EXHIBIT 10.5

SECURITY AND PLEDGE AGREEMENT

This SECURITY AND PLEDGE AGREEMENT (the “Agreement”) is made and entered into on
August 21, 2017, by and among NEXEON MEDSYSTEMS INC, a Nevada corporation (the
“Debtor”), the other parties identified as “Obligors” on the signature pages
hereto and such other parties that may become Obligors hereunder after the date
hereof (together with the Debtor, individually an “Obligor,” and collectively
the “Obligors”) and Leonite Capital LLC, a Delaware limited liability company,
and its permitted endorsees, transferees and assigns (collectively, the “Secured
Party”).

RECITALS

A.          Concurrently herewith, Debtor and the Secured Party have entered
into a Securities Purchase Agreement (the “Securities Purchase Agreement”) and
certain other agreements, pursuant to which the Debtor issued that certain
senior secured convertible promissory note in the principal amount of
$1,120,000.00 (the “Note”) to the Secured Party.

B.          Debtor and the other Obligors now enters into this Agreement with
the Secured Party as security for Debtor’s Obligations (as defined below).

AGREEMENT

NOW, THEREFORE, in consideration of their respective promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:

1.          Definitions.  Terms used but not otherwise defined in this Agreement
that are defined in Division 9 of the Uniform Commercial Code as adopted in the
state of Delaware (the “UCC”) (such as “account,” “adverse claim,” “chattel
paper,” “deposit account,” “document,” “equipment,” “fixtures,” “general
intangibles,” “goods,” “instruments,” “inventory,” “investment property,”
“proceeds,” and “supporting obligations”) shall have the respective meanings
given such terms in Division 9 of the UCC.  Capitalized terms used in this
Agreement and not defined elsewhere herein or in the Securities Purchase
Agreement shall have the meanings set forth below:
 
“Collateral” means all of the collateral identified on Exhibit A hereto, as well
as all of Oblogors’ tangible and intangible personal property assets, including,
but not limited to, all of the following: (i) all accounts, cash and currency,
chattel paper, deposit accounts, documents, equipment, fixtures, general
intangibles, instruments, intellectual property, inventory, investment property,
Negotiable Collateral, loans receivable, motor vehicles, Pledged Equity, goods,
supporting obligations, Obligors’ Books, and such other assets of Obligors as
may hereafter arise or Obligors may hereafter acquire or as to which the Secured
Party may from time-to-time be granted a security interest, and (ii) the
proceeds of any of the foregoing, including, but not limited to, proceeds of
insurance covering the foregoing or any portion thereof; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, the
Collateral does not include any “hazardous waste” as that term is defined under
42 U.S.C. section 6903(5), as such section may be from time to time amended, or
under any regulations thereunder.

“Obligors’ Books” means and includes all of Obligors’ books and records,
including, but not limited to, all records, ledgers and computer programs, disk
or tape files, printouts and other computer-prepared information indicating,
summarizing or evidencing the Collateral.
 

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“Equity Interests” means, with respect to any person, all of the shares of
capital stock of (or other ownership or profit interests in) such person, all of
the warrants, options or other rights for the purchase or acquisition from such
person of shares of capital stock of (or other ownership or profit interests in)
such person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such person or
warrants, rights or options for the purchase or acquisition from such person of
such shares (or such other interests), and all of the other ownership or profit
interests in such person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
 
“Event of Default” has the meaning specified in Section 6 of this Agreement.

“Negotiable Collateral” means and includes all of Obligors’ presently existing
and hereafter acquired or arising letters of credit, advices of credit,
promissory notes, drafts, instruments, documents, equity interests in any
entity, leases of personal property and chattel paper, as well as Obligors’
Books relating to any of the foregoing.

“Obligations” means and includes any and all present or future indebtedness or
obligations of Debtor owing to the Secured Party under the Note and the other
Subscription Documents, including, without limitation, (i) any amendments to any
of the foregoing and (ii) all interest and other payments required thereunder
that are not paid when due, and (iii) all of the Secured Party Expenses which
Debtor is required to pay or reimburse by this Agreement, by law, or otherwise.

“Permitted Liens” means (i) statutory liens of landlords and liens of carriers,
warehousemen, bailees, mechanics, materialmen and other like liens imposed by
law, created in the ordinary course of business and securing amounts not yet due
(or which are being contested in good faith, by appropriate proceedings or other
appropriate actions which are sufficient to prevent imminent foreclosure of such
liens), and with respect to which adequate reserves or other appropriate
provisions are being maintained by Debtor in accordance with generally accepted
accounting principles (“GAAP”) , (ii) deposits made (and the liens thereon) in
the ordinary course of business of Debtor (including, without limitation,
security deposits for leases, indemnity bonds, surety bonds and appeal bonds) in
connection with workers’ compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids,
contracts (other than for the repayment or guarantee of borrowed money or
purchase money obligations), statutory obligations and other similar obligations
arising as a result of progress payments under government contracts, (iii) liens
for taxes not yet due and payable or which are being contested in good faith and
with respect to which adequate reserves are being maintained by Debtor in
accordance with GAAP, (iv) purchase money liens relating to the acquisition of
equipment, machinery or other goods of Debtor approved in writing by the Secured
Party (which approval shall not be unreasonably withheld, conditioned or
delayed) and (v) liens in favor of the Secured Party under the Subscription
Documents.

“Pledged Equity” means, with respect to each Obligor, 100% of the issued and
outstanding Equity Interests of each Subsidiary that is directly owned, or will
be owned, by such Obligor, excluding, however, the to-be-owned shares of Ingest,
SPRL, including the Equity Interests of the Subsidiaries currently owned by such
Obligor as set forth on Schedule 1 hereto, in each case together with the
certificates (or other agreements or instruments), if any, representing such
shares, and all options and other rights, contractual or otherwise, with respect
thereto, including, but not limited to, the following:
 
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(1) all Equity Interests representing a dividend thereon, or representing a
distribution or return of capital upon or in respect thereof, or resulting from
a stock split, revision, reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the holder thereof, or
otherwise in respect thereof; and

(2) in the event of any consolidation or merger involving the issuer thereof and
in which such issuer is not the surviving person, all shares of each class of
the Equity Interests of the successor person formed by or resulting from such
consolidation or merger, to the extent that such successor person is a direct
subsidiary of an Obligor.
 
“Secured Party Expenses” means and includes (i) all costs or expenses required
to be paid by Debtor under this Agreement that are instead paid or advanced by
the Secured Party, including without limitation, all taxes, liens, securities
interests, encumbrances or other claims at any time levied or placed on the
Collateral, (ii) all reasonable costs and expenses incurred to correct any
default or enforce any provision of this Agreement, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale or advertising to sell all or any part of the Collateral, irrespective of
whether a sale is consummated, and (iii) all reasonable costs and expenses
(including reasonable attorney’s fees) incurred by the Secured Party in
enforcing or defending this Agreement, irrespective of whether suit is brought.

“Subsidiaries” means those subsidiaries of the Debtor listed as subsidiaries on
Schedule 1 hereto.

2.          Construction.  Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and vice versa, to the
part include the whole, “including” is not limiting, and “or” has the inclusive
meaning represented by the phrase “and/or.”  The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. 
Section references are to this Agreement, unless otherwise specified.
 
3.          Creation of Security Interest. In order to secure Debtor’s timely
payment of the Obligations and timely performance of each and all of its
covenants and obligations under this Agreement and any other document,
instrument or agreement executed by Debtor or delivered by Debtor to the Secured
Party in connection with the Obligations, each Obligor hereby unconditionally
and irrevocably grants, pledges and hypothecates to the Secured Party a
continuing first-priority security interest in and to, a lien upon, assignment
of, and right of set-off against, all presently existing and hereafter acquired
or arising Collateral.  Such security interest shall attach to all Collateral
without further act on the part of the Secured Party or Obligors.
 
 

4.
Filings; Further Assurances.

 
(a)          General.  The Secured Party is authorized to file a UCC-1 Financing
Statement with the Secretary of State of the State of Nevada, with respect to
the Debtor, and, with respect to the other Obligors, with the Secretaries of
State or other applicable offices in the jurisdictions where the other Obligors,
as indicated on Schedule 1, are organized, evidencing its security interest in
the Collateral.  Obligors also authorize the filing by the Secured Party of such
other UCC financing statements, continuation financing statements, fixture
filings, security agreements, mortgages, deeds of trust, chattel mortgages,
assignments, motor vehicle lien acknowledgments and other documents as the
Secured Party may reasonably require in order to perfect, maintain, protect or
enforce its security interest in the Collateral or any portion thereof and in
order to fully consummate all of the transactions contemplated under this
Agreement.  Subject to the foregoing, if so requested by the Secured Party at
any time hereafter, each Obligor shall promptly execute and deliver to the
Secured Party such fixture filings, security agreements, mortgages, deeds of
trust, chattel mortgages, assignments, motor vehicle lien acknowledgments and
other documents as the Secured Party may reasonably require from such Obligor in
order to perfect, maintain, protect or enforce its rights under this Agreement. 
Obligors shall promptly deliver to the Secured Party all certificates and
instruments constituting the Pledged Equity in suitable form for transfer by
delivery and accompanied by duly executed instruments of transfer or assignment
in blank.  Each Obligor hereby irrevocably makes, constitutes and appoints the
Secured Party as such Obligor’s true and lawful attorney with power, upon
Obligor’s failure or refusal to promptly comply with its obligations in this
Section 4(a), to sign the name of Obligor on any of the above-described
documents or on any other similar documents which need to be executed, recorded
or filed in order to perfect, maintain, protect or enforce the Secured Party’s
security interest in the Collateral.
 
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(b)          Additional Matters.  Without limiting the generality of Section
4(a), each Obligor will at the reasonable written request of the Secured Party,
appear in and defend any action or proceeding which is reasonably expected to
have a material and adverse effect with respect to such Obligor’s title to, or
the security interest of the Secured Party in, the Collateral.
 
5.              Representations, Warranties and Agreements. Each Obligor
represents, warrants and agrees as follows:
 
(a)          No Other Encumbrances.  Debtor and each other Obligor has good and
marketable title to its Collateral, free and clear of any liens, claims,
encumbrances and rights of any kind, except the Permitted Liens or as otherwise
approved in writing by the Secured Party, and has the right to pledge, sell,
assign or transfer the same.  There exists no adverse claim with respect to the
Pledged Equity of such Obligor.
 
(b)          Authorization of Pledged Equity. All Pledged Equity is duly
authorized and validly issued, is fully paid and, to the extent applicable,
nonassessable and is not subject to the preemptive rights of any person.
 
(c)          Security Interest/Priority. This Agreement creates a valid security
interest in favor of the Secured party in the Collateral of such Obligor and,
when properly perfected by filing, shall constitute a valid and perfected, first
priority security interest in such Collateral (including all uncertificated
Pledged Equity consisting of partnership or limited liability company interests
that do not constitute securities), to the extent such security interest can be
perfected by filing under the UCC, free and clear of all liens except for liens
permitted by the Securities Purchase Agreement. The taking possession by the
Secured Party of the certificated securities (if any) evidencing the Pledged
Equity and all other Instruments constituting Collateral will perfect and
establish the first priority of the Secured Party’s security interest in all the
Pledged Equity evidenced by such certificated securities and such instruments.
With respect to any Collateral consisting of a deposit account, securities
entitlement or held in a securities account, upon execution and delivery by the
applicable Obligor, the applicable depository bank or securities intermediary
and the Secured Party of an agreement granting control to the Secured Party over
such Collateral, the Secured Party shall have a valid and perfected, first
priority security interest in such Collateral.
 
(d)          Consents; Etc. There are no restrictions in any organizational
document governing any Pledged Equity or any other document related thereto
which would limit or restrict (i) the grant of a lien pursuant to this Agreement
on such Pledged Equity, (ii) the perfection of such lien or (iii) the exercise
of remedies in respect of such perfected lien in the Pledged Equity as
contemplated by this Agreement. Except for (i) the filing or recording of UCC
financing statements, (ii) the filing of appropriate notices with the United
States Patent and Trademark Office and the United States Copyright Office,
(iii) obtaining control to perfect the liens created by this Agreement (to the
extent required under Section 4(a) hereof), (iv) such actions as may be required
by laws affecting the offering and sale of securities, (v) such actions as may
be required by applicable foreign laws affecting the pledge of the Pledged
Equity of foreign Subsidiaries and (vi) consents, authorizations, filings or
other actions which have been obtained or made, no consent or authorization of,
filing with, or other act by or in respect of, any arbitrator or governmental
authority and no consent of any other person (including, without limitation, any
stockholder, member or creditor of such Obligor), is required for (A) the grant
by such Obligor of the security interest in the Collateral granted hereby or for
the execution, delivery or performance of this Agreement by such Obligor,
(B) the perfection of such security interest (to the extent such security
interest can be perfected by filing under the UCC, the granting of control (to
the extent required by Section 4(a) hereof) or by filing an appropriate notice
with the United States Patent and Trademark Office or the United States
Copyright Office) or (C) the exercise by the Secured party of the rights and
remedies provided for in this Agreement.
 
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(e)          Right to Inspect the Collateral.  The Secured Party shall have the
right, during Debtor’s usual business hours and upon reasonable advance notice,
to inspect and examine the Collateral.  Debtor agrees that any reasonable
expenses incurred by the Secured Party in connection with this Section 5(b)
during the continuance of an Event of Default shall constitute Secured Party
Expenses.
 
(f)          Negative Covenants.   Obligors shall not (i) sell, lease or
otherwise dispose of, relocate or transfer, any of the Collateral, except
dispositions of Collateral that is worn out, obsolete or no longer necessary in
the business of Obligors, (ii) allow any liens on the Collateral except the
Permitted Liens or (iii) change their names or add any new fictitious name
without the written consent of the Secured Party.
 
(g)          Relocation of Principal Place of Business.  The principal place of
business of Debtor, and the addresses at which the Collateral is located 1708
Jaggie Fix Way, Lexington, Kentucky 40511, and suvh other address as indicated
on Schedule 5(e) hereto.  Debtor shall not, without at least thirty (30) days
prior written notice to the Secured Party, relocate such principal place of
business or the Collateral, with no relocation being permitted outside the
United States in any event.
 
(h)          Further Information.  Obligors shall promptly supply the Secured
Party with such information concerning Obligors’ business as the Secured Party
may reasonably request from time-to-time hereafter, and shall within five (5)
business days of obtaining knowledge thereof, notify the Secured Party of any
event which constitutes an Event of Default.
 
(i)          Solvency.  Each Obligor is now and shall be at all times hereafter
able to pay its debts (including trade debts) as they mature.
 
(j)          Secured Party Expenses.  Debtor shall, within fifteen (15) business
days of written demand from the Secured Party accompanied by adequate
documentation of such expenses, reimburse the Secured Party for all sums
expended by it which constitute Secured Party Expenses and, in the event that
Debtor does not pay any Secured Party Expenses payable to a third party within
fifteen (15) business days after notice thereof, then the Secured Party may
immediately and without further notice pay such Secured Party Expenses on
Debtor’s behalf.  All such expenses shall become a part of the Obligations and,
at the Secured Party’s option, will (i) be payable on demand or (ii) be added to
the balance of the Note and be payable proportionately with any installment
payments that become due during the remaining term of the Note or otherwise be
treated as a balloon payment which will be due and payable at the maturity of
the Note.  This Agreement shall also secure payment of those amounts.
 
(k)           Commercial Tort Claims.   Obligors have no pending commercial tort
claim (as a plaintiff) against any individual or entity (a “Commercial Claim”). 
Obligors shall promptly deliver to the Secured Party notice of any Commercial
Claim that an Obligor may bring against any individual or entity, together with
such information with respect thereto as the Secured Party may reasonably
request.  Within ten (10) days after a written request by the Secured Party,
Obligors shall grant the Secured Party a security interest in any pending
Commercial Claim to the extent such security interest is permitted by applicable
law.
 
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(l)          Reliance by the Secured Party; Representations Cumulative.  Each
representation, warranty and agreement contained in this Agreement shall be
conclusively presumed to have been relied on by the Secured Party regardless of
any investigation made or information possessed by the Secured Party.  The
representations, warranties and agreements set forth herein shall be cumulative
and in addition to any and all other representations, warranties and agreements
set forth in the Subscription Documents or any other documents created after the
Closing Date and signed by Obligors.
 
6.            Events of Default.  The occurrence of any Event of Default under
the Note, after the expiration of any applicable grace or cure period, shall
constitute an “Event of Default” by Obligors under this Agreement.
 

7.
Rights and Remedies.

 

(a)
Rights and Remedies of the Secured Party.

 
(i)          Upon the occurrence and during the continuance of an Event of
Default, without notice of election and without demand, the Secured Party may
cause any one or more of the following to occur, all of which are authorized by
Obligors:
 
(A)          The Secured Party may make such payments and do such acts as it
reasonably considers necessary to protect its security interest in the
Collateral.  Obligors agree to promptly assemble and make available the
Collateral if the Secured Party so requires.  Obligors authorize the Secured
Party to enter the premises where the Collateral is located, take and maintain
possession of the Collateral, or any part thereof, and pay, purchase, contest or
compromise any encumbrance, claim, right or lien which, in the reasonable
opinion of the Secured Party, appears to be prior or superior to its security
interest in violation of this Agreement, and to pay all reasonable expenses
incurred in connection therewith.
 
(B)          The Secured Party shall be automatically deemed to be granted a
license or other appropriate right to use, without charge or representation or
warranty, Obligors’ labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, and any other
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any Collateral.
 
(C)          The Secured Party may ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale and sell (in the manner
provided for herein) the Collateral.
 
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(D)          The Secured Party may sell the Collateral at either a public or
private sale, or both (which in the case of a private sale of Pledged Equity,
shall be to a restricted group of purchasers who will be obligated to agree,
among other things, to acquire such securities for their own account, for
investment and not with a view to the distribution or resale thereof), by way of
one or more contracts or transactions, for cash or on terms, in such manner and
at such places (including Obligors’ premises) as is commercially reasonable (it
not being necessary that the Collateral be present at any such sale).  In the
case of a sale of Pledged Equity, the Secured party shall have no obligation to
delay sale of any such securities for the period of time necessary to permit the
issuer of such securities to register such securities for public sale under the
Securities Act of 1933. Each Obligor further acknowledges and agrees that any
offer to sell any Pledged Equity which has been (i) publicly advertised on a
bona fide basis in a newspaper or other publication of general circulation in
the financial community of New York, New York (to the extent that such offer may
be advertised without prior registration under the Securities Act of 1933), or
(ii) made privately in the manner described above shall be deemed to involve a
“public sale” under the UCC, notwithstanding that such sale may not constitute a
“public offering” under the Securities Act of 1933, and the Secured Party may,
in such event, bid for the purchase of such securities
 
(E)          The Secured Party shall be entitled to give notice of the
disposition of the Collateral as follows:  (1) the Secured Party shall give
Obligors a notice in writing of the time and place of public sale, or, if the
sale is a private sale or some other disposition other than a public sale is to
be made of the Collateral, the time on or after which the private sale or other
disposition is to be made, (2) the notice shall be personally delivered or
mailed, postage prepaid, to Obligors at least ten (10) days before the date
fixed for the sale, or at least ten (10) days before the date on or after which
the private sale or other disposition is to be made, unless the Collateral is
perishable or threatens to decline speedily in value in which case the Secured
Party shall use commercially reasonable efforts to provide such notice to
Obligors as far in advance of such disposition as is practicable, and (3) if the
sale is to be a public sale, the Secured Party shall also give notice of the
time and place by publishing a notice at least twice, the first at least twenty
(20) days before the date of the sale, in a newspaper of general circulation, if
one exists, in the county in which the sale is to be held.
 
(F)          The Secured Party may purchase all or any portion of the Collateral
at any public sale by credit bid or other appropriate payment therefor.
 
(G)          To the extent permitted by applicable law, the Secured Party shall
have the following rights and remedies regarding the appointment of a receiver: 
(1) the Secured Party may have a receiver appointed as a matter of right, (2)
the receiver may be an employee of  the Secured Party and may serve without
bond, and (3) all fees of the receiver and his or her attorney shall be Secured
Party Expenses and become part of the Obligations and shall be payable on
demand, with interest at the Rate specified in the Note from the date of
expenditure until repaid.
 
(H)          The Secured Party, either itself or through a receiver, may collect
the payments, rents, income, and revenues from the Collateral.  The Secured
Party may at any time, in its reasonable discretion, transfer any Collateral
into its own name or that of its nominee(s) and receive the payments, rents,
income, and revenues therefrom and hold the same as security for the Obligations
or apply it to payment of the Obligations in such order of preference as the
Secured Party may determine.  Insofar as the Collateral consists of accounts,
general intangibles, loans receivable, insurance policies, instruments, chattel
paper, choses in action, or similar property, the Secured Party may demand,
collect, issue receipts for, settle, compromise, adjust, sue for, foreclose, or
otherwise realize on the Collateral as the Secured Party may determine (in its
reasonable discretion), whether or not the Obligations are then due.  For these
purposes, the Secured Party may, on behalf of and in the name of Obligors, (1)
receive, open and dispose of mail addressed to Obligors, (2) change any address
to which mail and payments are to be sent, and (3) endorse notes, checks,
drafts, money orders, documents of title, instruments and items pertaining to
the payment, shipment, or storage of any Collateral.  To facilitate collection,
the Secured Party may notify account debtors and obligors on any Collateral to
make payments directly to the Secured Party.
 
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(ii)          The Secured Party may deduct from the proceeds of any sale of the
Collateral all Secured Party Expenses incurred in connection with the
enforcement and exercise of any of the rights and remedies of the Secured Party
provided for herein, irrespective of whether suit is commenced.  If such
deduction does not occur (in the Secured Party’s reasonable discretion), upon
demand, Obligors shall pay all of such Secured Party Expenses.  Any deficiency
which exists after disposition of the Collateral as provided herein will be paid
immediately by Obligors, and any excess that exists will be returned, without
interest and subject to the rights of third parties, to Obligors by the Secured
Party; provided, however, that if any excess exists at a time when any of the
Obligations remain outstanding, such excess shall instead remain as part of the
Collateral and continue to be subject to the security interest in Section 3(a)
above until such time as all of the Obligations have been fully satisfied or
otherwise terminated.
 
(iii)          Voting and payment Rights in Respect of the Pledged Equity.
 
(A)          So long as no Event of Default shall exist, each Obligor may
(1) exercise any and all voting and other consensual rights pertaining to the
Pledged Equity of such Obligor or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Securities Purchase
Agreement and (2) receive and retain any and all dividends (other than stock
dividends and other dividends constituting Collateral which are addressed
hereinabove), principal or interest paid in respect of the Pledged Equity to the
extent they are allowed under the Securities Purchase Agreement; and

(B)          During the continuance of an Event of Default, (1) all rights of an
Obligor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to clause (A)(1) above shall cease
and all such rights shall thereupon become vested in the Secured Party which
shall then have the sole right to exercise such voting and other consensual
rights, (2) all rights of an Obligor to receive the dividends, principal and
interest payments which it would otherwise be authorized to receive and retain
pursuant to clause (A)(2) above shall cease and all such rights shall thereupon
be vested in the Secured Party which shall then have the sole right to receive
and hold as Collateral such dividends, principal and interest payments, and (3)
all dividends, principal and interest payments which are received by an Obligor
contrary to the provisions of clause (B)(2) above shall be received in trust for
the benefit of the Secured Party, shall be segregated from other property or
funds of such Obligor, and shall be forthwith paid over to the Secured Party as
Collateral in the exact form received, to be held by the Secured Party as
Collateral and as further collateral security for the Secured Obligations.

(b)          Rights and Remedies Cumulative.  The rights and remedies of the
Secured Party under this Agreement and any other agreements and documents
delivered or executed in connection with the Obligations shall be cumulative. 
The Secured Party shall also have all other rights and remedies not inconsistent
herewith as are provided under applicable law, or in equity.  No exercise by the
Secured Party of any one right or remedy shall be deemed an election.
 
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8.          Additional Waivers.  The Secured Party shall not in any way or
manner be liable or responsible for (i) the safekeeping of the Collateral, (ii)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause, (iii) any diminution in the value thereof or (iv) any act or default
of any carrier, warehouseman, bailee, forwarding agency or other person
whomsoever, except to the extent that such loss, damage, liability, cost or
expense has resulted from the gross negligence or willful misconduct of the
Secured Party or its affiliates.  If the Secured Party at any time has
possession of any Collateral, whether before or after an Event of Default, the
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral if the Secured Party takes such action for
that purpose as Obligors shall request or as the Secured Party, in its
reasonable discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Obligors shall not of itself be deemed to be a
failure to exercise reasonable care.  The Secured Party shall not be required to
take any steps necessary to preserve any rights in the Collateral against prior
parties, nor to protect, preserve, or maintain any security interest given to
secure the Obligations.
 
9.          Notices.  All notices or demands by any party relating to this
Agreement shall be made in writing as provided in the Note, and with respect to
the Obligors other than the Debtor, such notices shall be delivered to the
addresses indicated herein.  Each party shall provide written notice to the
other party of any change in address.
 
10.       Choice of Law.  The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder and
concerning the Collateral, shall be determined under, governed by, and construed
in accordance with the laws of the state of New York as applied to contracts
made and to be fully performed in such state, without regard to the conflicts of
laws provisions thereof, except to the extent that the validity, perfection or
enforcement of a security interest hereunder in respect of any Collateral is
governed by the laws of the state of New York or some other state, in which case
such laws shall govern.
 
 
11.          Waiver of Jury Trial.  THE OBLIGORS EACH WAIVE, TO THE EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT.
 
12.          General Provisions.
 
(a)          Effectiveness.  This Agreement shall be binding and deemed
effective when executed by Obligors and the Secured Party.
 
(b)          Successors and Assigns.  This Agreement shall bind and inure to the
benefit of the successors and permitted endorsees, transferees and assigns of
the Secured Party.  Obligors shall not assign this Agreement or any rights or
obligations hereunder, and any such assignment shall be absolutely void.
 
(c)          Section Headings.  Section headings are for convenience only.
 
(d)          Interpretation.  No uncertainty or ambiguity herein shall be
construed or resolved against the Secured Party or Obligors, whether under any
rule of construction or otherwise.  This Agreement shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of the parties.
 
(e)          Severability of Provisions.  Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
 
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(f)          Entire Agreement; Amendments.  This Agreement and the documents
referenced herein contain the entire understanding of the parties with respect
to the subject matter covered herein and supersede all prior agreements,
negotiations and understandings, written or oral, with respect to such subject
matter.  No provision of this Agreement shall be waived or amended other than by
an instrument in writing signed by Obligors and the Secured Party.
 
(g)          Good Faith.  The parties intend and agree that their respective
rights, duties, powers, liabilities and obligations shall be performed, carried
out, discharged and exercised reasonably and in good faith.
 
(h)          Waiver and Consent.  No delay or omission on the part of the
Secured Party in exercising any right shall operate as a waiver of such right or
any other right.  A waiver by the Secured Party of a provision of this Agreement
shall not prejudice or constitute a waiver of the Secured Party’s right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement.  No prior waiver by the Secured Party, nor any course of
dealing between the Secured Party and Obligors, shall constitute a waiver of any
of the Secured Party’s rights or of any of Obligors’ obligations as to any
future transactions.  Whenever the consent of the Secured Party is required
under this Agreement, the granting of such consent by the Secured Party in any
instance shall not constitute continuing consent to subsequent instances where
such consent is required and in all cases such consent may be granted or
withheld in the reasonable discretion of the Secured Party.
 
(i)          Counterparts.  This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same agreement.
 
(j)          Termination.           Upon full satisfaction or other termination
of the Obligations (i) the Secured Party shall release and return to Obligors
all of the Collateral and any and all certificates and other documentation
representing or relating to the Collateral and (ii) the security interests
provided for under this Agreement shall be terminated and of no further force
and effect.  At Debtor’s expense, the Secured Party shall take all actions
reasonably requested by Debtor in connection with the foregoing.
 
(k)          Consent of Obligors as Issuers of Pledged Equity. Each
Obligor/issuer of Pledged Equity party to this Agreement hereby acknowledges,
consents and agrees to the grant of the security interests in such Pledged
Equity pursuant to this Agreement, together with all rights accompanying such
security interest as provided by this Agreement and applicable law,
notwithstanding any anti-assignment provisions in any operating agreement,
limited partnership agreement or similar organizational or governance documents
of such issuer.
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized persons on the date first written above.

 

   
Obligors
         
The Debtor:
         
Nexeon Medsystems Inc
       
By:
Will Rosellini
 
Name:
Will Rosellini
 
Title:
CEO

The Other Obligors
 
 
Nexeon Medsystems Puerto Rico
Pulsus Medical LLC,
Operating Company Corporation,
a Kentucky limited liability company
a Puerto Rico stock corporation
   
By:
/s/ Will Rosellini
 
By:
/s/ Will Rosellini
 
Name:
Will Rosellini
 
Name:
Will Rosellini
 
Title:
  CEO
 
Title:
  CEO
           
Rosellini Scientific LLC,
 
a Texas limited liability company
     
By:
/s/ Will Rosellini
   
Name:
Will Rosellini
   
Title:
  CEO
     

 

   
The Secured Party:
         
Leonite Capital LLC
       
By:
/s/Avrohom Geller
 
Name:
Avrohom Geller
 
Title:
CIO

 
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SCHEDULE 1

PLEDGED EQUITY
 
 
 
Name of
Subsidiary
Jurisdiction
of
Organization
Number of
Shares
Certificate
Number
Percentage
Ownership
Percentage
Pledged
Nexeon
Medsystems
Europe, SARL
 
Luxembourg
25,000
1
100%
100%
Nexeon
Medsystems
Belgium, SPRL
 
Belgium
107,154
N/A
ownership
reflected
on share
register
100%
100%
Nexeon
Medsystems
Puerto Rico
Operating
Company
Corporation
 
 
 
Puerto Rico
N/A – wholly owned subsidiary formed by Nexeon MedSystems Inc.
N/A
100%
100%
Pulsus Medical
LLC
 
Kentucky
N/A – wholly owned subsidiary formed by Nexeon MedSystems Inc.
N/A
100%
100%
Nuviant Medical
Inc
Nevada
1,735,000
Certificate not issued
10%
100%
MicroTransponder,
Inc.
Delaware
267
Certificate not issued
Less than 1%
100%

 
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Schedule 5(e)
 
Locations of Collateral/Addresses of Obligors

Nexeon Medsystems, Inc.
1910 Pacific Avenue, Suite 20000
Dallas, TX 75201

Nexeon Medsystems Belgium, SPRL
Headquarters: Nexeon MedSystems Belgium SPRL,
Rue Bois Saint-Jean 15/1, 4102 Liege, Belgium
Delivery address: Waterfront, Galileilaan 18, 2845 Niel, Belgium

Nexeon Medsystems Europe, SARL
33, rue du Puits Romain, L-8070 Bertrange, Grand Duchy of Luxembourg

Nexeon Medsystems Puerto Rico Operating Company, Inc.
Antiguq Pentinciaria Estata
Carr #21 Bo Monacillos
Rio Piedras, Puerto Rico 00927

Nexeon Medsystems Belgium, SPRL
Headquarters: Nexeon MedSystems Belgium SPRL, Rue Bois Saint-Jean 15/1, 4102
Liege, Belgium,
Delivery address: Waterfront, Galileilaan 18, 2845 Niel, Belgium

Pulsus Medical, LLC
1708 Jaggie Fox Way
Lexington, KY 40511
 
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EXHIBIT A
 
COLLATERAL
 
 
1.        All accounts, chattel paper, contracts, contract rights, accounts
receivable, tax refunds, tax credits, Note receivable, Pledged Equity,
documents, other choses in action and general intangibles, including, but not
limited to, proceeds of inventory and returned goods and proceeds from the sale
of goods and services, and all rights, liens, securities, guaranties, remedies
and privileges related thereto, including the right of stoppage in transit and
rights and property of any kind forming the subject matter of any of the
foregoing;
 
2.         All time, savings, demand, certificate of deposit or other accounts
in the name of Obligor or in which Obligor has any right, title or interest,
including but not limited to all sums now or at any time hereafter on deposit,
and any renewals, extensions or replacements of and all other property which may
from time to time be acquired directly or indirectly using the proceeds of any
of the foregoing;
 
3.         All inventory and equipment of every type or description wherever
located, including, but not limited to all raw materials, parts, containers,
work in process, finished goods, goods in transit, wares, merchandise furniture,
fixtures, hardware, machinery, tools, parts, supplies, automobiles, trucks,
other intangible property of whatever kind and wherever located associated with
the Obligor's business, tools and goods returned for credit, repossessed,
reclaimed or otherwise reacquired by Obligor;
 
4.         All documents of title and other property from time to time received,
receivable or otherwise distributed in respect of, exchange or substitution for
or addition to any of the foregoing including, but not limited to, any documents
of title;
 
5.         All know-how, information, permits, patents, copyrights, goodwill,
trademarks, trade names, licenses and approvals held by Obligor, including all
other intangible property of Obligor;
 
6.         All assets of  any type or description  that may at any time be
assigned or delivered to or come into possession of Obligor for any purpose for
the account of Obligor or as to which Debtor may have any right, title, interest
or power, and property in the possession or custody of or in transit to anyone
for the account of Obligor, as well as all proceeds and products thereof and
accessions and annexations thereto; and
 
7.         All proceeds (including but not limited to insurance proceeds) and
products of and accessions and annexations to any of the foregoing.
 
 
 

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