the foregoing, the Collateral does not include the following:

 

a.                                More than 65% of the presently existing and
hereafter arising issued and outstanding shares of capital stock owned by Debtor
of any foreign subsidiary, which shares entitle the holder thereof to vote for
directors or any other matter;

 

b.                                Any lease, license, contract or agreement to
which the Debtor is a party, and any of its rights or interest thereunder, if
and for so long as the valid grant of a Lien therein to Secured Party is
prohibited as a matter of law or under the terms of such lease, license,
contract or other agreement (including where the violation of any such
prohibition would result in the termination of the applicable lease, license,
contract or other agreement), and such prohibition has not been or is not waived
or the consent of the other party to such lease, license, contract or other
agreement, has not been or is not otherwise obtained; provided, that the
exclusions set forth in this subsection (b) shall in no way be construed (A) to
apply if any described prohibition is unenforceable under applicable laws
(including, without limitation, Sections 9-406, 9-407 or 9-408 of the UCC),
(B) to apply after the cessation of any such prohibition, and upon the cessation
of such prohibition, such property shall automatically become part of the
Collateral, (C) so as to limit, impair or otherwise affect Secured Party’s Lien
upon Debtor’s rights or interests in or to monies due or to become due under any
described lease, license, contract or other agreement, or (D) to limit, impair
or otherwise affect Secured Party’s Lien upon any of Borrower’s rights or
interest in and to any proceeds from the sale, license, lease or other
disposition of any such lease, license, contract or other agreement

 

c.                                 Any property, lease, license, general
intangible, contract or agreement subject to Permitted Liens securing purchase
money indebtedness to the extent that a grant or perfection of a Lien in favor
of Secured Party on any such property is prohibited by or results in a breach or
termination of, or constitutes a default under, the documentation governing such
Liens or the obligations secured by such Liens, to the extent enforceable under
applicable law (including, without limitation, Section 9406 of the UCC); or

 

d.                                Any deposit account exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of Debtor’s employees.

 

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