EXHIBIT 10.2




 





SHAREHOLDER PLEDGE AGREEMENT


 


SHAREHOLDER PLEDGE
AGREEMENT (this “Agreement”), dated as of November 1, 2018, made by and among FarmNet Limited, a Cayman
Islands exempted company (the “Pledgor”), Farmmi, Inc., an exempted company incorporated under the laws of the
Cayman Islands with offices located at No. 307, Tianning Industrial Area, Lishui, Zhejiang Province, People’s Republic of
China 323000 (the “Company”) and the secured parties listed on the signature pages hereof (collectively, the
“Secured Parties” and each, individually, a “Secured Party”).


 


W I T N E S S E T H:


 


WHEREAS, the Company
and each of the Secured Parties are parties to the Securities Purchase Agreement, dated as of November 1, 2018 (as amended, restated
or otherwise modified from time to time, the “Securities Purchase Agreement”), pursuant to which the Company
has agreed to sell, and the Secured Parties have agreed to purchase, severally and not jointly, the Notes (as defined in the Securities
Purchase Agreement) and the Warrants (as defined Securities Purchase Agreement); and


 


WHEREAS, in order to
induce the Secured Parties to purchase, severally and not jointly, the Notes and Warrants as provided for in the Securities Purchase
Agreement, the Pledgor has agreed to grant each Secured Party a separate, continuing security interest in and to the Pledged Collateral
(as defined below) in order to secure the prompt and complete payment, observance and performance of the Secured Obligations (as
defined below).


 


NOW, THEREFORE, for and
in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:


 


SECTION 1. Definitions
and Rules of Interpretation.


 


(a)
Definitions. Reference is made to the Securities Purchase Agreement and the Notes for a statement of terms thereof.
All terms used in this Agreement which are defined in the Securities Purchase Agreement or the Notes or in Article 8 or Article
9 of the Uniform Commercial Code as in effect from time to time in the State of New York (the “Code”) and which
are not otherwise defined herein shall have the same meanings herein as set forth therein; provided, that terms used herein
which are defined in the Code as in effect in the State of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as the Secured Parties holding a majority of the Secured Obligations
then outstanding (the “Required Holders”) may otherwise determine. In the event that any such term is defined
in both the Securities Purchase Agreement, the Notes and the Code, the definition of such term in the Securities Purchase Agreement
or the Notes shall control.


 


(b)
Rules of Interpretation. Except as otherwise expressly provided in this Agreement, the following rules of interpretation
apply to this Agreement: (i) the singular includes the plural and the plural includes the singular; (ii) “or” and “any”
are not exclusive and “include” and “including” are not limiting; (iii) a reference to any agreement or
other contract includes permitted supplements and amendments; (iv) a reference to a law includes any amendment or modification
to such law and any rules or regulations issued thereunder; (v) a reference to a person includes its permitted successors and assigns;
and (vi) a reference in this Agreement to an Article, Section, Annex, Exhibit or Schedule is to the Article, Section, Annex, Exhibit
or Schedule of this Agreement.


 






     


     


    

 


SECTION 2. Pledge
and Grant of Security Interest. As collateral security for the prompt and complete payment and due performance and observance
when due of the Secured Obligations (as defined in Section 3 hereof) when due, the Pledgor hereby pledges, charges and assigns
and grants to each Secured Party a separate, continuing security interest in, and Lien on, all of its right, title and interest
in and to the following (collectively, the “Pledged Collateral”):


 


(a)
The Pledgor’s Ordinary Shares of the Company as set forth in Schedule I (as such Schedule is amended from time
to time in accordance with the terms hereof), and all future, issued and outstanding share capital, or other equity or investment
securities of, or partnership, membership, or joint venture interests in, the Company that are required to be pledged from time
to time in accordance with the terms hereof including without limitation, any Additional Pledged Shares required to be pledged
in accordance with Section 4(a) of this Agreement, whether now owned or hereafter acquired or arising by the Pledgor and whether
or not evidenced or represented by any share certificate, certificated security or other instrument, together with the certificates
representing such equity interests, all options and other rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, instruments, investment property and any other property (including, but not limited to, any share dividend
and any distribution in connection with a share split) from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the foregoing and all cash and noncash proceeds thereof (collectively, the “Pledged
Shares”);


 


(b)
all present and future increases, profits, combinations, reclassifications, and substitutes and replacements for all or
part of the foregoing Pledged Shares heretofore described;


 


(c)
all investment property, financial assets, securities, share capital, other equity interests, share options and commodity
contracts of the Pledgor, all notes, debentures, bonds, promissory notes or other evidences of indebtedness payable or owing to
the Pledgor, and all other assets now or hereafter received or receivable with respect to the foregoing Pledged Shares;


 


(d)
all security entitlements of the Pledgor in any and all of the foregoing Pledged Shares; and


 


(e)
all products and proceeds (including proceeds of proceeds) of any and all of the foregoing Pledged Shares;


 


in each case, wherever located, whether
now owned or hereafter acquired or arising by the Pledgor and howsoever its interest therein may arise or appear (whether by ownership,
security interest, Lien, claim or otherwise).


 






     


     


    

 


SECTION 3. Security
for Secured Obligations. The security interest created hereby in the Pledged Collateral constitutes continuing collateral security
for the prompt and complete payment and due performance and observance of all of the following Secured Obligations (the “Secured
Obligations”):


 


(a) all liabilities,
obligations, or undertakings owing by the Company to the Secured Parties of any kind or description arising out of or outstanding
under, advanced or issued pursuant to, or evidenced by the Securities Purchase Agreement, the Notes or any of the other Transaction
Documents, and


 


(b) all liabilities,
obligations, or undertakings owing by Pledgor to the Secured Parties under this Agreement, in each case with respect to the foregoing
liabilities, obligations or undertakings, irrespective of whether for the payment of money, whether direct or indirect, absolute
or contingent, liquidated or unliquidated, determined or undetermined, due or to become due, voluntary or involuntary, whether
now existing or hereafter arising, and including all interest, costs, indemnities, fees (including attorney’s fees), and
expenses (including interest, costs, indemnities, fees, and expenses that, but for the provisions of the Bankruptcy Code, would
have accrued irrespective of whether a claim therefor is allowed) and any and all other amounts which Company or Pledgor is required
to pay pursuant to any of the foregoing, by law, or otherwise.


 


SECTION 4. Delivery
of the Pledged Collateral.


 


(a)
The fair market value of the Pledged Shares held by any Secured Party as of any time of determination shall equal the product
of (i) the aggregate number of Ordinary Shares pledged to such Secured Party hereunder and (ii) the quotient of (x) the sum of
the two (2) lowest VWAP (as defined in the Notes) of the Ordinary Shares during the five (5) Trading Day period immediately prior
to such time of determination, divided by (y) two (2) (subject to adjustment for any share splits, share dividends, share combinations,
recapitalizations and similar events during such measuring period) (the “Pledged Share Value”) and shall at
all times equal or exceed the aggregate principal amount outstanding under the Note (whether or not then due and payable) of such
Secured Party. The Pledgor shall, within five (5) Business Days following the receipt of notice from such Secured Party that the
Pledged Share Value is less than the aggregate principal amount outstanding under the Note of such Secured Party, deliver additional
shares (“Additional Pledged Shares”) to such Secured Party in accordance with the terms of this Section 4
such that the Pledged Share Value (taking into account the fair market value of such Additional Pledged Shares) shall be no less
than the aggregate principal amount outstanding under the Note.


 


(b)
In accordance with the terms and conditions set forth in the Securities Purchase Agreement, the Pledgor shall deliver to
each of the Secured Parties as of date hereof a certificate or certificates representing the Pledged Shares to be initially held
by such Security Party in such amounts as set forth on Schedule I attached hereto accompanied by duly executed instruments
of transfer or assignment or undated share powers executed in blank with medallion guarantees, all in form and substance reasonably
satisfactory to such Secured Party. As of any given date, with respect to all other promissory notes, certificates and instruments
constituting Pledged Collateral from time to time or required to be pledged to the Secured Parties pursuant to the terms of this
Agreement or the Securities Purchase Agreement, including without limitation, any Additional Pledged Shares required to be pledged
in accordance with Section 4(a) above (collectively the “Additional Collateral”) such amount equal to a fraction
(i) the numerator of which is the principal amount of such Secured Party’s Note on such given date and (ii) the denominator
of which is the aggregate principal amount of all Notes outstanding as of such given date (the “Secured Party Pro Rata
Amount”) of such Additional Collateral shall be delivered to each Secured Party promptly upon receipt thereof by or on
behalf of the Pledgor. All such promissory notes, certificates and instruments shall be held by each Secured Party pursuant hereto
and shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer
or assignment or undated share powers executed in blank, all in form and substance reasonably satisfactory to the Secured Parties.
If any Pledged Collateral consists of uncertificated securities, unless the immediately following sentence is applicable thereto,
the Pledgor shall cause the applicable Secured Party (or its designated custodian, nominee or other designee) to become the registered
holder thereof, or cause each issuer of such securities to agree in an authenticated record (in form and substance satisfactory
to the applicable Secured Party) that it will comply with instructions originated by the applicable Secured Party (or its designated
custodian, nominee or other designee), with respect to such securities without further consent by the Pledgor. If any Pledged Collateral
consists of security entitlements, the Pledgor shall transfer the applicable Secured Party Pro Rata Amount of such security entitlements
to each Secured Party (or its designated custodian, nominee or other designee) or cause the applicable securities intermediary
to agree that it will comply with entitlement orders by such Secured Party (or its designated custodian, nominee or other designee)
without further consent by the Pledgor.


 






     


     


    

 


(c)
Promptly upon the receipt by the Pledgor of any Additional Collateral and contemporaneously with any delivery of Additional
Pledged Shares in accordance with Section 4(a), a Pledge Amendment, duly executed by the Pledgor, in substantially the form of
Annex I hereto (a “Pledge Amendment”), shall be delivered to each Secured Party, in respect of the Additional
Collateral which is or are to be pledged pursuant to this Agreement and the Securities Purchase Agreement, which Pledge Amendment
shall from and after delivery thereof constitute part of Schedule I hereto. The Pledgor hereby authorizes each Secured Party
to attach each Pledge Amendment to this Agreement and agrees that all promissory notes, certificates or instruments listed on any
Pledge Amendment shall for all purposes hereunder constitute Pledged Collateral and the Pledgor shall be deemed upon delivery thereof
to have made the representations and warranties set forth in Section 6 with respect to such Additional Collateral.


 


(d)
If the Pledgor shall receive, by virtue of the Pledgor’s being or having been an owner of any Pledged Collateral,
any (i) share certificate (including, without limitation, any certificate representing a share dividend or distribution in connection
with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, share
split, spin-off or split-off), promissory note or other instrument, (ii) option or right, whether as an addition to, substitution
for, or in exchange for, any Pledged Collateral, or otherwise, (iii) dividends payable in cash (except such dividends permitted
to be retained by the Pledgor pursuant to Section 8 hereof) or in securities or other property or (iv) dividends, distributions,
cash, instruments, investment property and other property in connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or paid-in surplus (collectively, the “Distribution Collateral”),
the Pledgor shall hold such Distribution Collateral in trust for the benefit of the Secured Parties, shall segregate it from the
Pledgor’s other property and shall deliver the applicable Secured Party Pro Rata Amount of such Distribution Collateral forthwith
(but in any event within five (5) Business Days) to each Secured Party in the exact form received, with any necessary endorsement
and/or appropriate share powers duly executed in blank, to be held by the each Secured Party as Pledged Collateral and as further
collateral security for the Secured Obligations.


 


(e)
So long as no Event of Default (as defined in the Notes) has occurred or is continuing, on the later to occur of (i) the
final Adjustment Date (as defined in the Notes) and (ii) the last business day of each fiscal quarter of the Company beginning
with the fiscal quarter ended December 31, 2018, if both (x) the number of Ordinary Shares issuable pursuant to the Notes and Warrants
then outstanding of a Secured Party is less than the number of Pledged Shares then held by such Secured Party and (y) the Pledged
Share Value of the Pledged Shares held by such Secured Party exceeds 110% of the Secured Obligations of such Secured Party then
outstanding (whether or not then due and payable), then no later than the tenth (10th) Trading Day following receipt of written
notice from the Pledgor, such Secured Party shall release such number of Pledged Shares to the Pledgor equal to the difference
of (A) the number of Pledged Shares then held by such Secured Party and (B) the number of Ordinary Shares issuable pursuant to
the Notes and Warrants then outstanding of such Secured Party.


 


SECTION 5. Taxes.


 


(a)
All payments made by the Pledgor hereunder or under any other Transaction Document shall be made in accordance with the
terms of the respective Transaction Document and shall be made without set-off, counterclaim, deduction or other defense. All such
payments shall be made free and clear of and without deduction for any present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the net income of any Secured Party by the
jurisdiction in which such Secured Party is organized or where it has its principal lending office (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually, “Taxes”).
If the Pledgor shall be required to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under
any other Transaction Document:


 


(i)
the amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings
(including Taxes on amounts payable to any Secured Party pursuant to this sentence) each Secured Party receives an amount equal
to the sum it would have received had no such deduction or withholding been made,


 


(ii)
the Pledgor shall make such deduction or withholding,


 


(iii)
the Pledgor shall pay the full amount deducted or withheld to the relevant taxation authority in accordance with applicable
law, and


 


(iv)
as promptly as possible thereafter, the Pledgor shall send the Secured Parties an official receipt (or, if an official receipt
is not available, such other documentation as shall be satisfactory to the Secured Parties, as the case may be) showing payment. 
In addition, the Pledgor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration or enforcement
of, or otherwise with respect to, this Agreement or any other Transaction Document (collectively, “Other Taxes”).


 






     


     


    

 


(b)
The Pledgor hereby indemnifies and agrees to hold each Secured Party and all of its officers, directors, Affiliates, employees,
attorneys, consultants) (each an “Indemnified Party”) harmless from and against Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 5) paid
by any Indemnified Party  as a result of any payment made hereunder or from the execution, delivery, registration or enforcement
of, or otherwise with respect to, this Agreement or any other Transaction Document, and any liability (including penalties, interest
and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted.  This indemnification shall be paid within 30 days from the date on which
such Secured Party makes written demand therefor, which demand shall identify the nature and amount of such Taxes or Other Taxes.


 


(c)
If the Pledgor fails to perform any of its obligations under this Section 5, the Pledgor shall indemnify each
Indemnified Party for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations
of the Pledgor under this Section 5 shall survive the termination of this Pledge Agreement and the payment of the Obligations
and all other amounts payable hereunder.


 


SECTION 6. Representations
and Warranties. The Pledgor represents and warrants as follows:


 


(a)
The Pledgor has all requisite power and authority to execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly executed and delivered by the Pledgor and constitutes a legal, valid and binding obligation of the
Pledgor, enforceable against the Pledgor in accordance with its terms, except (a) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws now or hereafter in effect relating to,
or affecting generally, the enforcement of creditors’ and other obligees’ rights and (b) where the remedy of specific
performance or other forms of equitable relief may be subject to certain equitable defenses and principles and to the discretion
of the court before which the proceeding may be brought.


 


(b)
The Pledged Shares have been duly authorized and validly issued, are fully paid and nonassessable and the holders thereof
are not entitled to any preemptive first refusal or other similar rights. All other shares constituting Pledged Collateral will
be, when issued, duly authorized and validly issued, fully paid and nonassessable.


 


(c)
The Pledgor is and will be at all times the sole legal and beneficial owner of the Pledged Collateral free and clear of
any Lien, security interest, option or other charge or encumbrance except for the security interest and Lien created by this Agreement
or any Permitted Liens. No other Persons other than the Secured Parties has control or possession of all or any part of the Pledged
Collateral, except as permitted by this Agreement.


 






     


     


    

 


(d)
The exercise by any Secured Party of any of its rights and remedies hereunder will not contravene any law or any contractual
restriction binding on or affecting the Pledgor or any of the properties of the Pledgor and will not result in or require the creation
of any Lien, security interest or other charge or encumbrance upon or with respect to any of the properties of the Pledgor other
than pursuant to this Agreement and the other Transaction Documents, as defined in the Securities Purchase Agreement, the “Transaction
Documents”).


 


(e)
No authorization or approval or other action by, and no notice to or filing with, any governmental authority is required
to be obtained or made by the Pledgor for (i) the due execution, delivery and performance by the Pledgor of this Agreement, (ii)
the grant by the Pledgor, or the perfection, of the security interest and Lien purported to be created hereby in the Pledged Collateral
or (iii) the exercise by any Secured Party of any of its rights and remedies hereunder, except as may be required in connection
with any sale of any Pledged Collateral by laws affecting the offering and sale of securities generally.


 


(f)
This Agreement creates a valid security interest and Lien in favor of the Secured Parties in the Pledged Collateral, as
security for the Secured Obligations. Each Secured Party having possession of the certificates representing the Pledged Shares
and all other certificates, instruments and cash constituting Pledged Collateral from time to time results in the perfection of
such security interest and Lien. Such security interest and Lien is, or in the case of Pledged Collateral in which the Pledgor
obtains rights after the date hereof, will be, a perfected first priority Lien, subject only to the Permitted Liens. All action
necessary or desirable to perfect and protect such security interest and Lien has been duly taken, except for such Secured Party’s
having possession of certificates, instruments and cash constituting Pledged Collateral after the date hereof. Each Secured Party
has a perfected first priority Lien in all Pledged Collateral that are uncertificated securities (if any) pledged to it hereunder
that are in existence on the date hereof.


 


(g)
Pledgor’s legal name (as it appears on the Pledgor’s certificate of incorporation or similar organizational
document), its jurisdiction of incorporation, its organizational identification number (if any), jurisdiction where the chief executive
office or its sole place of business is located, each as in effect on the date hereof, are indicated next to its name in Schedule
I. Except as set forth in Schedule I, Pledgor has not, in the last five (5) years, (i) and does not do, business under
any other name (including any trade-names of fictitious business names) and (ii) changed its name, jurisdiction of incorporation,
chief executive office or principal place of business.


 


(h)
All information set forth herein, including the schedules annexed hereto, and all information contained in any documents,
schedules and lists previously delivered to any Secured Party relating to the Pledged Collateral, is accurate and complete.


 


(i)
Pledgor (i) has adequate means to obtain on a continuing basis (A) from the Company, information concerning the Company
and its financial condition and affairs and (B) from other reliable sources, such other information as he deems material in deciding
to provide this Agreement (“Other Information”), and has full and complete access to the Company’s books
and records and to such Other Information; (ii) is not relying on any Secured Party or its employees, officers, directors, agents
or other representatives or Affiliates, to provide any such information, now or in the future; (iii) has been furnished with, and
reviewed the terms of, the Transaction Documents as he has requested, is executing this Agreement freely and deliberately, and
understands the obligations and financial risk undertaken by providing this Agreement; (iv) has relied solely on its own independent
investigation, appraisal and analysis of the Company, its financial condition and affairs, the Other Information, and such other
matters as he deems material in deciding to provide this Agreement and is fully aware of the same; and (v) has not depended or
relied on any Secured Party or its employees, officers, directors, agents or other representatives or Affiliates, for any information
whatsoever concerning the Company or its financial condition and affairs or any other matters material to Pledgor’s decision
to provide this Agreement, or for any counseling, guidance, or special consideration or any promise therefor with respect to such
decision. Pledgor agrees that no Secured Party has any duty or responsibility whatsoever, now or in the future, to provide to Pledgor
any information concerning the Company or its financial condition and affairs, or any Other Information, other than as expressly
provided herein, and that, if such Pledgor receives any such information from any Secured Party or its employees, officers, directors,
agents or Affiliates, such Pledgor will independently verify the information and will not rely on such Secured Party or its employees,
officers, directors, agents or other representatives or Affiliates, with respect to such information.


 






     


     


    

 


SECTION 7. Covenants
as to the Pledged Collateral. So long as any Secured Obligations shall remain outstanding, the Pledgor will, unless the Required
Holders, shall otherwise consent in writing:


 


(a)
keep adequate records concerning the Pledged Collateral and permit the Secured Parties, or any designees or representatives
thereof at any time or from time to time during reasonable hours after prior written notice to examine and make copies of and abstracts
from such records;


 


(b)
at the Pledgor’s expense, promptly deliver to each Secured Party a copy of each material notice or other material
communication received by the Pledgor in respect of the Pledged Collateral;


 


(c)
at the Pledgor’s expense, defend each Secured Party’s right, title and security interest in and to the Pledged
Collateral against the claims of any Person;


 


(d)
at the Pledgor’s expense, at any time and from time to time, promptly execute and deliver all further instruments
and documents and take all further action that may be necessary or desirable or that any Secured Party may reasonably request in
order to (i) perfect and protect, or maintain the perfection of, the security interest and Lien purported to be created hereby,
(ii) enable such Secured Party to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral or
(iii) otherwise effect the purposes of this Agreement, including, without limitation, delivering to such Secured Party irrevocable
proxies in respect of the Pledged Collateral;


 


(e)
not sell, assign (by operation of law or otherwise), exchange or otherwise dispose of any Pledged Collateral or any interest
therein except as expressly permitted by the Securities Purchase Agreement or the Notes;


 


(f)
not permit, create or suffer to exist any Lien, upon or with respect to any Pledged Collateral except for the Lien created
hereby or for any Permitted Lien;


 


(g)
not make or consent to any amendment or other modification or waiver with respect to any Pledged Collateral, organizational
documents of the Company or enter into any agreement or permit to exist any restriction with respect to any Pledged Collateral;


 


(h)
except as expressly permitted by the Securities Purchase Agreement, not permit the issuance of (i) any additional shares
of any class of share capital, partnership interests, member interests or other equity of the Company, (ii) any securities
convertible voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or condition
into, or exchangeable for, any such shares of share capital or (iii) any warrants, options, contracts or other commitments entitling
any Person to purchase or otherwise acquire any such shares of share capital;


 


(i)
not change any of its name, its certificate of incorporation, bylaws or similar organizational documents, jurisdiction of
incorporation, or the location of its chief executive office, without giving the Secured Parties at least thirty (30) days prior
written notice thereof;


 


(j)
not issue any share certificate, certificated security or other instrument to evidence or represent any share capital, any
partnership interest or membership interest described in Schedule I hereto; and


 


(k)
not take or fail to take any action which would in any manner impair the validity or enforceability of each Secured Party’s
security interest in and Lien on any Pledged Collateral.


 


SECTION 8. Voting
Rights, Dividends, Etc. in Respect of the Pledged Collateral.


 


(a)
So long as no Event of Default shall have occurred and be continuing:


 


(i)
the Pledgor may exercise any and all voting and other consensual rights pertaining to any Pledged Collateral for any purpose
not inconsistent with the terms of this Agreement, the Securities Purchase Agreement or the Notes;


 


(ii)
the Pledgor may receive and retain any and all dividends, interest or other distributions paid in respect of the Pledged
Collateral to the extent permitted by the Securities Purchase Agreement; provided, however, that any and all (A)
dividends and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of or in exchange for, any Pledged Collateral, (B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, and (C) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Pledged Collateral, together with any dividend, distribution, interest or other payment which at the
time of such dividend, distribution, interest or other payment was not permitted by the Securities Purchase Agreement, shall be,
and shall forthwith (but in any event within five (5) Business Days) be delivered to each Secured Party in proportion to their
Secured Party Pro Rata Amount to hold as, Pledged Collateral and shall, if received by the Pledgor, be received in trust for the
benefit of such Secured Party, shall be segregated from the other property or funds of the Pledgor, and shall be forthwith (but
in any event within five (5) Business Days) delivered to such Secured Party in the exact form received with any necessary indorsement
and/or appropriate share powers duly executed in blank, to be held by such Secured Party as Pledged Collateral and as further collateral
security for the Secured Obligations; and


 






     


     


    

 


(iii)
each Secured Party will execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies and
other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i) of this Section 8(a) and to receive the dividends, distributions,
interest and other payments which it is authorized to receive and retain pursuant to paragraph (ii) of this Section 8(a),
in each case, to the extent that such Secured Party has possession of such Pledged Collateral.


 


(b)
Upon the occurrence and during the continuance of an Event of Default (as defined in the Notes) (an “Event of Default”),
:


 


(i)
all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise
pursuant to paragraph (i) of subsection (a) of this Section 8, and to receive the dividends, distributions, interest
and other payments which he would otherwise be authorized to receive and retain pursuant to paragraph (ii) of subsection (a)
of this Section 8, shall cease, and all such rights shall thereupon become vested in each Secured Party which shall
thereupon have the sole right to exercise such voting and other consensual rights and to receive and hold as Pledged Collateral
such dividends, distributions, interest and other payments;


 


(ii)
without limiting the generality of the foregoing, each Secured Party may at its option exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to any of the Pledged Collateral as if it were the
absolute owner thereof, including, without limitation, the right to exchange, in its discretion, any and all of the Pledged Collateral
upon the merger, consolidation, reorganization, recapitalization or other adjustment of any issuer of the Pledged Collateral or
upon the exercise by any issuer of the Pledged Collateral of any right, privilege or option pertaining to any Pledged Collateral,
and, in connection therewith, to deposit and deliver any and all of the Pledged Collateral with any committee, depository, transfer
agent, registrar or other designated agent upon such terms and conditions as the Secured Parties may determine; and


 


(iii)
all dividends, distributions, interest and other payments which are received by the Pledgor contrary to the provisions of
paragraph (i) of this Section 8(b) shall be received in trust for the benefit of the Secured Parties, shall be segregated
from other funds of the Pledgor, and shall be forthwith paid over to the Secured Parties in proportion to the applicable Secured
Party Pro Rata Amount as Pledged Collateral in the exact form received with any necessary indorsement and/or appropriate share
powers duly executed in blank, to be held by such Secured Party as Pledged Collateral and as further collateral security for the
Secured Obligations.


 






     


     


    

 


SECTION 9. Additional
Provisions Concerning the Pledged Collateral.


 


(a)
The Pledgor hereby (i) authorizes the Secured Parties to file one or more financing or continuation statements, and amendments
thereto, relating to the Pledged Collateral, without the signature of the Pledgor where permitted by law, (ii) ratifies such authorization
to the extent that the Secured Parties has filed any such financing or continuation statements, or amendments thereto, without
the signature of the Pledgor prior to the date hereof and (iii) authorizes each Secured Party to execute any agreements, instruments
or other documents in the Pledgor’s name and to file such agreements, instruments or other documents that are related to
the security interest and Lien of each Secured Party in the Pledged Collateral or as provided under Article 8 or Article 9 of the
Code or any other applicable uniform commercial code or other law in any appropriate filing office. Notwithstanding anything to
the contrary contained herein, no Secured Party shall have any responsibility for the preparing, recording, filing, re-recording,
or re-filing of any financing statement (amendments and continuation statements) or other instrument in any public office.


 


(b)
The Pledgor hereby irrevocably appoints each Secured Party as its attorney-in-fact and proxy, with full authority in the
place and stead and in its name or otherwise, from time to time in the Secured Parties’ discretion to take any action and
to execute any instrument which the Secured Parties may deem necessary or advisable to accomplish the purposes of this Agreement
(subject to the rights of the Pledgor under Section 8(a) hereof), including, without limitation, to receive, indorse and
collect all instruments made payable to the Pledgor representing any dividend, interest payment or other distribution in respect
of any Pledged Collateral and to give full discharge for the same. This power is coupled with an interest and is irrevocable until
the termination of this Agreement.


 


(c)
If the Pledgor fails to perform any agreement or obligation contained herein, each Secured Party may perform, or cause performance
of, such agreement or obligation, and the expenses of such Secured Party incurred in connection therewith shall be payable by the
Pledgor pursuant to Section 11 hereof and shall be secured by the Pledged Collateral.


 


(d)
Other than the exercise of reasonable care to assure the safe custody of the Pledged Collateral while held hereunder, no
Secured Party shall have any duty or liability to preserve rights pertaining thereto and shall be relieved of all responsibility
for the Pledged Collateral upon surrendering it or tendering surrender of it to any of the Pledgor. Each Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which such Secured Party accords its own property, it being understood
that no Secured Party shall have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether or not such Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged
Collateral. Each Secured Party agrees that, with respect to any Pledged Collateral at any time or times in its possession and in
which any other Secured Party has a Lien, the Secured Party in possession of any such Pledged Collateral shall be the bailee of
each other Secured Party solely for purposes of perfecting (to the extent not otherwise perfected) each other Secured Party’s
Lien in such Pledged Collateral, provided that no Secured Party shall be obligated to obtain or retain possession of any such Pledged
Collateral. Without limiting the generality of the foregoing, Secured Parties and Pledgor hereby agree that any Secured Party that
is in possession of any Pledged Collateral at such time as the Secured Obligations owing to such Secured Party have been paid in
full in cash may deliver such Pledged Collateral to the Company or, if requested by any other Secured Party prior to such delivery,
may deliver such Pledged Collateral (unless otherwise restricted by applicable law or court order and subject in all events to
the receipt of an indemnification of all liabilities arising from such delivery) to the requesting Secured Party, without recourse
to or representation or warranty by the Secured Party in such possession. No later than the third business day after the Company’s
receipt of such Pledged Collateral, the Company shall deliver to each Secured Party with Secured Obligations then outstanding the
applicable Secured Party Pro Rata Amount of such Pledged Collateral.


 






     


     


    

 


(e)
The powers conferred on each Secured Party hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession
and the accounting for monies actually received by it hereunder, no Secured Party shall have any duty as to any Pledged Collateral
or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged
Collateral.


 


(f)
Upon the occurrence and during the continuation of any default or Event of Default, each Secured Party may at any time in
its discretion (i) without notice to the Pledgor, transfer or register in the name of such Secured Party or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights of the Pledgor under Section 8(a) hereof, and
(ii) exchange certificates or instruments constituting Pledged Collateral for certificates or instruments of smaller or larger
denominations.


 


SECTION 10. Remedies
Upon Event of Default. If any Event of Default shall have occurred and be continuing:


 


(a)
Each Secured Party may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all of the rights and remedies of a secured party on default under the Code then in effect
in the State of New York; and without limiting the generality of the foregoing and without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange or broker’s
board or elsewhere, at such price or prices and on such other terms as such Secured Party may deem commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ notice to any of the
Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable
notification. No Secured Party shall be obligated to make any sale of Pledged Collateral regardless of notice of sale having been
given. Each Secured Party may adjourn any public or private sale by such Secured Party from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.


 


(b)
The Pledgor recognizes that it may be impracticable to effect a public sale of all or any part of the Pledged Shares or
any other securities constituting Pledged Collateral and that each Secured Party may, therefore, determine to make one or more
private sales of any such securities to a restricted group of purchasers who will be obligated to agree, among other things, to
acquire such securities for its own account, for investment and not with a view to the distribution or resale thereof. The Pledgor
acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms
which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sales shall be deemed
to have been made in a commercially reasonable manner and that no Secured Party shall have any 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, as amended (the “Securities Act”). The Pledgor further acknowledges and
agrees that any offer to sell such securities 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 an offer may be so
advertised without prior registration under the Securities Act) or (ii) made privately in the manner described above to not less
than fifteen (15) bona fide offerees shall be deemed to involve a “public disposition” for the purposes of Section
9-610 of the Code (or any successor or similar, applicable statutory provision) as then in effect in the State of New York, notwithstanding
that such sale may not constitute a “public offering” under the Securities Act, and that any Secured Party may, in
such event, bid for the purchase of such securities.


 


(c)
Any cash held by any Secured Party as Pledged Collateral and all cash proceeds received by such Secured Party in respect
of any sale of, collection from, or other realization upon, all or any part of the Pledged Collateral shall be applied (after payment
of any amounts payable to such Secured Party pursuant to Section 11 hereof) by such Secured Party against, all or any part
of the Secured Obligations in such order as such Secured Party shall elect consistent with the provisions of the Securities Purchase
Agreement.


 


(d)
In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which
any Secured Party is legally entitled, the Pledgor shall be liable for the deficiency, together with interest thereon at the highest
rate specified in the Notes for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together
with the costs of collection and the reasonable fees, costs and expenses of any attorneys employed by such Secured Party to collect
such deficiency.


 


(e)
In disposing of the Pledged Collateral hereunder, a Secured Party may disclaim all warranties of title, possession, quiet
enjoyment and the like. Any proceeds of any disposition of any Pledged Collateral, including proceeds, or any part thereof, may
be applied by a Secured Party to the payment of expenses incurred by such Secured Party in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by such Secured Party toward the payment of the Secured
Obligations in such order of application as such Secured Party may from time to time elect. Upon the transfer of all or any part
of the Secured Obligations in accordance with this Agreement and the other Transaction Documents, a Secured Party may transfer
all or any part of the Pledged Collateral, including the proceeds, and shall be fully discharged thereafter from all liability
and responsibility with respect to any of the foregoing so transferred, and the transferee shall be vested with all rights and
powers of such Secured Party hereunder with respect to any of the foregoing so transferred; but with respect to any Pledged Collateral,
including the proceeds, not so transferred, such Secured Party shall retain all rights, powers, privileges and remedies herein
given.


 






     


     


    

 


SECTION 11. Indemnity
and Expenses.


 


(a)
The Pledgor hereby agrees to indemnify and hold each Secured Party (and all of its officers, directors, employees, attorneys,
consultants) harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and
expenses (including, without limitation, reasonable legal fees and disbursements of counsel) to the extent that they arise out
of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses
or liabilities arising or resulting directly from such Person’s gross negligence or willful misconduct, each as determined
by a final non-appealable judgment in favor of the Company or the Pledgor of a court of competent jurisdiction. The costs and expenses
of enforcing this right of indemnification by any Secured Party shall also be paid by the Pledgor.


 


(b)
The Pledgor shall be obligated for, and will upon demand pay to each Secured Party the reasonable amount of any and all
out-of-pocket costs and expenses, including the reasonable fees and disbursements of such Secured Party’s counsel and of
any experts which such Secured Party may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation,
administration, amendment, waiver or other modification or termination of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any Pledged Collateral, (iii) the exercise or enforcement
of any of the rights of such Secured Party hereunder, or (iv) the failure by the Pledgor to perform or observe any of the provisions
hereof.


 


SECTION 12. Notices,
Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed (by certified mail,
postage prepaid and return receipt requested), sent by Federal Express or other recognized courier service (return receipt requested),
telecopied or delivered, if to the Pledgor, to it at the address specified in the Securities Purchase Agreement or if to the Secured
Parties, to it at the address specified in the Securities Purchase Agreement; or as to either such Person at such other address
as shall be designated by such Person in a written notice to such other Person complying as to delivery with the terms of this
Section 12. All such notices and other communications shall be effective (i) if sent by certified mail, postage prepaid, return
receipt requested, when received or three (3) Business Days after mailing, whichever first occurs, (ii) if telecopied, when transmitted
and confirmation is received, provided same is on a Business Day and, if not, on the next Business Day or (iii) if delivered or
sent by Federal Express or other recognized courier service (return receipt requested), upon delivery, provided same is on a Business
Day and, if not, on the next Business Day.


 


SECTION 13. Security
Interest Absolute. All rights of the Secured Parties, all Liens and all obligations of the Pledgor hereunder shall be absolute
and unconditional irrespective of: (i) any lack of validity or enforceability of the Securities Purchase Agreement, the Notes or
any other Transaction Document, (ii) any change in the time, manner or place of payment of, or in any other term in respect of,
all or any of the Secured Obligations, or any other amendment or waiver of or consent to any departure from the Securities Purchase
Agreement, the Notes or any other Transaction Document, (iii) any exchange or release of, or non-perfection of any Lien on any
Collateral, or any release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Secured Obligations,
or (iv) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Pledgor in respect
of the Secured Obligations (other than the payment in full in cash of the Secured Obligations or complete conversion to equity
securities of the Company of all indebtedness obligations owed by the Company to the Secured Parties under the Notes (including,
without limitation, all principal, interest and fees related to the Notes)). All authorizations and agencies contained herein with
respect to any of the Pledged Collateral are irrevocable and powers coupled with an interest.


  


SECTION 14. Beneficial
Ownership. Each Secured Party shall not have the right to exercise its rights under this Agreement and any such exercise shall
be null and void and treated as if never made, to the extent that after giving effect to such exercise, such applicable Secured
Party together with its other Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the Ordinary Shares outstanding immediately after giving effect to such exercise. For purposes of the
foregoing sentence, the aggregate number of Ordinary Shares beneficially owned by a Secured Party and its other Attribution Parties
shall include the number of Ordinary Shares held by such Secured Party and all its other Attribution Parties plus the number of
Ordinary Shares to be acquired by such Secured Party with respect to which the determination of such sentence is being made, but
shall exclude the remaining Ordinary Shares pledged to such Secured Party that are not then being acquired upon such Secured Party’s
exercise of its right hereunder and any Ordinary Shares which would be issuable upon (A) conversion of the remaining, nonconverted
portion of the Note beneficially owned by such Secured Party or any its other Attribution Parties, (B) exercise or conversion of
the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertible
notes or convertible preferred shares or warrants, including, without limitation, the Warrants) beneficially owned by such Secured
Party or any its other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained
in this Section 14. For purposes of this Section 14, beneficial ownership shall be calculated in accordance with Section 13(d)
of the 1934 Act. For purposes of determining the number of outstanding Ordinary Shares a Secured Party may acquire upon exercise
of its rights hereunder at any time of determination without exceeding the Maximum Percentage, each Secured Party may rely on the
number of outstanding Ordinary Shares as reflected in (x) the Company’s most recent Annual Report on Form 20-F, Report of
Foreign Issuer on Form 6-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement by the
Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of Ordinary Shares
outstanding (the “Reported Outstanding Share Number”). For any reason at any time, upon the written or oral
request of a Secured Party, the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail to
such Secured Party the number of Ordinary Shares then outstanding. In the event that the exercise of rights by a Secured Party
hereunder and transfer of Ordinary Shares from the Pledgor to such Secured Party hereunder would result in such Secured Party and
its other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number
of outstanding Ordinary Shares (as determined under Section 13(d) of the 1934 Act), the transfer from the Pledgor to such Secured
Party of such number of shares by which such Secured Party’s and its other Attribution Parties’ aggregate beneficial
ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled
ab initio, and such Secured Party shall not have the power to vote or to transfer the Excess Shares. Upon delivery of a written
notice to the Company, a Secured Party may from time to time increase (with such increase not effective until the sixty-first (61st)
day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified
in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to such Secured Party
and its other Attribution Parties and not to any other Secured Party that is not an Attribution Party of such Secured Party. For
purposes of clarity, the Ordinary Shares in excess of the Maximum Percentage shall not be deemed to be beneficially owned by such
Secured Party for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability of
a Secured Party to exercise its rights hereunder and acquire any Ordinary Shares from the Pledger to such Secured Party pursuant
to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent
determination of transferability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 14 to the extent necessary to correct this paragraph (or any portion of this
paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 14
or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in
this paragraph may not be waived and shall apply to a successor Secured Party.


 






     


     


    

 


SECTION 15. Acknowledgment.


 


(a)
Each Secured Party hereby agrees and acknowledges that no other Secured Party has agreed to act for it as an administrative
or collateral agent with respect to the Pledged Collateral pledged to such Secured Party hereunder, and each Secured Party is and
shall remain solely responsible for the attachment, perfection and priority of all Liens created by this Agreement or any other
Security Document in favor of such Secured Party with respect to the Pledged Collateral pledged to such Secured Party hereunder.
No Secured Party shall have by reason of this Agreement or any other Transaction Document an agency or fiduciary relationship
with any other Secured Party. No Secured Party (which term, as used in this sentence, shall include reference to each Secured Party’s
officers, directors, employees, attorneys, agents and Affiliates and to the officers, directors, employees, attorneys and agents
of such Secured Party’s Affiliates) shall: (i) have any duties or responsibilities except those expressly set forth
in this Agreement and the other Security Documents or (ii) be required to take, initiate or conduct any enforcement action
(including any litigation, foreclosure or collection proceedings hereunder or under any of the other Security Documents). Without
limiting the foregoing, no Secured Party shall have any right of action whatsoever against any other Secured Party as a result
of such Secured Party acting or refraining from acting hereunder or under any of the Security Documents except as a result and
to the extent of losses caused by such Secured Party’s actual gross negligence or willful misconduct, each as determined
by a final non-appealable judgment of a court of competent jurisdiction. No Secured Party assumes any responsibility for any failure
or delay in performance or breach by the Pledgor or any Secured Party of its obligations under this Agreement or any other Transaction
Document. No Secured Party makes to any other Secured Party or any other Person any express or implied warranty, representation
or guarantee with respect to any Secured Obligations, Pledged Collateral, Transaction Document or the Pledgor. No Secured Party
nor any of its officers, directors, employees, attorneys or agents shall be responsible to any other Secured Party or any of its
officers, directors, employees, attorneys or agents or any other Person for: (i) any recitals, statements, information, representations
or warranties contained in any of the Transaction Documents or in any certificate or other document furnished pursuant to the terms
hereof; (ii) the execution, validity, genuineness, effectiveness or enforceability of any of the Transaction Documents; (iii) the
validity, genuineness, enforceability, collectability, value, sufficiency or existence of any Pledged Collateral, or the attachment,
perfection or priority of any Lien therein; or (iv) the assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of the Pledgor. No Secured Party nor any of its officers, directors, employees, attorneys or agents
shall have any obligation to any other Secured Party to ascertain or inquire into the existence of any default or Event of Default,
the observance or performance by the Pledgor of any of the duties or agreements of the Pledgor under any of the Transaction Documents
or the satisfaction of any conditions precedent contained in any of the Transaction Documents.


 


(b)
Each Secured Party hereby acknowledges and represents that it has, independently and without reliance upon any other Secured
Party, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of the
Pledgor and the Company and its own decision to enter into the Transaction Documents and to purchase the Notes and Warrants, and
each Secured Party has made such inquiries concerning the Transaction Documents, the Pledged Collateral, the Company and the
Pledgor as such Secured Party feels necessary and appropriate, and has taken such care on its own behalf as would have been the
case had it entered into the Transaction Documents without any other Secured Party. Each Secured Party hereby further acknowledges
and represents that the other Secured Parties have not made any representations or warranties to it concerning the Pledgor, any
of the Pledged Collateral or the legality, validity, sufficiency or enforceability of any of the Transaction Documents. Each Secured
Party also hereby acknowledges that it will, independently and without reliance upon the other Secured Parties, and based upon
such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own
credit decisions in taking or refraining to take any other action under this Agreement or the Transaction Documents. No Secured
Party shall have any duty or responsibility to provide any other Secured Party with any notices, reports or certificates furnished
to such Secured Party by the Pledgor or any credit or other information concerning the affairs, financial condition, business or
assets of the Company (or any of its Affiliates) or any Pledgor which may come into possession of such Secured Party.


 


SECTION 16. Miscellaneous.


 


(a)
No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by the Pledgor and
the Required Holders, and no waiver of any provision of this Agreement, and no consent to any departure by the Pledgor therefrom,
shall be effective unless it is in writing and signed by the Required Holders, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.


 


(b)
No failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder or under any other
Transaction Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The rights and remedies of the Secured Parties provided herein
and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided
by law. The rights of the each Secured Party under any Transaction Document against any party thereto are not conditional or contingent
on any attempt by such Secured Party to exercise any of its rights under any other Transaction Document against such party or against
any other Person.


 






     


     


    

 


(c)
To the extent that Pledgor makes a payment or payments to any Secured Party, or any Secured Party enforces any Lien or security
interest or exercises any right of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any
part thereof are subsequently invalidated, declared to be fraudulent, preferential or at undervalue, set aside and/or required
to be repaid to a trustee, receiver or any other party under any bankruptcy, debtor relief laws, any other federal, state or foreign
law, or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such
payment or payments had not been made or such enforcement or set-off had not occurred.


 


(d)
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.


 


(e)
This Agreement shall create a continuing security interest in and Lien on the Pledged Collateral and shall (i) remain in
full force and effect until the termination of this Agreement in accordance with the terms hereof and (ii) be binding on the
Pledgor and its successors and assigns and shall inure, together with all rights and remedies of each Secured Party and its successors,
transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence, each Secured Party
may assign or otherwise transfer its rights and obligations under this Agreement and any other Transaction Document to any other
Person pursuant to the terms of the Securities Purchase Agreement, and such other Person shall thereupon become vested with all
of the benefits in respect thereof granted to such Secured Party herein or otherwise. Upon any such assignment or transfer, all
references in this Agreement to such Secured Party shall mean the assignee of such Secured Party. None of the rights or obligations
of the Pledgor hereunder may be assigned or otherwise transferred without the prior written consent of the Required Holders, and
any such assignment or transfer without such consent shall be null and void.


 


(f)
Notwithstanding anything to the contrary in this Agreement, (i) this Agreement (along with all powers of attorney granted
hereunder) and the security interests and Lien created hereby shall terminate and all rights to the Pledged Collateral shall revert
to the Pledgor upon the repayment in full in cash and/or complete conversion to equity securities of the Company of all indebtedness
obligations owed by the Company to the Secured Parties under the Notes (including, without limitation, all principal, interest
and fees related to the Notes), and (ii) the Secured Parties will, upon the Pledgor’s request and at the Pledgor’s
expense, (A) return to the Pledgor such of the Pledged Collateral (to the extent delivered to such Secured Party) as shall not
have been sold or otherwise disposed of or applied pursuant to the terms hereof, and (B) execute and deliver to the Pledgor, without
recourse, representation or warranty, such documents as the Pledgor shall reasonably request to evidence such termination.


 






     


     


    

 


(g)
The internal laws, and not the laws of conflicts, of the State of New York shall govern the enforceability and validity
of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties, except as required
by mandatory provisions of law and except to the extent that the validity and perfection or the perfection and the effect of perfection
or non-perfection of the security interest and Lien created hereby, or remedies hereunder, in respect of any particular Pledged
Collateral are governed by the law of a jurisdiction other than the State of New York.


 


(h)
Each party to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the United States District Court for the Southern District of New York sitting in Manhattan or the Commercial Division,
Civil Branch of the Supreme Court of the State of New York sitting in New York County in connection with any suit, action or proceeding
directly or indirectly arising out of, under or in connection with this Agreement or the other Transaction Documents or the transactions
contemplated hereby or thereby. No party to this Agreement may move to (i) transfer any such suit, action or proceeding brought
in such New York court or federal court to another jurisdiction, (ii) consolidate any such suit, action or proceeding brought in
such New York court or federal court with a suit, action or proceeding in another jurisdiction or (iii) dismiss any such suit,
action or proceeding brought in such New York court or federal court for the purpose of bringing the same in another jurisdiction.
Each party to this Agreement agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. Each party to this Agreement
hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement,
or the other Transaction Documents in any New York court sitting in New York County or any federal court sitting in the Southern
District of New York.


 


(i)
The Pledgor hereby appoints CT Corporation System, 111 Eighth Avenue, 13th Floor, New York, New York 10011, as its agent
for service of process in New York. The Company hereby appoints CT Corporation System, 111 Eighth Avenue, 13th Floor, New York,
New York 10011, as its agent for service of process in New York. Nothing contained herein shall affect the right of each Secured
Party to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Pledgor
or the Company or any property of the Pledgor or the Company in any other jurisdiction.


 


(j)
The Pledgor irrevocably and unconditionally waives any right he may have to claim or recover in any legal action, suit or
proceeding referred to in this Section any special, exemplary, punitive or consequential damages.


 


(k)
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR OTHER TRANSACTION DOCUMENTS.


 


(l)
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit
or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party.


 


(m)
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.


 


[Signature
Page Follows]


 






     


     


    







 


In
Witness Whereof, the Pledgor, the Company and the Secured Parties have executed and delivered this Agreement as of the date
first above written.


 





	 	PLEDGOR:
	 	 	 
	 	FARMNET LIMITED
	 	 	 
	 	 	 
	 	By: 	 
	 	 	Name:
	 	 	Title:


  








     


     


    







 


In
Witness Whereof, the Pledgor, the Company and the Secured Parties have executed and delivered this Agreement as of the date
first above written.


 





	 	SECURED PARTY:
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 






     


     


    







 


In
Witness Whereof, the Pledgor, the Company and the Secured Parties have executed and delivered this Agreement as of the date
first above written.


 





	 	COMPANY:
	 	 	 
	 	Farmmi, Inc.
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:




 






     


     


    







 


SCHEDULE
I TO PLEDGE AGREEMENT


 


Pledged Shares


 


	Pledgor Legal Name and Addresses	 	Name 

of Issuer	 	Number 

of Shares	 	 
%
                                         of 

Shares
	 	Class	 	Secured
Party
  to Initially 
 Hold Certificate
with respect to such Pledged Shares
	FarmNet Limited
 c/o Farmmi, Inc., No. 307, Tianning Industrial Area, Lishui, Zhejiang Province, People’s Republic of China 323000	 	Farmmi, Inc.	 	3,000,000	 	25.14%	 	Ordinary Shares	 	0



 


Pledgor’s jurisdiction of incorporation: Cayman Islands


 


 


Pledgor’s organizational number: NS-301873


 


Address of Pledgor’s chief executive office or its sole
place of business (if different from above):


Juguang Center A-9F


No. 459 Qianmo Rd.


Binjiang District, Hangzhou, China


 






     


     


    







 


ANNEX I


 


TO


 


PLEDGE
AGREEMENT


  


PLEDGE AMENDMENT


 


This Pledge Amendment,
dated ●, 20●, is delivered pursuant to Section 4 of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated as of November ___, 2018, made by FarmNet
Limited and Farmmi, Inc., a company organized under the laws of the Cayman Islands in favor of the secured parties signatory thereto
(the “Secured Parties”) as it may heretofore have been or hereafter may be amended or otherwise modified or
supplemented from time to time and that the promissory notes [and/or] shares or other equity interests listed on this Pledge Amendment
shall be hereby pledged and assigned to the Secured Parties and become part of the Pledged Collateral referred to in such Pledge
Agreement and shall secure all of the obligations referred to in such Pledge Agreement.


 


Pledged Shares


 


	Pledgor	 	 	Name of Issuer	 	 	Number of Shares or Other Equity Interests	 	 	Class	 	 	Certificate No(s)	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






 





	 	[PLEDGOR]
	 	 	 
	 	By: 	 
	 	 	[SHAREHOLDER]