Exhibit 10.5


 


SECURITY AGREEMENT


 


THIS SECURITY AGREEMENT
(this “Security Agreement”), is made as of July 20, 2012, by and between Targeted Medical Pharma, Inc., a Delaware
corporation, having an address at 2980 Beverly Glen Circle, Suite 301, Los Angeles, CA 90077 (the “Obligor”
or “Company”), and AFH Holding and Advisory, LLC, a Delaware limited liability company, having an address at
9595 Wilshire Boulevard, Suite 700, Beverly Hills, CA 90212 (the “Secured Party”). (The Company and the Secured
Party may hereinafter be referred to singularly as a “party,” and collectively as the “parties”).


 


W I T N E S S E T H


 


WHEREAS, concurrently
herewith, the Obligor is entering into a letter agreement with the Secured Party (the “Letter Agreement”), pursuant
to which, in consideration for past services rendered, the Obligor will issue to the Secured Party (a) a Secured Convertible Promissory
Note in the principal amount of $585,448 (the “Note”); and (b) warrants to purchase 1,063,981 shares of the
Company’s common stock (the “Warrants”); and


 


WHEREAS, the
Obligor has agreed to execute and deliver to the Secured Party this Security Agreement for the benefit of the Secured Party and
to grant to the Secured Party a security interest in certain of the Obligor’s assets, as set forth in Section 1(a) below,
to secure the prompt payment, performance and discharge in full of all of the Obligor’s obligations under the Security Agreement,
the Note and the Warrants.


 


NOW, THEREFORE,
in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:


 


1.Certain
Definitions. As used in this Security Agreement, the following terms shall have the meanings set forth in this Section
1. Terms used but not otherwise defined in this Security Agreement that are defined in Article 9 of the UCC shall have the respective
meanings given such terms in Article 9 of the UCC. Each capitalized term used herein, and not otherwise defined, shall have the
meaning ascribed thereto in the Letter Agreement.


 


(a)“Collateral”
means the collateral in which the Secured Party is granted a security interest by this Security and which shall include the following,
whether presently owned or existing or hereafter acquired or coming into existence, and all additions and accessions thereto and
all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection therewith:


 


(i)All of the Obligor’s
rights in and to Allen Salick MD, Inc. open claims from October 8, 2007 through and including March
9, 2010, in the approximate value of $2,658,000, as further set forth on Schedule A hereto; and


 






    	 



    	 	



    
 


(ii)All of the Obligor’s
documents, instruments and chattel paper, files, records, books of account, business papers, computer programs and the products
and proceeds of all of the foregoing Collateral set forth in clause (i) above, if any.


 


(b)“Obligations”
means all of the Obligor’s obligations under this Security Agreement, the Letter Agreement, the Note and the Warrants, in
each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later
decreased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any
part of such payment is avoided or recovered directly or indirectly from the Secured Party as a preference, fraudulent transfer
or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.


 


(c)“UCC”
means the Uniform Commercial Code, as currently in effect in the State of California.


 


2.Grant
of Security Interest. To secure the complete and timely payment, performance and discharge in full, as the case may be,
of all of the Obligations, except for Permitted Liens (as hereinafter defined), the Obligor hereby, unconditionally and irrevocably,
pledges, grants and hypothecates to the Secured Party, a continuing security interest in, a continuing lien upon, an unqualified
right to possession and disposition of and a right of set-off against, in each case to the fullest extent permitted by law, all
of the Obligor’s right, title and interest of whatsoever kind and nature in and to the Collateral (the “Security
Interest”).


 


3.Representations,
Warranties, Covenants and Agreements of the Obligor. The Obligor represents and warrants to, and covenants and agrees with,
the Secured Party as follows:


 


(a)The Obligor
has the requisite corporate power and authority to enter into this Security Agreement and otherwise to carry out its obligations
hereunder. The execution, delivery and performance by the Obligor of this Security Agreement and the filings contemplated herein
have been duly authorized by all necessary action on the part of the Obligor and no further action is required by the Obligor.
This Security Agreement constitutes a legal, valid and binding obligation of the Obligor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditor’s rights generally.


 


(b)The Obligor
represents and warrants that it has no place of business or offices where its respective books of account and records are kept
(other than temporarily at the offices of its attorneys or accountants), except as set forth on Schedule B attached
hereto;


 


(c)Except
as to those liens existing as of the date hereof that were disclosed to the Secured Party by the Obligor and are set forth on the
attached Schedule C (the “Permitted Liens”), the Obligor is the sole owner of the Collateral (except
for non-exclusive licenses granted by the Obligor in the ordinary course of business), free and clear of any liens, security interests,
encumbrances, rights or claims, and is fully authorized to grant the Security Interest in and to pledge the Collateral. Except
as to the Permitted Liens, there is not on file in any governmental or regulatory authority, agency or recording office an effective
financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that have
been filed in favor of the Secured Party pursuant to this Security Agreement) covering or affecting any of the Collateral. Except
as to the Permitted Liens, so long as this Security Agreement shall be in effect, the Obligor shall not execute and shall not knowingly
permit to be on file in any such office or agency any such financing statement or other document or instrument (except to the extent
filed or recorded in favor of the Secured Party pursuant to the terms of this Security Agreement).


 






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(d)No part
of the Collateral has been judged invalid or unenforceable. No written claim has been received that any Collateral or the Obligor’s
use of any Collateral violates the rights of any third party. There has been no adverse decision to the Obligor’s claim of
ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the Obligor's right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving said rights pending or, to the best knowledge of
the Obligor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator or other governmental
authority.


 


(e)The Obligor
shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and
may not relocate such books of account and records unless it delivers to the Secured Party at least 30 days prior to such relocation
(i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence
that appropriate financing statements and other necessary documents have been filed and recorded and other steps have been taken
to perfect the Security Interest to create in favor of the Secured Party a valid, perfected and continuing lien in the Collateral.


 


(f)This Security
Agreement creates in favor of the Secured Party a valid security interest in the Collateral securing the payment and performance
of the Obligations and, upon making the filings described in the immediately following sentence, a perfected security interest
in such Collateral. Except for the filing of financing statements on Form-1 under the UCC with the jurisdictions indicated on Schedule
D, attached hereto, no authorization or approval of or filing with or notice to any governmental authority or regulatory
body is required either (i) for the grant by the Obligor of, or the effectiveness of, the Security Interest granted hereby or for
the execution, delivery and performance of this Security Agreement by the Obligor or (ii) for the perfection of or exercise by
the Secured Party of its rights and remedies hereunder.


 


(g)The Obligor
hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any Uniform Commercial Code jurisdiction
any initial financing statements and amendments thereto that (a) indicate the Collateral regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State of California as amended
from time to time (“CAUCC”), or any other Uniform Commercial Code jurisdiction; and (b) contain any other information
required by part 5 of Article 9 of the CAUCC for the sufficiency or filing office acceptance of any financing statement or amendment,
including whether the Obligor is an organization, the type of organization and any organization identification number issued to
the Obligor. The Obligor agrees to furnish any such information to the Secured Party promptly upon request. The Obligor also ratifies
its authorization for the Secured Party to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements
or amendments thereto if filed prior to the date hereof with respect to the Collateral.


 






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(h)The execution,
delivery and performance of this Security Agreement does not conflict with or cause a breach or default, or an event that with
or without the passage of time or notice, shall constitute a breach or default, under any agreement to which the Obligor is a party
or by the Obligor is bound. No consent (including, without limitation, from stockholders or creditors of the Obligor) is required
for the Obligor to enter into and perform its obligations hereunder.


 


(i)The Obligor
shall at all times maintain the liens and Security Interest provided for hereunder as valid and perfected liens and security interests
in the Collateral in favor of the Secured Party until this Security Agreement and the Security Interest hereunder shall be terminated
pursuant to Section 11. The Obligor hereby agrees to defend the same against any and all persons. The Obligor shall safeguard and
protect all Collateral for the account of the Secured Party. At the request of the Secured Party, the Obligor will pay the cost
of filing one or more financing statements pursuant to the UCC (or any other applicable statute) in form reasonably satisfactory
to the Secured Party in all public offices wherever filing is, or is deemed by the Secured Party to be, necessary or desirable
to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Obligor shall pay
all fees, taxes and other amounts necessary to maintain the Collateral and the Security Interest hereunder, and the Obligor shall
obtain and furnish to the Secured Party from time to time, upon demand, such releases and/or subordinations of claims and liens
which may be required to maintain the priority of the Security Interest hereunder.


 


(j)The Obligor
will not transfer, pledge, hypothecate, encumber, license (except for non-exclusive licenses granted by the Obligor in the ordinary
course of business), sell (except for sales of inventory in the ordinary course of business) or otherwise dispose of any of the
Collateral without the prior written consent of the Secured Party.


 


(k)The Obligor
shall keep and preserve its Equipment, Inventory and other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.


 


(l)The Obligor
shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Party promptly, in sufficient detail, of any substantial
change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value of the Collateral
or on the Secured Party’s security interest therein.


 


(m)The Obligor
shall promptly execute and deliver to the Secured Party such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take such further action as the Secured Party may from
time to time request and may in its sole discretion deem necessary to perfect, protect or enforce its security interest in the
Collateral.


 






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(n)The Obligor
shall permit the Secured Party and their representatives and agents to inspect the Collateral at any time and to make copies of
records pertaining to the Collateral as may be requested by the Secured Party from time to time.


 


(o)The Obligor
will take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral.


 


(p)The Obligor
shall promptly notify the Secured Party in sufficient detail upon becoming aware of any attachment, garnishment, execution or other
legal process levied against any Collateral and of any other information received by the Obligor that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies of the Secured Party hereunder.


 


(q)All information
heretofore, herein or hereafter supplied to the Secured Party by or on behalf of the Obligor with respect to the Collateral is
accurate and complete in all material respects as of the date furnished.


 


4.Defaults.
The following events shall be “Events of Default”:


 


(a)A breach
by the Obligor of its material obligations under the Letter Agreement, Note or Warrants, and failure to cure such breach for ten
(10) days after receipt by the Obligor of notice of such breach from the Secured Party;


 


(b)Any representation
or warranty of the Obligor in this Security Agreement shall prove to have been incorrect in any material respect when made; and


 


(c)The material
failure by the Obligor to observe or perform any of its material obligations hereunder for ten (10) days after receipt by the Obligor
of notice of such failure from the Secured Party.


 


5.Duty
To Hold In Trust. Upon the occurrence of any Event of Default and at any time thereafter, the Obligor shall, upon receipt
by it of any revenue, income or other sums subject to the Security Interest, whether payable pursuant to the Letter Agreement,
the Note, or otherwise, or of any check, draft, debenture, trade acceptance or other instrument evidencing an obligation to pay
any such sum, hold the same in trust for the Secured Party and shall forthwith endorse and transfer any such sums or instruments,
or both, to the Secured Party for application to the satisfaction of the Obligations.


 


6.Rights
and Remedies Upon Default. Upon occurrence of any Event of Default and at any time thereafter, the Secured Party shall
have the right to exercise all of the remedies conferred hereunder and under the Letter Agreement, and the Secured Party shall
have all the rights and remedies of a secured party under the UCC and/or any other applicable law (including the Uniform Commercial
Code of any jurisdiction in which any Collateral is then located). The Secured Party shall have the following rights and powers:


 






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(a)The Secured
Party shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and the Obligor shall
assemble the Collateral and make it available to the Secured Party at places which the Secured Party shall reasonably select, whether
at the Obligor's premises or elsewhere, and make available to the Secured Party, without rent, all of the Obligor’s respective
premises and facilities for the purpose of the Secured Party taking possession of, removing or putting the Collateral in saleable
or disposable form.


 


(b)The Secured
Party shall have the right to operate the business of the Obligor using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with
or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such
time or times and at such place or places, and upon such terms and conditions as the Secured Party may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to
the Obligor or right of redemption of the Obligor, which are hereby expressly waived. Upon each such sale, lease, assignment or
other transfer of Collateral, the Secured Party may, unless prohibited by applicable law which cannot be waived, purchase all or
any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of the
Obligor, which are hereby waived and released.


 


7.Applications
of Proceeds.


 


(a)The
proceeds of any such sale, lease or other disposition of the Collateral hereunder shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and
other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys' fees and expenses incurred by the
Secured Party in enforcing its rights hereunder and in connection with collecting, storing and disposing of the Collateral, and
then to satisfaction of the Obligations, and to the payment of any other amounts required by applicable law, after which the Secured
Party shall pay to the Obligor any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which the Secured Party is legally entitled, the Obligor will be liable for the
deficiency, together with interest thereon, at the rate of 15% per annum (the “Default Rate”), and the reasonable
fees of any attorneys employed by the Secured Party to collect such deficiency. To the extent permitted by applicable law, the
Obligor waives all claims, damages and demands against the Secured Party arising out of the repossession, removal, retention or
sale of the Collateral, unless due to the gross negligence or willful misconduct of the Secured Party.


 


(b)All ordinary costs and expenses
incurred by the Secured Party in collection of the Obligations shall be borne exclusively by the Obligor including, without limitation,
any costs, expenses, fees or disbursements incurred by outside agencies or attorneys retained by the Secured Party to effect collections
of the Obligations or any Collateral securing the Obligations. The provisions of this paragraph shall not apply to any suits, actions,
proceedings or claims of the nature referred to herein or otherwise which are based upon or related to the repayment of, or the
taking of security for, any loans and/or advances made by the Secured Party to the Company that do not arise under the Letter Agreement
or that are not participated in by the Secured Party, and the party making such loans and/or advances shall be exclusively responsible
for such suits, actions, proceedings or claims and the payment of all such expenses in connection therewith.


 






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8.Costs
and Expenses. The Obligor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection
with any filing required hereunder, including without limitation, any financing statements, continuation statements, partial releases
and/or termination statements related thereto or any expenses of any searches reasonably required by the Secured Party. The Obligor
shall also pay all other claims and charges which in the reasonable opinion of the Secured Party might prejudice, imperil or otherwise
affect the Collateral or the Security Interest therein. The Obligor will also, upon demand, pay to the Secured Party the amount
of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with (i) the enforcement of this Security Agreement, (ii) the custody or preservation
of, or the sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Party under the Letter Agreement. Until so paid, any fees payable hereunder shall be added to
the principal amount of the Note and shall bear interest at the Default Rate.


 


9.Responsibility
for Collateral. The Obligor assumes all liabilities and responsibility in connection with all Collateral, and the obligations
of the Obligor hereunder or under the Letter Agreement shall in no way be affected or diminished by reason of the loss, destruction,
damage or theft of any of the Collateral or its unavailability for any reason.


 


10.Security
Interest Absolute. All rights of the Secured Party and all Obligations of the Obligor hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of this Security Agreement, the Letter Agreement, or
any agreement entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner
or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Letter Agreement, or any other agreement entered into in connection with the foregoing;
(c) any exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guaranty, or any other security, for all or any of the Obligations; (d) any action by the
Secured Party to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection
with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to
the Obligor, or a discharge of all or any part of the Security Interest granted hereby. Until the Obligations shall have been paid
and performed in full, the rights of the Secured Party shall continue even if the Obligations are barred for any reason, including,
without limitation, the running of the statute of limitations or bankruptcy. The Obligor expressly waives presentment, protest,
notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral
or any payment received by the Secured Party hereunder shall be deemed by final order of a court of competent jurisdiction to have
been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed
to be otherwise due to any party other than the Secured Party, then, in any such event, the Obligor’s obligations hereunder
shall survive cancellation of this Security Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or
cancellation of this Security Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms
and provisions hereof. The Obligor waives all right to require the Secured Party to proceed against any other person or to apply
any Collateral which the Secured Party may hold at any time, or to marshal assets, or to pursue any other remedy. The Obligor waives
any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.


 






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11.Term
of Agreement. This Security Agreement and the Security Interest shall terminate on the repayment of all amounts due the
Secured Party under the Letter Agreement and the Note. Upon such termination, the Secured Party, at the request and at the expense
of the Obligor, will join in executing any termination statement with respect to any financing statement executed and filed pursuant
to this Security Agreement.


 


12.Power
of Attorney; Further Assurances.


 


(a)The Obligor
authorizes the Secured Party, and does hereby make, constitute and appoint the Secured Party, and the Secured Party’s officers,
agents, successors or assigns with full power of substitution, as the Obligor’s true and lawful attorney-in-fact, with power,
in its own name or in the name of the Obligor, to, after the occurrence and during the continuance of an Event of Default, (i)
endorse any debentures, checks, drafts, money orders, or other instruments of payment (including payments payable under or in respect
of any policy of insurance) in respect of the Collateral that may come into possession of the Secured Party; (ii) to sign and endorse
any UCC financing statement or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii)
to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against
the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; and
(v) generally, to do, at the option of the Secured Party, and at the Obligor’s expense, at any time, or from time to time,
all acts and things which the Secured Party deems necessary to protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this Security Agreement and the Letter Agreement, all as fully and effectually
as the Obligor might or could do; and the Obligor hereby ratifies all that said attorney shall lawfully do or cause to be done
by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Security Agreement
and thereafter as long as any of the Obligations shall be outstanding.


 


(b)On a continuing
basis, the Obligor will make, execute, acknowledge, deliver, file and record, as the case may be, in the proper filing and recording
places in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C, attached hereto,
all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by
the Secured Party, to perfect the Security Interest granted hereunder and otherwise to carry out the intent and purposes of this
Security Agreement, or for assuring and confirming to the Secured Party the grant or perfection of a security interest in all the
Collateral.


 






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(c)The Obligor
hereby irrevocably appoints the Secured Party as the Obligor’s attorney-in-fact, with full authority in the place and stead
of the Obligor and in the name of the Obligor, from time to time at the discretion of the Secured Party, to take any action and
to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Security Agreement,
including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative
to any of the Collateral without the signature of the Obligor where permitted by law.


 


13.Notices.
All notices, requests, demands and other communications hereunder shall be in writing, with copies to all the other parties hereto,
and shall be deemed to have been duly given when (i) if delivered by hand, upon receipt, (ii) if sent by facsimile, upon receipt
of proof of sending thereof, (iii) if sent by nationally recognized overnight delivery service (receipt requested), the next business
day or (iv) if mailed by first-class registered or certified mail, return receipt requested, postage prepaid, four days after posting
in the U.S. mails, in each case if delivered to the following addresses:


 


If to the Obligor: to the address first
set forth in the Preambles to this Security Agreement.


 


With copies to: 


 


 


 


 


If to the Secured Party:
to the address first set forth above.


 


With copies to:


 


 


 


 


14.Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity, then the Secured Party shall have the right, in
its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way
modifying or affecting any of the Secured Party’s rights and remedies hereunder.


 






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15.Miscellaneous.


 


(a)No course
of dealing between the Obligor and the Secured Party, nor any failure to exercise, nor any delay in exercising, on the part of
the Secured Party, any right, power or privilege hereunder or under the Letter Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.


 


(b)All of
the rights and remedies of the Secured Party with respect to the Collateral, whether established hereby or by the Letter Agreement
or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.


 


(c)This Security
Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and is intended to supersede
all prior negotiations, understandings and agreements with respect thereto. Except as specifically set forth in this Security Agreement,
no provision of this Security Agreement may be modified or amended except by a written agreement specifically referring to this
Security Agreement and signed by the parties hereto.


 


(d)In the
event that any provision of this Security Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction for
any reason, unless such provision is narrowed by judicial construction, this Security Agreement shall, as to such jurisdiction,
be construed as if such invalid, prohibited or unenforceable provision had been more narrowly drawn so as not to be invalid, prohibited
or unenforceable. If, notwithstanding the foregoing, any provision of this Security Agreement is held to be invalid, prohibited
or unenforceable in any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability without invalidating the remaining portion of such provision or the other provisions of this Security
Agreement and without affecting the validity or enforceability of such provision or the other provisions of this Security Agreement
in any other jurisdiction.


 


(e)No waiver
of any breach or default or any right under this Security Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of any subsequent breach or default or right, whether of
the same or similar nature or otherwise.


 


(f)This Security
Agreement shall be binding upon and inure to the benefit of each party hereto and its successors and assigns.


 


(g)Each party
shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry
out the provisions and purposes of this Security Agreement.


 






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(h)This Security
Agreement shall be construed in accordance with the laws of the State of California, except to the extent the validity, perfection
or enforcement of a security interest hereunder in respect of any particular Collateral which are governed by a jurisdiction other
than the State of California in which case such law shall govern. Each of the parties hereto irrevocably submit to the exclusive
jurisdiction of any California State or United States federal court sitting in Los Angeles county over any action or proceeding
arising out of or relating to this Security Agreement, and the parties hereto hereby irrevocably agree that all claims in respect
of such action or proceeding may be heard and determined in such California State or Federal court. The parties hereto agree that
a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. The parties hereto further waive any objection to venue in the State of California
and any objection to an action or proceeding in the State of California on the basis of forum non conveniens.


 


(i)EACH PARTY
HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS SECURITY AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATER OF THIS SECURITY AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT
FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS SECURITY
AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVED
ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN
TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS SECURITY AGREEMENT. IN THE EVENT OF A LITIGATION, THIS SECURITY AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


 


(j)This Security
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same Security Agreement. In the event that any signature is delivered
by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.


 


 


 


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IN WITNESS WHEREOF, the parties hereto
have caused this Security Agreement to be duly executed on the day and year first above written.


 


 


	 	OBLIGOR:
	 	 	 
	 	 	TARGETED MEDICAL PHARMA, INC.
	 	 	 
	 	 	 
	 	 	By: 	/s/ William E. Shel
	 	 	Name:
Title:	William E. Shell, MD
Chief Executive Officer
	 	 	 	 
	 	 	 	 
	 	SECURED PARTY:
	 	 	 	 
	 	 	AFH HOLDING AND ADVISORY, LLC
	 	 	 	 
	 	 	 	 
	 	 	By:	/s/ Amir F. Heshmatpour
	 	 	Name:	Amir F. Heshmatpour
	 	 	Title:	Managing Director



 



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