Exhibit 10.26


 


AMENDED AND RESTATED SECURITY
AGREEMENT


 


This AMENDED AND RESTATED
SECURITY AGREEMENT (this “Agreement”), dated as of April 1, 2016, is made by and among Atomera Incorporated,
a Delaware corporation (the “Grantor”), Robert Clifford, as the Collateral Agent, and the secured parties listed
on Schedule A annexed hereto (collectively, the “Secured Parties” and each, individually, a “Secured
Party”).


 


RECITALS


 


WHEREAS, pursuant
to that certain securities purchase agreement, dated March 17, 2015 (as amended, restated, supplemented, or otherwise modified
from time to time, including all schedules and exhibits thereto, collectively the “2015 Purchase Agreement”),
by and among the Grantor (f/k/a Mears Technologies, Inc.) and the investors listed on the Schedule of Buyers attached thereto (the
“Existing Noteholders”), the Grantor has sold, and each of the Existing Noteholders have purchased, severally
and not jointly, certain senior secured convertible notes in the aggregate original principal amount of up to $14,750,000 (the
“2015 Offering Notes”); and


 


WHEREAS, in respect
of the 2015 Offering Notes, the Grantor has, pursuant to this security agreement, originally dated March 17, 2015 (the “2015
Security Agreement”), by and among Grantor and the Existing Noteholders, granted a continuing security interest in and
to the Collateral (as defined in the 2015 Security Agreement) in order to secure the prompt and complete payment, observance and
performance of the Secured Obligations (as defined in the 2015 Security Agreement); and


 


WHEREAS, pursuant
to that certain securities purchase agreement, dated even date herewith (as may be amended, restated, supplemented, or otherwise
modified from time to time, including all schedules and exhibits thereto, collectively, the “2016 Purchase Agreement”),
by and among the Grantor and the investors listed on the Schedule of Buyers attached thereto (the “New Noteholders”),
the Grantor has agreed to sell, and each of the New Noteholders have agreed to purchase, severally and not jointly, certain senior
secured convertible notes in the aggregate original principal amount of up to $6,000,000 (the “2016 Offering Notes”);
and


 


WHEREAS, in order
to induce the New Noteholders to purchase, severally and not jointly, the 2016 Offering Notes as provided for in the 2016 Purchase
Agreement, the Grantor has agreed to grant a continuing security interest in and to the Collateral (as defined below) in order
to secure the prompt and complete payment, observance and performance of the Secured Obligations (as defined below); and


 


WHEREAS, a majority
of the Existing Noteholders have consented to allow the 2016 Offering Notes to be, in all respects, pari passu with the
2015 Offering Notes in respect of this Agreement, and the Collateral Agent now wishes to amend and restate the 2015 Security Agreement
to allow each New Noteholder to become a party hereto. Accordingly, for purposes of this Agreement, the term “Secured Parties”
shall mean both the Existing Noteholders and the New Noteholders.


 




    	 		 



     


    

 


AGREEMENTS


 


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:


 


1.           Defined
Terms. All capitalized terms used herein (including in the preamble and recitals hereof) without definition shall have the
meanings ascribed thereto in the Notes. Any terms used in this Agreement that are defined in the Code shall be construed and defined
as set forth in the Code unless otherwise defined herein or in the Notes; provided, however, if the Code is used to define any
term used herein and if such term is defined differently in different Articles of the Code, the definition of such term contained
in Article 9 of the Code shall govern. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement,
the following terms shall have the following meanings:


 


(a)          “Account”
means an account (as that term is defined in the Code).


 


(b)          “Account
Debtor” means an account debtor (as that term is defined in the Code).


 


(c)          “Bankruptcy
Code” means title 11 of the United States Code, as in effect from time to time.


 


(d)          “Books”
means books and records (including, without limitation, the Grantor’s Records) indicating, summarizing, or evidencing the
Grantor’s assets (including the Collateral) or liabilities, the Grantor’s Records relating to its business operations
(including, without limitation, stock ledgers) or financial condition, and the Grantor’s goods or General Intangibles related
to such information.


 


(e)          “Chattel
Paper” means chattel paper (as that term is defined in the Code) and includes tangible chattel paper and electronic chattel
paper.


 


(f)          “Code”
means the New York Uniform Commercial Code, as in effect from time to time; provided, however, in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to any Secured Party’s
Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State
of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.


 


(g)          “Collateral”
has the meaning specified therefor in Section 2.


 


(h)          “Commercial
Tort Claims” means commercial tort claims (as that term is defined in the Code), and includes those commercial tort claims
listed on Schedule 1 attached hereto.


 




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(i)          “Control
Agreement” means a control agreement, in form and substance reasonably satisfactory to the Collateral Agent, executed
and delivered by Grantor, the Collateral Agent (on behalf of all Secured Parties), and the applicable securities intermediary (with
respect to a Securities Account) or bank (with respect to a Deposit Account), as may be amended, restated, supplemented, or otherwise
modified from time to time.


 


(j)          “Copyrights”
means all copyrights and copyright registrations, and also includes (i) all reissues, continuations, extensions or renewals thereof,
(ii) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions
thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of Grantor’s
business symbolized by the foregoing or connected therewith, and (v) all of Grantor’s rights corresponding thereto throughout
the world.


 


(k)          “Deposit
Account” means a deposit account (as that term is defined in the Code).


 


(l)          “Equipment”
means all equipment (as that term is defined in the Code) in all of its forms of the Grantor, wherever located, and including,
without limitation, all machinery, apparatus, installation facilities and other tangible personal property, and all parts thereof
and all accessions, additions, attachments, improvements, substitutions, replacements and proceeds thereto and therefor.


 


(m)          “Event
of Default” has the meaning specified therefor in the Notes.


 


(n)          “Foreign
Subsidiary” means any Person in which the Company, directly or indirectly, owns the majority of the outstanding Stock
and that is a “controlled foreign corporation” under Section 957 of the Internal Revenue Code of 1986.


 


(o)          “GAAP”
means United States generally accepted accounting principles, consistently applied.


 


(p)          “General
Intangibles” means general intangibles (as that term is defined in the Code) and, in any event, includes payment intangibles,
contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill,
programming materials, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment
under any royalty or licensing agreements (including Intellectual Property Licenses), infringement claims, commercial computer
programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension plan refunds, pension
plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, interests in a partnership or limited liability
company which do not constitute a security under Article 8 of the Code, and any other personal property other than Commercial Tort
Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and oil, gas,
or other minerals before extraction.


 




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(q)          “Governmental
Authority” means any domestic or foreign federal, state, local, or other governmental or administrative body, instrumentality,
board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.


 


(r)          “Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under
any other state or federal bankruptcy or insolvency law or any equivalent laws in any other jurisdiction, assignments for the benefit
of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.


 


(s)          “Intellectual
Property” means Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks, trade secrets and customer
lists, and Intellectual Property Licenses.


 


(t)          “Intellectual
Property Licenses” means rights under or interests in any patent, trademark, copyright or other intellectual property,
including software license agreements with any other party, whether the Grantor is a licensee or licensor under any such license
agreement, as may be amended, restated, supplemented, or otherwise modified from time to time.


 


(u)          “Inventory”
means all inventory (as that term is defined in the Code) in all of its forms of the Grantor, wherever located, including, without
limitation, (i) all goods in which the Grantor has an interest in mass or a joint or other interest or right of any kind (including
goods in which the Grantor has an interest or right as consignee), and (ii) all goods which are returned to or repossessed by the
Grantor, and all accessions thereto, products thereof and documents therefor.


 


(v)         “Investment
Related Property” means (i) investment property (as that term is defined in the Code), and (ii) all of the following
(regardless of whether classified as investment property under the Code): all Pledged Interests, Pledged Operating Agreements,
and Pledged Partnership Agreements.


 


(w)          “Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or
charge on property of any kind.


 


(x)          “Negotiable
Collateral” means letters of credit, letter-of-credit rights, instruments, promissory notes, drafts, and documents.


 


(y)          “New
Subsidiary” has the meaning specified therefor in the Notes.


 


(z)          “Notes”
means collectively the 2015 Offering Notes and the 2016 Offering Notes.


 




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(aa)         “Patents”
means all patents and patent applications, and also includes (i) all renewals thereof, (ii) all income, royalties, damages and
payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for
past, present and future infringements and dilutions thereof, and (iv) all of Grantor’s rights corresponding thereto throughout
the world.


 


(bb)       
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising
in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent or that is
being contested in good faith for which adequate reserves have been established in accordance with GAAP, (iii) any Lien created
by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary
course of business with respect to a liability that is not yet due or delinquent or that is being contested in good faith by appropriate
proceedings, (iv) Liens on Equipment having a fair market value of not more than $250,000 in the aggregate, but only if the lien
constitutes a purchase money security interest incurred in connection with the purchase of such Equipment, (v) Liens securing the
Company’s obligations under the Transaction Documents, and (vi) Liens granted to the Secured Parties pursuant to the terms
of this Agreement.


 


(cc)         “Permitted
Transfers” means (i) sales of Inventory in the ordinary course of business, (ii) non-exclusive licenses in the ordinary
course of business for the use of Intellectual Property (A) to manufacturers, distributors, OEMs, strategic partners and value
added re-sellers in connection with the manufacture and distribution of Grantor’s products, (B) in connection with the embedding
of Intellectual Property in the products of others, and (C) to end users; provided no such license could result in a legal transfer
of title of the licensed Intellectual Property, or (iii) dispositions of worn-out, obsolete or surplus Equipment at fair market
value in the ordinary course of business. 


 


(dd)        
“Person” has the meaning specified therefor in the Securities Purchase Agreement.


 


(ee)          “Pledged
Companies” means each Person all or a portion of whose Stock is acquired or otherwise owned by the Grantor after the
date hereof.


 


(ff)           “Pledged
Interests” means all of Grantor’s right, title and interest in and to all of the Stock now or hereafter owned by
Grantor, regardless of class or designation, including all substitutions therefor and replacements thereof, all proceeds thereof
and all rights relating thereto, also including any certificates representing the Stock, the right to receive any certificates
representing any of the Stock, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in
respect thereof, and the right to receive dividends, distributions of income, profits, surplus, or other compensation by way of
income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received,
receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any
or all of the foregoing. Pledged Interests categorically excludes any authorized but unissued Stock of the Company which is not
being pledged under this Agreement.


 




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(gg)         “Pledged
Operating Agreements” means all of Grantor’s rights, powers, and remedies under the limited liability company operating
agreements of each of the Pledged Companies that are limited liability companies, as may be amended, restated, supplemented, or
otherwise modified from time to time.


 


(hh)         “Pledged
Partnership Agreements” means all of Grantor’s rights, powers, and remedies under the partnership agreements of
each of the Pledged Companies that are partnerships, as may be amended, restated, supplemented, or otherwise modified from time
to time.


 


(ii)           “Proceeds”
has the meaning specified therefor in Section 2.


 


(jj)           “Real
Property” means any estates or interests in real property now owned or hereafter acquired by Grantor and the improvements
thereto.


 


(kk)         “Records”
means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable
in perceivable form.


 


(ll)           “Registration
Rights Agreement” means that certain amended and restated registration rights agreement, dated as of the date hereof,
by and among the Grantor and the Secured Parties, as may be amended from time to time.


 


(mm)       “Secured
Obligations” mean all of the present and future payment and performance obligations of the Grantor arising under this
Agreement, the Notes and the other Transaction Documents, including, without duplication, reasonable attorneys’ fees and
expenses and any interest, fees, or expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed
or allowable in whole or in part as a claim in any Insolvency Proceeding.


 


(nn)        “Securities
Account” means a securities account (as that term is defined in the Code).


 


(oo)        “Securities
Purchase Agreement” means collectively the 2015 Purchase Agreement and the 2016 Purchase Agreement.


 


(pp)        “Security
Documents” means, collectively, this Agreement, each Control Agreement and each other security agreement, pledge agreement,
assignment, mortgage, security deed, deed of trust, and other agreement or document executed and delivered by the Grantor as security
for any of the Secured Obligations, as may be amended, restated, supplemented, or otherwise modified from time to time.


 


(qq)        “Security
Interest” and “Security Interests” have the meanings specified therefor in Section 2.


 




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(rr)          “Stock”
means all shares, options, warrants, interests (including, without limitation, membership and partnership interests), participations,
or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred
stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the United States Securities and Exchange Commission and any successor thereto under the Securities Exchange Act
of 1934, as in effect from time to time).


 


(ss)         “Supporting
Obligations” means supporting obligations (as such term is defined in the Code).


 


(tt)          “Trademarks”
means all trademarks, trade names, trademark applications, service marks, service mark applications, and also includes (i) all
renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto,
including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements
or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill
of Grantor’s business symbolized by the foregoing or connected therewith, and (v) all of Grantor’s rights corresponding
thereto throughout the world.


 


(uu)        “Transaction
Documents” mean, collectively, the Securities Purchase Agreement, the Notes, the Security Documents, the Registration
Rights Agreement and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection
with the consummation of the transactions contemplated hereby and thereby, as may be amended from time to time.


 


(vv)        “URL”
means “uniform resource locator,” an internet web address.


 


2.             Grant
of Security. The Grantor hereby unconditionally grants, assigns, and pledges to the Collateral Agent a continuing security
interest (each, a “Security Interest” and, collectively, the “Security Interests”) in all
personal property assets of the Grantor whether now owned or hereafter acquired or arising and wherever located (collectively,
the “Collateral”), including, without limitation, the Grantor’s right, title, and interest in and to the
following, whether now owned or hereafter acquired or arising and wherever located:


 


(a)          all
of the Grantor’s Accounts;


 


(b)          all
of the Grantor’s Books;


 


(c)          all
of the Grantor’s Chattel Paper;


 


(d)          all
of the Grantor’s Deposit Accounts;


 


(e)          all
of the Grantor’s Equipment and fixtures;


 


(f)          all
of the Grantor’s General Intangibles;


 




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(g)          all
of the Grantor’s Intellectual Property;


 


(h)          all
of the Grantor’s Inventory;


 


(i)          all
of the Grantor’s Investment Related Property;


 


(j)          all
of the Grantor’s Negotiable Collateral;


 


(k)          all
of the Grantor’s rights in respect of Supporting Obligations;


 


(l)          all
of the Grantor’s Commercial Tort Claims;


 


(m)        all
of the Grantor’s money, cash, cash equivalents, or other assets of the Grantor that now or hereafter come into the possession,
custody, or control of any Secured Party; and


 


all of the proceeds
and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance or Commercial Tort Claims
covering or relating to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment,
General Intangibles, Intellectual Property, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations,
money, or other tangible or intangible property resulting from the sale, lease, license, exchange, collection, or other disposition
of any of the foregoing, the proceeds of any award in condemnation with respect to any of the foregoing, any rebates or refunds,
whether for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds
thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent
not otherwise included, any indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect
to any of the foregoing (the “Proceeds”). Without limiting the generality of the foregoing, the term “Proceeds”
includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes proceeds of any indemnity or guaranty payable to
the Grantor or any Secured Party from time to time with respect to any of the Investment Related Property. Notwithstanding the
foregoing, the Collateral shall not include (i) the Stock of any first-tier Foreign Subsidiary in excess of 65% of the aggregate
outstanding voting Stock of such first-tier Foreign Subsidiary or (ii) any Stock of any Foreign Subsidiary that is not a first-tier
Foreign Subsidiary.


 


3.             Security
for Obligations. This Agreement and the Security Interests created hereby secure the payment and performance of the Secured
Obligations, whether now existing or arising hereafter.


 




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4.             Grantor
Remains Liable. Anything herein to the contrary notwithstanding, (a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral, including the Pledged Operating Agreements and the Pledged Partnership Agreements, to perform
all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by
Secured Parties, or any of them, of any of the rights hereunder shall not release the Grantor from any of its duties or obligations
under such contracts and agreements included in the Collateral, and (c) no Secured Party shall have any obligation or liability
under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall any Secured Party be obligated
to perform any of the obligations or duties of the Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder. Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement
or any other Transaction Document, the Grantor shall have the right to possession and enjoyment of the Collateral for the purpose
of conducting the ordinary course of its businesses, subject to and upon the terms hereof and the other Transaction Documents.
Without limiting the generality of the foregoing, it is the intention of the parties hereto that record and beneficial ownership
of the Pledged Interests, including all voting, consensual, and dividend rights, shall remain in the Grantor until the occurrence
of an Event of Default and until the Collateral Agent (on behalf of all Secured Parties) shall notify the Grantor of its exercise
of voting, consensual, or dividend rights with respect to the Pledged Interests pursuant to Section 15 hereof.


 


5.            Representations
and Warranties. The Grantor hereby represents and warrants as follows:


 


(a)          The
exact legal name of the Grantor is set forth in the preamble this Agreement.


 


(b)          Schedule
2 attached hereto sets forth (i) all Real Property owned or leased by the Grantor, together with all other locations of
Collateral, as of the date hereof, and (ii) the chief executive office of the Grantor as of the date hereof.


 


(c)          This
Agreement creates a valid security interest in all of the Collateral of the Grantor, to the extent a security interest therein
can be created under the Code, securing the payment of the Secured Obligations. Except to the extent a security interest in the
Collateral cannot be perfected by the filing of a financing statement under the Code, all filings and other actions necessary or
reasonably desirable to perfect and protect such security interest have been duly taken or will have been taken upon the filing
of financing statements listing the Grantor, as a debtor, and Secured Parties, as secured parties, in the jurisdictions listed
on Schedule 3 attached hereto. Upon the making of such filings, the Secured Parties shall each have a first priority
perfected security interest in all of the Collateral of the Grantor to the extent such security interest can be perfected by the
filing of a financing statement (subject to Permitted Liens). Subject to Section 6(c), all action by the Grantor necessary to perfect
and reasonably necessary to protect such security interest on each item of Collateral has been duly taken.


 


(d)          Except
for the Security Interests created hereby, no Collateral is subject to any Lien as of the date hereof, except for Permitted Liens.


 




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(e)          No
consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority
or any other Person is required (i) for the grant of a Security Interest by the Grantor in and to the Collateral pursuant to this
Agreement or for the execution, delivery, or performance of this Agreement by the Grantor, or (ii) for the exercise by any Secured
Party of the voting or other rights provided in this Agreement with respect to Investment Related Property pledged hereunder or
the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition
of Investment Related Property by laws affecting the offering and sale of securities generally.


 


(f)          Schedule
4 contains a complete and accurate list of all of the Grantor’s Deposit Accounts and Securities Accounts, including,
without limitation, with respect to each bank or securities intermediary (a) the name and address of such Person and (b) the account
numbers of such accounts maintained with such Person.


 


6.            Covenants.
The Grantor covenants and agrees with each Secured Party that from and after the date of this Agreement and until the date of termination
of this Agreement in accordance with Section 24 hereof:


 


(a)          Possession
of Collateral. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral,
Investment Related Property, or Chattel Paper with a value in excess of $100,000 in the aggregate, and if and to the extent that
perfection or priority of Secured Parties’ respective Security Interests is dependent on or enhanced by possession, the Grantor,
immediately upon the request of the Collateral Agent (on behalf of all Secured Parties), shall execute such other documents and
instruments as shall be reasonably requested by the Collateral Agent or, if applicable, endorse and deliver physical possession
of such Negotiable Collateral, Investment Related Property, or Chattel Paper to the Collateral Agent (on behalf of all Secured
Parties), together with such undated powers endorsed in blank as shall be requested by the Collateral Agent.


 


(b)          Chattel
Paper.


 


(i)          The
Grantor shall take all steps reasonably necessary to grant the Collateral Agent (on behalf of all Secured Parties) control of all
Chattel Paper in accordance with the Code and all “transferable records” as that term is defined in Section 16 of the
Uniform Electronic Purchase Act and Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in
effect in any relevant jurisdiction; and


 


(ii)         If
the Grantor retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent
permitted hereby), promptly upon the request of the Collateral Agent (on behalf of all Secured Parties), such Chattel Paper and
instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are
subject to the Security Interests of [names of Secured Parties].”


 




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(c)          Control
Agreements. The Grantor shall not establish or maintain any Deposit Account or Securities Account (or any other similar account)
other than a payroll account unless (i) the Grantor shall have provided each Secured Party with ten (10) days’ advance written
notice of each such account and (ii) if an Event of Default has occurred and is then continuing, the Collateral Agent on behalf
of the Secured Parties shall have received a Control Agreement in respect of such account concurrently with the opening thereof.
From and after the occurrence and during the continuance of any Event of Default, the Grantor shall ensure that all of its Account
Debtors forward payment of the amounts owed by them directly to a Deposit Account that is subject to a Control Agreement and deposit
or cause to be deposited promptly, and in any event no later than the first (1st) Business Day after the date of receipt
thereof, all of their collections (including those sent directly by their Account Debtors to the Grantor) into a Deposit Account
subject to a Control Agreement. Upon the request of the Collateral Agent (on behalf of all Secured Parties) from and after the
occurrence and during the continuance of any Event of Default, the Grantor shall promptly (but in no event later than ten (10)
Business Days after such request therefor) cause each of its Deposit Accounts and Securities Accounts to be subject to a Control
Agreement in favor of the Collateral Agent on behalf of the Secured Parties.


 


(d)          Letter-of-Credit
Rights. In the event that the Grantor is or becomes the beneficiary of one or more letters of credit with a face amount of
greater than $25,000 individually or $100,000 in the aggregate, the Grantor shall promptly (and in any event within five (5) Business
Days after becoming a beneficiary) notify the Secured Parties thereof and, upon the request by the Collateral Agent (on behalf
of all Secured Parties), use commercially reasonable efforts to enter into an agreement with the Collateral Agent (on behalf of
all Secured Parties) and the issuing or confirming bank with respect to letter-of-credit rights assigning such letter-of-credit
rights to the Collateral Agent (on behalf of all Secured Parties) and directing all payments thereunder to the Collateral Agent
(on behalf of all Secured Parties) during the continuance of an Event of Default following notice from the Collateral Agent, all
in form and substance satisfactory to the Collateral Agent (on behalf of all Secured Parties).


 


(e)          Commercial
Tort Claims. The Grantor shall promptly (and in any event within five (5) Business Days of receipt thereof) notify the Secured
Parties in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof and, upon request of the
Collateral Agent (on behalf of all Secured Parties), promptly amend Schedule 1 to this Agreement to describe such
after-acquired Commercial Tort Claim in a manner that reasonably identifies such Commercial Tort Claim, and hereby authorizes the
filing of additional financing statements or amendments to existing financing statements describing such Commercial Tort Claims,
and agrees to do such other acts or things deemed reasonably necessary or desirable by the Collateral Agent (on behalf of all Secured
Parties) to give the Collateral Agent on behalf of the Secured Parties a first priority, perfected security interest (subject to
Permitted Liens) in any such Commercial Tort Claim.


 




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(f)          Government
Contracts. If any Account or Chattel Paper arises out of a contract or contracts with the United States of America or any department,
agency, or instrumentality thereof, the Grantor shall promptly (and in any event within five (5) Business Days of the creation
thereof) notify the Secured Parties thereof in writing and use commercially reasonable efforts to execute any instruments or take
any steps reasonably required by the Collateral Agent (on behalf of all Secured Parties) in order that all moneys due or to become
due under such contract or contracts shall be assigned to the Collateral Agent (on behalf of all Secured Parties) during the continuance
of an Event of Default following notice from the Collateral Agent, and shall provide written notice thereof and use commercially
reasonable efforts to take all other appropriate actions under the Assignment of Claims Act or other applicable law to provide
the Collateral Agent on behalf of all Secured Parties a first-priority perfected security interest (subject to Permitted Liens)
in such contract.


 


(g)          Investment
Related Property.


 


(i)          If
the Grantor shall receive or become entitled to receive any Pledged Interests after the date hereof, it shall promptly (and in
any event within five (5) Business Days of receipt thereof) identify such Pledged Interests in a written notice to the Secured
Parties;


 


(ii)         Upon
the request of the Collateral Agent during the continuance of an Event of Default, all sums of money and property paid or distributed
in respect of the Investment Related Property pledged hereunder which are received by the Grantor shall be held by the Grantor
in trust for the benefit of the Secured Parties segregated from the Grantor’s other property, and the Grantor shall deliver
it promptly to the Collateral Agent (on behalf of all Secured Parties) in the exact form received;


 


(iii)        The
Grantor shall promptly deliver to the Secured Parties a copy of each material notice or other written communication received by
it in respect of any Pledged Interests;


 


(iv)        The
Grantor shall not make or consent to any material amendment or other modification or waiver with respect to any Pledged Interests,
Pledged Operating Agreement, or Pledged Partnership Agreement or enter into any agreement or permit to exist any restriction with
respect to any Pledged Interests, in each case, that could reasonably be expected to materially adversely affect the Collateral
Agent or the Secured Parties;


 


(v)         The
Grantor agrees that it will cooperate with the Secured Parties in obtaining all necessary approvals and making all necessary filings
under federal and state law, and, upon the request of the Collateral Agent during the continuance of an Event of Default, under
foreign law, in connection with the Security Interests on the Investment Related Property pledged hereunder or any sale or transfer
thereof; and


 




    	 	12	 



     


    

 


 


(vi)        As
to all limited liability company or partnership interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement,
the Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to such agreement (A) shall not
be dealt in or traded on securities exchanges or in securities markets, (B) will not constitute investment company securities,
and (C) will not be held by the Grantor in a securities account. In addition, none of the Pledged Operating Agreements, the
Pledged Partnership Agreements, or any other agreements governing any of the Pledged Interests issued under any Pledged Operating
Agreement or Pledged Partnership Agreement, shall provide that such Pledged Interests are securities governed by Article 8 of the
Uniform Commercial Code as in effect in any relevant jurisdiction.


 


(h)           Transfers
and Other Liens. The Grantor shall not (i) sell, lease, license, assign (by operation of law or otherwise), transfer or otherwise
dispose of, or grant any option with respect to, any of the Collateral, except for Permitted Transfers or as expressly permitted
by this Agreement and the other Transaction Documents, or (ii) except for Permitted Liens, create or permit to exist any Lien upon
or with respect to any of the Collateral without the consent of the Collateral Agent. The inclusion of Proceeds in the Collateral
shall not be deemed to constitute consent by any Secured Party to any sale or other disposition of any of the Collateral except
as expressly permitted in this Agreement or the other Transaction Documents. Notwithstanding anything contained in this Agreement
to the contrary, Permitted Liens (other than Permitted Liens granted to the Secured Parties) shall not be permitted with respect
to any Pledged Interests.


 


(i)            Preservation
of Existence.  The Grantor shall maintain and preserve its existence, rights and privileges, and become or remain
duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which
the transaction of its business makes such qualification necessary, except where failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect (as defined in the Securities Purchase Agreement).


 


(j)            Maintenance
of Properties. The Grantor shall maintain and preserve all of its properties which are reasonably necessary in the proper
conduct of its business in good working order and condition, ordinary wear and tear excepted.


 


(k)           Maintenance
of Insurance. The Grantor shall maintain insurance with responsible and reputable insurance companies or associations
(including, without limitation, comprehensive general liability, property, hazard, rent and business interruption insurance) with
respect to all of its assets and properties (including, without limitation, all real properties leased or owned by it and any and
all Inventory and Equipment) and business, in such amounts and covering such risks as is required by any governmental authority
having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in
similar businesses similarly situated, in each case, reasonably acceptable to the Collateral Agent (on behalf of all Secured Parties).


 




    	 	13	 



     


    

 


 


(l)            Other
Actions as to Any and All Collateral. The Grantor shall promptly (and in any event within five (5) Business Days of acquiring
or obtaining such Collateral) notify the Secured Parties in writing upon (i) acquiring or otherwise obtaining any Collateral after
the date hereof consisting of Investment Related Property, Chattel Paper (electronic, tangible or otherwise), documents (as defined
in Article 9 of the Code), promissory notes (as defined in the Code) or instruments (as defined in the Code) collectively having
an aggregate value in excess of $100,000 or (ii) any amount payable under or in connection with any of the Collateral being or
becoming evidenced after the date hereof by any Chattel Paper, documents, promissory notes, or instruments and, in each such case
upon the request of the Collateral Agent (on behalf of all Secured Parties), promptly execute such other documents, or if applicable,
deliver such Chattel Paper, other documents or certificates evidencing any Investment Related Property and do such other acts or
things deemed reasonably necessary or desirable by the Collateral Agent (on behalf of all Secured Parties) to protect the Secured
Parties’ respective Security Interests therein.


 


7.             Relation
to Other Transaction Documents. In the event of any conflict between any provision in this Agreement and any provision in the
Securities Purchase Agreement or the Notes, such provision of the Securities Purchase Agreement or the Notes shall control, except
to the extent the applicable provision in this Agreement is more restrictive with respect to the rights of the Grantor or imposes
more burdensome or additional obligations on the Grantor, in which event the applicable provision in this Agreement shall control.


 


8.            Further
Assurances.


 


(a)           The
Grantor agrees that from time to time, at its own expense, it will promptly execute and deliver all further instruments and documents,
and take all further action, that may be reasonably necessary or that the Collateral Agent (on behalf of all Secured Parties) may
reasonably request, in order to perfect and protect the Security Interests granted or purported to be granted hereby or to enable
the Secured Parties to exercise and enforce their rights and remedies hereunder with respect to any of the Collateral.


 


(b)           The
Grantor authorizes the filing by the Collateral Agent (on behalf of all Secured Parties) of financing or continuation statements,
or amendments thereto, including, but not limited to, the recordation of the security interests granted hereunder in Patents, Trademarks
and Copyrights in the United States Patent and Trademark Office and the United States Copyright Office, and Grantor will execute
and deliver to the Collateral Agent such other instruments or notices, as may be reasonably necessary or as the Collateral Agent
may reasonably request, in order to perfect and preserve the Security Interests granted or purported to be granted hereby. Upon
the Satisfaction in Full of the Secured Obligations, the Collateral Agent shall (at Grantor’ expense) file a termination
statement and/or other necessary documents terminating and releasing any and all financing statements or Liens on the Collateral
pursuant to Section 24 within five (5) Business Days following a written request therefor from Grantor.


 


(c)           The
Grantor authorizes the Collateral Agent (on behalf of all Secured Parties) at any time and from time to time to file, transmit,
or communicate, as applicable, financing statements and amendments (i) describing the Collateral as “all assets of debtor”
or words of similar effect, (ii) describing the Collateral as being of equal or lesser scope or with greater detail, or (iii) that
contain any information required by part 5 of Article 9 of the Code for the sufficiency or filing office acceptance. The Grantor
also hereby ratifies any and all financing statements or amendments previously filed by the Collateral Agent in any jurisdiction.


 




    	 	14	 



     


    

 


(d)          Subject
to Section 8(b), the Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination
statement with respect to any financing statement filed in connection with this Agreement without the prior written consent of
the Collateral Agent (on behalf of all Secured Parties), subject to the Grantor’s rights under Section 9-509(d)(2) of the
Code.


 


(e)          Upon
five (5) Business Day’s advance notice, the Grantor shall permit each Secured Party (at such Secured Party’s expense)
or its employees, accountants, attorneys or agents, access to examine and inspect any Collateral or any other property of the Grantor
at any time during ordinary business hours, but no more than once per calendar year unless an Event of Default has occurred and
is continuing.


 


9.             Collateral
Agent’s Right to Perform Contracts, Exercise Rights, etc. Upon the occurrence and during the continuance of an Event
of Default, the Collateral Agent (on behalf of all Secured Parties) (a) may proceed to perform any and all of the obligations of
the Grantor contained in any contract, lease, or other agreement and exercise any and all rights of the Grantor therein contained
as fully as the Grantor itself could, (b) shall have the right to use the Grantor’s rights under Intellectual Property Licenses
in connection with the enforcement of the Secured Parties’ rights hereunder, including the right to prepare for sale and
sell any and all Inventory and Equipment now or hereafter owned by the Grantor and now or hereafter covered by such licenses, and
(c) shall have the right to request that any Stock that is pledged hereunder be registered in the name of the Secured Parties or
any of their nominees.


 


10.           Collateral
Agent Appointed Attorney-in-Fact. The Grantor, on behalf of itself and each New Subsidiary of the Grantor, hereby irrevocably
appoints the Collateral Agent (on behalf of all Secured Parties) as the attorney-in-fact of the Grantor and each such New Subsidiary
upon the occurrence and during the continuance of an Event of Default. In the event the Grantor or any New Subsidiary fails to
execute or deliver in a timely manner any Transaction Document or other agreement, document, certificate or instrument which the
Grantor or New Subsidiary now or at any time hereafter is required to execute or deliver pursuant to the terms of the Securities
Purchase Agreement or any other Transaction Document, upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent (on behalf of all Secured Parties) shall have full authority in the place and stead of the Grantor or New Subsidiary,
and in the name of the Grantor, such New Subsidiary or otherwise, to execute and deliver each of the foregoing. Without limitation
of the foregoing, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent (on behalf of all
Secured Parties) shall have full authority in the place and stead of the Grantor and each New Subsidiary, and in the name of any
the Grantor, any such New Subsidiary or otherwise, to take any action and to execute any instrument which the Collateral Agent
(on behalf of all Secured Parties) may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:


 




    	 	15	 



     


    

 


 


(a)          to
ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due
under or in connection with any Collateral of the Grantor or New Subsidiary;


 


(b)          to
receive and open all mail addressed to the Grantor or New Subsidiary and to notify postal authorities to change the address for
the delivery of mail to the Grantor or New Subsidiary to that of an address approved by the Collateral Agent (on behalf of all
Secured Parties);


 


(c)          to
receive, indorse, and collect any drafts or other instruments, documents, Negotiable Collateral or Chattel Paper;


 


(d)          to
file any claims or take any action or institute any proceedings which the Collateral Agent (on behalf of all Secured Parties) may
deem reasonably necessary or desirable for the collection of any of the Collateral of the Grantor or New Subsidiary or otherwise
to enforce the rights of the Secured Parties with respect to any of the Collateral; and


 


(e)          to
use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, customer lists, advertising
matter or other industrial or intellectual property rights, in advertising for the exclusive purpose of sale and selling Inventory
and other Collateral and to collect any amounts due under Accounts, contracts or Negotiable Collateral of the Grantor or New Subsidiary.


 


To the extent permitted by
law, the Grantor hereby ratifies, for itself and each New Subsidiary, all that such attorney-in-fact shall lawfully do or cause
to be done by virtue hereof. Such power-of-attorney granted pursuant to this Section 10 is coupled with an interest and shall be
irrevocable until this Agreement is terminated.


 


11.           Collateral
Agent May Perform. If the Grantor fails to perform any agreement contained herein, upon the occurrence and during the continuance
of an Event of Default, the Collateral Agent (on behalf of all Secured Parties) may perform, or cause performance of, such agreement,
and the reasonable expenses of the Collateral Agent incurred in connection therewith shall be payable by the Grantor.


 


12.           Collateral
Agent’s Duties; Bailee for Perfection. The powers conferred on the Collateral Agent hereunder are solely to protect the
Secured Parties’ respective interests in the Collateral and shall not impose any duty upon the Collateral Agent in favor
of the Grantor or any other Secured Party to exercise any such powers. Except for the safe custody of any Collateral in its actual
possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall not have any duty to the
Grantor or any other Secured Party as to any Collateral or as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have exercised reasonable care
in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially
equal to that which is accorded to its own property. The Collateral Agent agrees that, with respect to any Collateral at any time
or times in its possession and in which any other Secured Party has a Lien, the Collateral Agent 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 Collateral, provided that the Collateral Agent shall not be obligated to obtain or retain possession of any such Collateral.


 




    	 	16	 



     


    

 


 


13.           Collection
of Accounts, General Intangibles and Negotiable Collateral. At any time upon the occurrence and during the continuation of
an Event of Default, the Collateral Agent (on behalf of all Secured Parties) may (a) notify Account Debtors of the Grantor that
the Accounts, General Intangibles, Chattel Paper or Negotiable Collateral have been assigned to the Collateral Agent (on behalf
of all Secured Parties) or that the Collateral Agent (on behalf of all Secured Parties) has a security interest therein, and (b)
collect the Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and expenses shall constitute
part of the Secured Obligations.


 


14.           Disposition
of Pledged Interests by Secured Parties. None of the Pledged Interests hereafter acquired on the date of acquisition thereof
will be registered or qualified under the various federal, state or other securities laws of the United States or any other jurisdiction,
and disposition thereof after an Event of Default may be restricted to one or more private (instead of public) sales in view of
the lack of such registration. The Grantor understands that in connection with such disposition, the Collateral Agent (on behalf
of all Secured Parties) may approach only a restricted number of potential purchasers and further understands that a sale under
such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were registered and qualified
pursuant to federal, state and other securities laws and sold on the open market. The Grantor, therefore, agrees that: (a) if the
Collateral Agent (on behalf of all Secured Parties) shall, pursuant to the terms of this Agreement, sell or cause the Pledged Interests
or any portion thereof to be sold at a private sale, the Collateral Agent (on behalf of all Secured Parties) shall have the right
to rely upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall not be obligated to seek
such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to
the best manner in which to offer the Pledged Interest or any portion thereof for sale and as to the best price reasonably obtainable
at the private sale thereof; and (b) such reliance shall be conclusive evidence that the Collateral Agent has handled the disposition
in a commercially reasonable manner.


 


15.          Voting
Rights.


 


(a)          Upon
the occurrence and during the continuation of an Event of Default, (i) the Collateral Agent (on behalf of all Secured Parties)
may, at its option, and with two (2) Business Days prior notice to the Grantor, and in addition to all rights and remedies available
to the Secured Parties under any other agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership
or consensual rights in respect of the Pledged Interests, but under no circumstances is the Collateral Agent obligated by the terms
of this Agreement to exercise such rights, and (ii) if the Collateral Agent (on behalf of all Secured Parties) duly exercises its
right to vote any of such Pledged Interests, the Grantor hereby appoints the Collateral Agent (on behalf of all Secured Parties)
as the Grantor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner that
the Collateral Agent (on behalf of all Secured Parties) deem advisable for or against all matters submitted or which may be submitted
to a vote of shareholders, partners or members, as the case may be. Such power-of-attorney granted pursuant to this Section 15
is coupled with an interest and shall be irrevocable until this Agreement is terminated.


 




    	 	17	 



     


    

 


 


(b)          For
so long as the Grantor shall have the right to vote the Pledged Interests, it covenants and agrees that it will not, without the
prior written consent of the Collateral Agent (on behalf of all Secured Parties), vote or take any consensual action with respect
to such Pledged Interests which would materially or adversely affect the rights of the Secured Parties exercising the voting rights
owned by the Grantor or the value of the Pledged Interests.


 


16.         Remedies.
Upon the occurrence and during the continuance of an Event of Default:


 


(a)          The
Collateral Agent (on behalf of all Secured Parties) may exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein, in the other Transaction Documents, or otherwise available to it, all the rights and remedies of
a secured party on default under the Code or any other applicable law. Without limiting the generality of the foregoing, the Grantor
expressly agrees that, in any such event, the Collateral Agent (on behalf of all Secured Parties) without any demand, advertisement,
or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon the Grantor or any
other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted
by the Code or by any other applicable law), may take immediate possession of all or any portion of the Collateral and (i) require
the Grantor to, and the Grantor hereby agrees that it will at its own expense and upon request of the Collateral Agent (on behalf
of all Secured Parties) promptly, assemble all or part of the Collateral as directed by the Collateral Agent (on behalf of all
Secured Parties) and make it available to the Collateral Agent (on behalf of all Secured Parties) at one or more locations where
the Grantor regularly maintains Inventory, and (ii) without notice except as specified below, sell the Collateral or any part thereof
in one or more parcels at public or private sale, at the Collateral Agent’s offices or elsewhere, for cash, on credit, and
upon such other terms as the Collateral Agent (on behalf of all Secured Parties) may deem commercially reasonable. The Grantor
agrees that, to the extent notice of sale shall be required by law, at least 10 Business Days’ notice 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 and specifically
such notice shall constitute a reasonable “authenticated notification of disposition” within the meaning of Section
9-611 of the Code. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent (on behalf of all Secured Parties) may adjourn any public or private sale 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.


 




    	 	18	 



     


    

 


 


(b)          The
Collateral Agent (on behalf of all Secured Parties) is hereby granted a non-exclusive license or other right to use, without liability
for royalties or any other charge, the Grantor’s labels, Patents, Copyrights, rights of use of any name, trade secrets, trade
names, Trademarks, service marks and advertising matter, URLs, domain names, industrial designs, other industrial or intellectual
property or any property of a similar nature, whether owned by the Grantor or with respect to which the Grantor has rights under
license, sublicense, or other agreements (but only to the extent (i) such license, sublicense or agreement does not prohibit such
use by the Collateral Agent (on behalf of all Secured Parties), and (ii) the Grantor will not be in default under such license,
sublicense, or other agreement as a result of such use by the Collateral Agent (on behalf of all Secured Parties)), as it pertains
to the Collateral, for the exclusive purpose of preparing for sale, advertising for sale and effectuating the sale of any Collateral,
and the Grantor’s rights under all licenses and all franchise agreements shall inure to the benefit of the Collateral Agent
(on behalf of all Secured Parties).


 


(c)          Any
cash held by the Collateral Agent as Collateral and all proceeds received by the Collateral Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order
set forth in Section 17 hereof. In the event the proceeds of Collateral are insufficient for the Satisfaction in Full of the Secured
Obligations (as defined below), the Grantor shall remain liable for any such deficiency.


 


(d)          The
Grantor hereby acknowledges that the Secured Obligations arose out of a commercial transaction, and agrees that if an Event of
Default shall occur and be continuing the Collateral Agent (on behalf of all Secured Parties) shall have the right to an immediate
writ of possession without notice of a hearing. The Collateral Agent (on behalf of all Secured Parties) shall have the right to
the appointment of a receiver for the properties and assets of the Grantor, and the Grantor hereby consents to such rights and
such appointment and hereby waives any objection it may have thereto or the right to have a bond or other security posted by the
Collateral Agent (on behalf of all Secured Parties).


 


(e)           The
Collateral Agent (on behalf of all Secured Parties) may, in addition to other rights and remedies provided for herein, in the other
Transaction Documents, or otherwise available to it under applicable law and without the requirement of notice to or upon the Grantor
or any other Person (which notice is hereby expressly waived to the maximum extent permitted by the Code or any other applicable
law), (i) with respect to the Grantor’s Deposit Accounts in which any Secured Party’s Liens are perfected by control
under Section 9-104 of the Code, instruct the bank maintaining such Deposit Account for the Grantor to pay the balance of such
Deposit Account to or for the benefit of the Collateral Agent (on behalf of all Secured Parties), and (ii) with respect to
the Grantor’s Securities Accounts in which any Secured Party’s Liens are perfected by control under Section 9-106 of
the Code, instruct the securities intermediary maintaining such Securities Account for the Grantor to (A) transfer any cash in
such Securities Account to or for the benefit of the Collateral Agent (on behalf of all Secured Parties), or (B) liquidate any
financial assets in such Securities Account that are customarily sold on a recognized market and transfer the cash proceeds thereof
to or for the benefit of the Collateral Agent (on behalf of all Secured Parties).


 




    	 	19	 



     


    

 


17.         Priority
of Liens; Application of Proceeds of Collateral. Each Secured Party hereby acknowledges and agrees that, notwithstanding the
time or order of the filing of any financing statement or other registration or document with respect to the Collateral and the
Security Interests, or any provision of this Agreement, any other Security Document, the Code or other applicable law, solely as
amongst the Secured Parties, the separate Security Interests of the Secured Parties shall have the same rank and priority; provided,
that, the foregoing shall not apply to any Security Interest of a Secured Party that is void or voidable as a matter of law. In
furtherance thereof, all proceeds of Collateral received by the Collateral Agent shall be applied as follows:


 


(a)          first,
ratably to pay any expenses due to the Collateral Agent (including, without limitation, the reasonable costs and expenses paid
or incurred to correct any default under or enforce any provision of the Transaction Documents, or after the occurrence and during
the continuance of any Event of Default in gaining possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated);


 


(b)          second,
to pay any indemnities then due to any of the Secured Parties under the Transaction Documents, until paid in full;


 


(c)           third,
ratably to pay any fees or premiums then due to any of the Secured Parties under the Transaction Documents, until paid in full;


 


(d)          fourth,
ratably to pay interest due in respect of the Secured Obligations then due to any of the Secured Parties, until paid in full;


 


(e)          fifth,
ratably to pay the principal amount of all Secured Obligations then due to any of the Secured Parties, until paid in full;


 


(f)           sixth,
ratably to pay any other Secured Obligations then due to any of the Secured Parties; and


 


(g)          seventh,
to Grantor or such other Person entitled thereto under applicable law.


 


18.         Remedies
Cumulative. Each right, power, and remedy of any Secured Party as provided for in this Agreement or in any other Transaction
Document or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall
be in addition to every other right, power, or remedy provided for in this Agreement or in the other Transaction Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by any Secured
Party, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by such Secured
Party of any or all such other rights, powers, or remedies.


 




    	 	20	 



     


    

 


 


19.         Marshaling.
No Secured Party shall be required to marshal any present or future collateral security (including but not limited to the Collateral)
for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising.
To the extent that it lawfully may, the Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral
which might cause delay in or impede the enforcement of any Secured Party’s rights and remedies under this Agreement or under
any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding
or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully
may, the Grantor hereby irrevocably waives the benefits of all such laws.


 


20.         Appointment
of Collateral Agent; Acknowledgment.


 


(a)          The
Secured Parties hereby appoint Robert Clifford to act as the initial collateral agent on behalf of all Secured Parties (the “Collateral
Agent”). Notwithstanding anything in this Agreement to the contrary, one or more Secured Parties (other than the then
Collateral Agent) holding a majority of the then aggregate outstanding principal balance of the Notes (excluding any Notes held
by the then acting Collateral Agent) may remove the then-acting Collateral Agent and appoint any other Secured Party to act as
the Collateral Agent under this Agreement. Upon such appointment such Secured Party shall act as Collateral Agent pursuant to the
terms of this Agreement.


 


(b)          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. No Secured Party assumes any responsibility for any failure or
delay in performance or breach by the Grantor or any other Secured Party of its obligations under this Agreement or any other Transaction
Document. No Secured Party makes to any other Secured Party any express or implied warranty, representation or guarantee with
respect to any Secured Obligations, Collateral, Transaction Document or the Grantor. 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 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 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 Grantor or any Account Debtor. 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 Grantor of any of its duties or agreements under any of the Transaction Documents
or the satisfaction of any conditions precedent contained in any of the Transaction Documents.


 




    	 	21	 



     


    

 


(d)          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 Grantor
and its own decision to enter into the Transaction Documents and to purchase the Notes, and each Secured Party has made such
inquiries concerning the Transaction Documents, the Collateral and the Grantor 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 Grantor, any of the 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 Grantor or any credit or other
information concerning the affairs, financial condition, business or assets of the Grantor (or any of its affiliates) which may
come into possession of such Secured Party.


 


21.          Indemnity
and Expenses.


 


(a)          Without
limiting any obligations of the Grantor under the Securities Purchase Agreement, the Grantor agrees to indemnify all Secured Parties
from and against all claims, lawsuits and liabilities (including reasonable attorneys’ fees) arising out of or resulting
from this Agreement (including enforcement of this Agreement), except claims, losses or liabilities resulting from the gross negligence
or willful misconduct of the Secured Party seeking indemnification as determined by a final non-appealable order of a court of
competent jurisdiction. This provision shall survive the termination of this Agreement and the Transaction Documents and the Satisfaction
in Full of the Secured Obligations.


 




    	 	22	 



     


    

 


(b)          The
Grantor shall, upon demand, pay to the Collateral Agent all of the reasonable costs and expenses which the Collateral Agent may
incur in connection with the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection
from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Transaction Documents. The
Grantor shall, upon demand, pay to each Secured Party all of the reasonable costs and expenses which such Secured Party may incur
in connection with (i) the exercise or enforcement of any of the rights of such Secured Party hereunder or (ii) the failure by
the Grantor to perform or observe any of the provisions hereof.


 


22.           Merger,
Amendments; Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES SOLELY WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No provision of this Agreement
may be amended other than by an instrument in writing signed by the Grantor and the Collateral Agent, and any amendment to any
provision of this Agreement made in conformity with the provisions of this Section 22 shall be binding on all Secured Parties,
provided that no such amendment shall be effective to the extent that it (a) applies to less than all of the Secured Parties or
(b) imposes any obligation or liability on any Secured Party without such Secured Party’s prior written consent (which may
be granted or withheld in such Secured Party’s sole discretion). No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party, provided that the Collateral Agent may waive any provision of this
Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 22 shall be
binding on all Secured Parties, provided that no such waiver shall be effective to the extent that it (i) applies to less than
all the Secured Parties (unless a party gives a waiver as to itself only) or (ii) imposes any obligation or liability on any Secured
Party without such Secured Party’s prior written consent (which may be granted or withheld in such Secured Party’s
sole discretion).


 


23.           Addresses
for Notices. All notices and other communications provided for hereunder (a) shall be given in the form and manner set forth
in the Securities Purchase Agreement and (b) shall be delivered, (i) in the case of notice to the Grantor, by delivery of such
notice to the Grantor’s address specified in the Securities Purchase Agreement or at such other address as shall be designated
by the Grantor in a written notice to each of the Secured Parties in accordance with the provisions thereof, and (ii) in the case
of notice to any Secured Party, by delivery of such notice to such Secured Party at its address specified in the Securities Purchase
Agreement or at such other address as shall be designated by such Secured Party in a written notice to the Grantor and each other
Secured Party in accordance with the provisions thereof.


 




    	 	23	 



     


    

 


24.           Separate,
Continuing Security Interests; Assignments under Transaction Documents. This Agreement shall create a continuing security interest
in the Collateral in favor of the Collateral Agent on behalf of each Secured Party and shall (a) remain in full force and effect
until Satisfaction in Full of the Secured Obligations, (b) be binding upon the Grantor, and its permitted successors and permitted
assigns, and (c) inure to the benefit of, and be enforceable by, the Secured Parties and their respective successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), any Secured Party may, in accordance with the provisions
of the Transaction Documents, assign or otherwise transfer all or any portion of its rights and obligations under the Transaction
Documents to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted
to such Secured Party herein or otherwise. Upon Satisfaction in Full of the Secured Obligations, the Security Interests granted
hereby shall terminate and all rights to the Collateral shall revert to the Grantor or any other Person entitled thereto. At such
time, the Collateral Agent and each Secured Party will authorize the filing of appropriate termination statements to terminate
such Security Interests. No transfer or renewal, extension, assignment, or termination of this Agreement or any other Transaction
Document, or any other instrument or document executed and delivered by the Grantor to any Secured Party nor any additional loans
made by any Secured Party to the Grantor, nor the taking of further security, nor the retaking or re-delivery of the Collateral
to the Grantor, or any of them, by any Secured Party, nor any other act of the Secured Parties, or any of them, shall release the
Grantor from any obligation, except a release or discharge executed in writing by all Secured Parties. No Secured Party shall by
any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless such waiver is
in writing and signed by such Secured Party and then only to the extent therein set forth. A waiver by any Secured Party of any
right or remedy on any occasion shall not be construed as a bar to the exercise of any such right or remedy which such Secured
Party would otherwise have had on any other occasion.


 


25.           Governing
Law; Jurisdiction; Service of Process; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper; provided, however, any suit seeking enforcement against any Collateral or other property may be brought,
at any Secured Party’s option, in the courts of any jurisdiction where such Secured Party elects to bring such action or
where such Collateral or other property may be found. Each party hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 


 




    	 	24	 



     


    

 


26.         Miscellaneous.


 


(a)          This
Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature
page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such signature page were an original thereof. Any party delivering an executed
counterpart of this Agreement by facsimile or other electronic method of transmission also shall deliver an original executed counterpart
of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other Security Document mutatis mutandis.


 


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


 


(c)           Headings
used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.


 


(d)          The
pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction
of sentences shall conform thereto.


 


(e)           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. For clarification purposes, the Recitals are part of this Agreement.


 


(f)            Unless
the context of this Agreement or any other Transaction Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes” and “including” are not limiting,
and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this
Agreement or any other Transaction Document refer to this Agreement or such other Transaction Document, as the case may be, as
a whole and not to any particular provision of this Agreement or such other Transaction Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in
this Agreement or in any other Transaction Document to any agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). “Satisfaction in Full of the Secured Obligations” shall mean the
indefeasible payment in full in cash and discharge, or other satisfaction in accordance with the terms of the Transaction Documents
(including, without limitation, conversion of the Notes into equity of the Company) and discharge, of all Secured Obligations in
full. Any reference herein to any Person shall be construed to include such Person’s permitted successors and permitted assigns.
Any requirement of a writing contained herein or in any other Transaction Document shall be satisfied by the transmission of a
Record and any Record so transmitted shall constitute a representation and warranty as to the accuracy and completeness of the
information contained therein.


 




    	 	25	 



     


    

 


(g)          All
dollar amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”),
and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated
in other currencies shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date
of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S.
Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in The Wall Street Journal on the relevant date
of calculation.


 


(h)          For
the avoidance of doubt, this Agreement hereby amends and restates the 2015 Security Agreement in its entirety.


 


[signature pages follow]


 




    	 	26	 



     


    

 


IN WITNESS WHEREOF, the
undersigned parties hereto have executed this Agreement by and through their duly authorized officers, as of the day and year first
above written.


 


	
        GRANTOR:
	ATOMERA INCORPORATED,
	 	a Delaware corporation
	 	 
	 	By:	/s/ Scott A. Bibaud
	 	 	Scott A. Bibaud,
	 	 	Chief Executive Officer


 


	Collateral Agent:	/s/ Robert Clifford
	 	Robert Clifford


 


[Signature Page to Amended
and Restated Security Agreement]


 




     


     


    

 


SECURED PARTIES:


 


	For Entity Investors:	  For Individual Investors:


 


	
        Print Name:
	 	 	Print Name: 	 
	 	 	 	 	 
	Signature:	 	 	Signature:	 


 


	Name of Signatory: 	 	 	If Joint Investment, 2nd investor should complete:


 


	Title: 	 	 	Print Name: 	 
	 	 	 	 
	 	 	Signature:	 


 


[Signature Page to Amended
and Restated Security Agreement]


 




     


     


    

 


SCHEDULE 1


 


COMMERCIAL TORT CLAIMS


 


None.


 




     


     


    

 





SCHEDULE 2


 


REAL PROPERTY


 


Owned Real Property


 


None.


 


Leased Real Property


 


Facilities located at 20 Walnut Street, Suite
8, Wellesley Hills, MA 02481


 


Facilities located at 750 University Avenue, Suite
280, Los Gatos, CA 95032


 


Chief Executive Office


 


750 University Avenue, Suite
280, Los Gatos, CA 95032


 




     


     


    

 


SCHEDULE 3


 


LIST OF UNIFORM COMMERCIAL
CODE FILING JURISDICTIONS


 


Delaware


 




     


     


    

 


SCHEDULE 4


 


DEPOSIT ACCOUNTS AND SECURITIES
ACCOUNTS


 


Deposit Accounts


 


	
        Bank
	 	Account Name	 	Account Number


 





Securities Accounts


 


None.