Document:

Exhibit 10.4

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT, dated as of July
1, 2015 (this “Agreement”), is among Xenetic Biosciences, Inc., a Nevada corporation (the “Company”),
all of the subsidiaries of the Company (such subsidiaries, the “Guarantors” and together with the Company, the
“Debtors”) and the holder of the Company’s Ten Percent (10%) Senior Secured Collateralized Convertible
Promissory Note due twelve (12) months following its issuance, in the original principal amount of $3,000,000 (the “Note”)
signatory hereto, its endorsees, transferees and assigns (collectively, the “Secured Parties”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant
to the Purchase Agreement (as defined in the Note), the Secured Parties have agreed to extend the loan to the Company evidenced
by the Note;

 

WHEREAS, pursuant
to a certain Subsidiary Guarantee, dated as of the date hereof (the “Guarantee”), the Guarantors have jointly
and severally agreed to guarantee and act as surety for payment of such Note; and

 

WHEREAS, in order
to induce the Secured Parties to extend the loan evidenced by the Note, each Debtor has agreed to execute and deliver to the Secured
Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party and through the Agent
(as defined in Section 18 hereof), a security interest in certain property of such Debtor to secure the prompt payment, performance
and discharge in full of all of the Company’s obligations under the Note and the Guarantors’ obligations under the
Guarantee.

 

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 Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not otherwise defined in
this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial
tort claim”, “deposit account”, “document”, “equipment”, “fixtures”, “general
intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of- credit rights”, “proceeds” and “supporting obligations”) shall have the respective
meanings given such terms in Article 9 of the UCC.

 

(a) “Collateral” means
the collateral in which the Secured Parties are granted a security interest by this Agreement and which shall include the following
personal property of the Debtors, whether presently owned or existing or hereafter acquired or coming into existence, wherever
situated, 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, and all dividends, interest, cash, notes, securities, equity interest
or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange
for, any or all of the Pledged Securities (as defined below) or Pledged Notes (as defined below):

 

 (i) All goods, including, without limitation,

 

(A)all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and general tools, fixtures, test and quality control
devices and other equipment of every kind and nature and wherever situated, together with all documents of title and documents
representing the same, all additions and accessions thereto, replacements therefor, all parts therefor, and all substitutes for
any of the foregoing and all other items used and useful in connection with any Debtor’s businesses and all improvements
thereto; and (B) all inventory;

 

    	 

    	 

    

 

(ii)All contract rights and other general
intangibles, including, without limitation, all partnership interests, membership interests, stock or other securities, rights
under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution and other agreements,
computer software (whether “off-the-shelf”, licensed from any third party or developed by any Debtor), computer software
development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual Property
and income tax refunds;

 

(iii)All accounts, together with all
instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods, equipment, motor
vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to each account,
including any right of stoppage in transit;

 

(iv)All documents, letter-of-credit
rights, instruments and chattel paper;

 

 (v) All commercial tort claims;

 

(vi)All deposit accounts and all cash
(whether or not deposited in such deposit accounts);

 

 (vii) All investment property;

 

 (viii) All supporting obligations; and

 

(ix)All files, records, books of account,
business papers, and computer programs; and

 

(x)the products and proceeds of
all of the foregoing Collateral set forth in clauses (i)-(ix) above, and all accessions to, substitutions and replacements
for, and rents, profits and products of, each of the foregoing, and any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Debtor from time to time with respect to any of the foregoing.

 

Without limiting the generality of the
foregoing, the “Collateral” shall include all investment property and general intangibles respecting ownership
and/or other equity interests in each Guarantor, including, without limitation, the shares of capital stock and the other equity
interests listed on Schedule H hereto (as the same may be modified from time to time pursuant to the terms hereof), and
any other shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of any Debtor obtained
in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each case, all rights,
options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in
respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged Securities or
the Pledged Notes, including, but not limited to, all dividends, interest and cash.

 

Notwithstanding the foregoing, nothing
herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes void by operation
of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such applicable
law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided, however,
that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.

 

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(b)“Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i)
all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation, all registrations, recordings and applications in the
United States Copyright Office, (ii) all letters patent of the United States, any other country or any political subdivision
thereof, all reissues and extensions thereof, and all applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other
source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under
the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any
reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action
for infringement of the foregoing.

 

(c)“Majority
in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal amounts
of Note at the time of such determination) of the Secured Parties.

 

(d)“Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and
such other instruments or documents as the Agent (as that term is defined below) may reasonably request.

 

(e)“Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become
due, or that are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured Parties, including,
without limitation, all obligations under this Agreement, the Note, the Guarantee and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith, 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 increased, 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 any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without limiting the generality of the foregoing, the term “Obligations”
shall include, without limitation:

 

(i)principal of, and interest on the
Note and the loan extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the
Debtors from time to time under or in connection with this Agreement, the Note, the Guarantee and any other instruments, agreements
or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited
to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such
amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving
any Debtor.

 

(f) “Organizational
Documents” means with respect to any Debtor, the documents by which such Debtor was organized (such as a
certificate of incorporation, certificate of limited partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the
internal governance of such Debtor (such as bylaws, a partnership agreement or an operating, limited liability or members
agreement).

 

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(g)“Pledged Interests”
shall have the meaning ascribed to such term in Section 4(j).

 

(h)“Pledged Notes”
means, with respect to each Debtor, all intercompany notes from time to time issued to such Debtor, including the promissory notes
described in Schedule I hereto and issued by the obligors named therein, and all interest, cash, instruments and other property,
assets or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all
of such promissory notes and all certificates, instruments or agreements evidencing such promissory notes, and all assignments,
amendments, restatements, supplements,extensions,renewals, replacements or modifications thereof.

 

(i)“Pledged Securities”
shall have the meaning ascribed to such term in Section 4(i).

 

(j)“UCC” means the
Uniform Commercial Code from time to time in effect in the State of New York and/or any other applicable law of any state or states
which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent
of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral”
will be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that
broaden the definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions,
the existing ones shall be controlling.

 

2. Grant of Security Interest in
Collateral. As an inducement for the Secured Parties to extend the loan as evidenced by the Note and to secure the
complete and timely payment, performance and discharge in full, as the case may be (whether at the stated maturity, by
acceleration or otherwise), of all of the Obligations, each Debtor hereby unconditionally and irrevocably pledges, grants and
hypothecates to the Secured Parties a security interest in and to, a lien upon and a right of set-off against all of their
respective right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security Interest”
and, collectively, the “Security Interests”).

  

3. Delivery of Certain Collateral.
Contemporaneously or prior to the execution of this Agreement, each Debtor shall deliver or cause to be delivered to the Agent
(a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and (b) any and all certificates
and other instruments or documents representing any of the other Collateral (including the Pledged Notes), in each case, together
with all Necessary Endorsements. The Debtors are, contemporaneously with the execution hereof, delivering to Agent, or have previously
delivered to Agent, a true and correct copy of each Organizational Document governing any of the Pledged Securities.

 

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4. Representations,
Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure
schedules delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure
Schedules shall be deemed a part hereof, (i) each Debtor represents and warrants to, and (ii) from and after the date of this Agreement
until all the Obligations shall have been paid and performed in full, each Debtor covenants and agrees with, the Secured Parties
as follows:

 

(a) Each Debtor has the requisite
corporate, partnership, limited liability company or other power and authority to enter into this Agreement and otherwise to
carry out its obligations hereunder. The execution, delivery and performance by each Debtor of this Agreement and the filings
contemplated therein have been duly authorized by all necessary action on the part of such Debtor and no further action is
required by such Debtor. This Agreement has been duly executed by each Debtor. This Agreement constitutes the legal, valid
and binding obligation of each Debtor, enforceable against each Debtor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application
relating to or affecting the rights and remedies of creditors and by general principles of equity.

 

(b)The Debtors have
no place of business or offices where their respective books of account and records are kept (other than temporarily at the offices
of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached
hereto. Except as specifically set forth on Schedule A, each Debtor is the record owner of the real property where such
Collateral is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens (as defined
in the Note). Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee, bailee,
warehouseman, agent or processor.

 

(c)Except for Permitted Liens
(as defined in the Note) and except as set forth on Schedule B attached hereto, the Debtors (i) are the sole owner of
the Collateral (except for non-exclusive licenses granted by any Debtor in the ordinary course of business), (ii) have good
title to the Collateral, free and clear of any liens, security interests, encumbrances, rights or claims, and (iii) are fully
authorized to grant the Security Interests. Except as set forth on Schedule C attached hereto, 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 will be filed in favor of the Secured
Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule C attached
hereto and except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtors shall not execute and
shall not knowingly permit to be on file in any such office or agency any other financing statement or other document or
instrument (except to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this
Agreement).

 

(d)No written claim has been received
that any Collateral or any Debtor's use of any Collateral violates the rights of any third party. There has been no adverse decision
to any Debtor's claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to any Debtor'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 any Debtor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.

 

(e)Each Debtor shall at all times maintain
its books of account and records relating to the Collateral at its principal place of business and its Collateral at the locations
set forth on Schedule A attached hereto and may not relocate such books of account and records or tangible Collateral unless
it delivers to the Secured Parties 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 under the UCC
and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests to
create in favor of the Secured Parties a valid, perfected and continuing perfected first priority lien in the Collateral.

 

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(f)This Agreement creates in favor
of the Secured Parties a valid and enforceable security interest in the Collateral, subject only to Permitted Liens (as defined
in the Note), securing the payment and performance of the Obligations. Upon making the filings and completing the actions described
in the immediately following sentence, all security interests created hereunder in any Collateral shall have been duly perfected.
Except for the filing of the Uniform Commercial Code financing statements in the jurisdictions set forth on Schedule J,
the recordation of the Intellectual Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights
and copyright applications in the United States Copyright Office referred to in paragraph (mm), the execution and delivery of
deposit account control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit
account of the Debtors, and the delivery of the certificates and other instruments provided in Section 3, no action is necessary
to create, perfect or protect the security interests created hereunder. Without limiting the generality of the foregoing, except
for the filing of said financing statements, the recordation of said Intellectual Property Security Agreement, and the execution
and delivery of said deposit account control agreements, no consent of any third parties and no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery
and performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral
or (iii) the enforcement of the rights of the Agent and the Secured Parties hereunder. The Security Interests granted pursuant
to this Agreement are prior to all other liens, security interests and other encumbrances on the Collateral, except for Permitted
Liens (as defined in the Note).

 

(g) Each Debtor hereby authorizes
the Agent at any time and from time to time to file one or more financing statements under the UCC and other filing or
recording documents or instruments (in each case without the signature of such Debtor), with respect to the Security
Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it. Each Debtor hereby
authorizes the Agent to use (at the option of the Agent) the collateral description “all personal property”,
“all assets” or any similar phrase in any such financing statements.

 

(h)The execution,
delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational Documents
of any Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule
or regulation applicable to any Debtor, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing any Debtor's
debt or otherwise) or other understanding to which any Debtor is a party or by which any property or asset of any Debtor is bound
or affected or (iii) result in or require the creation or imposition of any lien, security interest or other encumbrance on any
property or asset of any Debtor pursuant to any applicable law or contractual obligation, other than Permitted Liens (as defined
in the Note). If any, all required consents (including, without limitation, from stockholders or creditors of any Debtor) necessary
for any Debtor to enter into and perform its obligations hereunder have been obtained.

 

(i)The capital stock and other equity
interests (including, for the avoidance of doubt, the Pledged Interests, if any) listed on Schedule H hereto (the “Pledged
Securities”) represent (A) all of the capital stock and other equity interests owned, directly or indirectly, by the
Guarantors, and (B) all capital stock and other equity interests owned, directly or indirectly, by the Company (including all
of the capital stock and other equity interests of the Guarantors owned, directly or indirectly, by the Company). All of the Pledged
Securities are validly issued, fully paid and nonassessable, and each Debtor is the legal and beneficial owner of the Pledged
Securities pledged by it hereunder, free and clear of any lien, security interest or other encumbrance except for the security
interests created by this Agreement and other Permitted Liens (as defined in the Note). The Guarantors party to this Agreement
constitute all of the direct and indirect subsidiaries of the Company and each other Debtor.

 

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(j)The ownership and other equity interests
in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged Interests”)
by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held in a securities
account or by any financial intermediary.

 

(k)Except for Permitted Liens (as defined
in the Note), each Debtor shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected
first priority liens and security interests in the Collateral in favor of the Secured Parties until this Agreement and the Security
Interests hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor hereby agrees to defend the same against the
claims of any and all persons and entities. Each Debtor shall safeguard and protect all Collateral for the account of the Secured
Parties. At the request of the Agent, each Debtor will deliver to the Agent on behalf of the Secured Parties at any time or from
time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the
cost of filing financing statements and other filing or recording documents and instruments in all public offices wherever filing
is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting
the generality of the foregoing, each Debtor shall pay all fees, taxes and other amounts necessary to maintain the Collateral and
the Security Interests hereunder, and each Debtor shall obtain and furnish to the Agent 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 Interests hereunder.

 

(l) No Debtor will transfer, pledge,
hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive licenses granted
by a Debtor in its ordinary course of business and sales of inventory by a Debtor in its ordinary course of business) without
the prior written consent of a Majority in Interest.

 

(m)Each Debtor 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.

 

(n)Each Debtor
shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter
acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation
having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other
such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the
full replacement cost thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide, and the
insurer issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured
under each such insurance policy; (b) if such insurance is proposed to be cancelled or materially changed for any reason whatsoever,
such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the Agent for at least
thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase coverage
under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in the payment
of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in the Note)
exists and if the proceeds arising out of any claim or series of related claims do not exceed $50,000, loss payments in each instance
will be applied by the applicable Debtor to the repair and/or replacement of property with respect to which the loss was incurred
to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall
be payable to the applicable Debtor; provided, however, that payments received by any Debtor after an Event of Default
occurs and is continuing or in excess of $50,000 for any occurrence or series of related occurrences shall be paid to the Agent
on behalf of the Secured Parties and, if received by such Debtor, shall be held in trust for the Secured Parties and immediately
paid over to the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the related certificates,
in each case, naming the Agent as lender loss payee and additional insured shall be delivered to the Agent at least annually and
at the time any new policy of insurance is issued.

 

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(o)Each Debtor shall, within ten (10)
days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any material adverse 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 Parties’ security interest, through the Agent, therein.

 

(p)Each Debtor shall
promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time request
and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest in the
Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement with respect
to each Debtor’s Intellectual Property (“Intellectual Property Security Agreement”) in which the Secured
Parties have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual
Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.

 

(q)Each Debtor shall permit the Agent
and its representatives and agents to inspect the Collateral during normal business hours and upon reasonable prior notice, and
to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time to time.

 

(r)Each Debtor shall 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.

 

(s)Each Debtor shall promptly notify
the Secured Parties 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 such Debtor that may materially affect the value of the Collateral,
the Security Interest or the rights and remedies of the Secured Parties hereunder.

 

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

 

(u)The Debtors shall at all times preserve
and keep in full force and effect their respective valid existence and good standing and any rights and franchises material to
its business.

 

(v)No Debtor will change its name,
type of organization, jurisdiction of organization, organizational identification number (if it has one), legal or corporate structure,
or identity, or add any new fictitious name unless it provides at least 30 days prior written notice to the Secured Parties of
such change and, at the time of such written notification, such Debtor (i) provides any financing statements, fixture filings
or other documents or instruments necessary to perfect and continue the perfection of the Security Interests granted and evidenced
by this Agreement and (ii) ensures that such change will not adversely affect the perfection or priority of the Security Interests
granted and evidenced by this Agreement.

 

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(w)Except in the ordinary course of business,
no Debtor may consign any of its inventory or sell any of its inventory on bill and hold, sale or return, sale on approval, or
other conditional terms of sale without the consent of the Agent which shall not be unreasonably withheld.

 

(x)No Debtor may relocate its chief executive
office to a new location without providing thirty (30) days prior written notification thereof to the Secured Parties and so long
as, at the time of such written notification, such Debtor (i) provides any financing statements, fixture filings or other documents
or instruments necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement
and (ii) ensures that such relocation will not adversely affect the perfection or priority of the Security Interests granted and
evidenced by this Agreement.

 

(y)Each Debtor was
organized and remains organized solely under the laws of the jurisdiction set forth next to such Debtor’s name in Schedule
D attached hereto, which Schedule D sets forth each Debtor’s organizational identification number or, if any Debtor
does not have one, states that one does not exist.

 

(z)(i) The full and correct legal name
of each Debtor is the name set forth in Schedule D attached hereto; (ii) no Debtor has any trade names except as
set forth on Schedule E attached hereto; (iii) no Debtor has used any name other than that stated in the preamble hereto
or as set forth on Schedule E for the preceding five (5) years; and (iv) no entity has merged into any Debtor or been acquired
by any Debtor within the past five years except as set forth on Schedule E.

 

(aa) At any time and from time to time
that any Collateral consists of instruments, certificated securities or other items that require or permit possession by the secured
party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral to the Agent.

 

(bb) Each Debtor,
in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Agent regarding the Pledged Securities
consistent with the terms of this Agreement without the further consent of any Debtor as contemplated by Section 8-106 (or any
successor section) of the UCC. Further, each Debtor agrees that it shall not enter into a similar agreement (or one that would
confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.

 

(cc) Each Debtor shall cause all tangible
chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is not possible, then to cause such tangible
chattel paper to contain a legend noting that it is subject to the security interest created by this Agreement. To the extent that
any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper to be “marked”
within the meaning of Section 9-105 of the UCC (or successor section thereto).

 

(dd) If there is any investment property
or deposit account included as Collateral that can be perfected by “control” through an account control agreement,
the applicable Debtor shall cause such an account control agreement, in form and substance in each case satisfactory to the Agent,
to be entered into and delivered to the Agent for the benefit of the Secured Parties.

 

(ee) To the extent that any Collateral
consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying letter of credit to consent
to an assignment of the proceeds thereof to the Secured Parties.

 

(ff) To the extent that any Collateral
is in the possession of any third party, the applicable Debtor shall join with the Agent in notifying such third party of the
Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement and agreement
from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.

 

    	9

    	 

    

 

(gg) If any Debtor shall at any time hold
or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties in a writing signed by such Debtor of
the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent. As of the date of
this Agreement, no Debtor holds a commercial tort claim.

 

(hh) Each Debtor shall immediately provide
written notice to the Secured Parties of any and all accounts which arise out of contracts with any governmental authority and,
to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof,
shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate with the Agent in taking any other
steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local statute or rule
to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.

 

(ii)Each Debtor
shall cause each subsidiary of such Debtor to immediately become a party hereto (an “Additional Debtor”), by
executing and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with
the provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules
for, or supplements to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall
supersede, or supplements shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of
counsel, authorizing resolutions, good standing certificates, incumbency certificates, organizational documents, financing statements
and other information and documentation as the Agent may reasonably request. Upon delivery of the foregoing to the Agent, the
Additional Debtor shall be and become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes
hereof as fully and to the same extent as if it were an original signatory hereto and shall be deemed to have made the representations,
warranties and covenants set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all
references herein to the “Debtors” shall be deemed to include each Additional Debtor.

 

(jj) Each Debtor shall vote the Pledged
Securities to comply with the covenants and agreements set forth herein and in the Note.

 

(kk) Each Debtor shall register the pledge
of the applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each issuer of Pledged Securities to
register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such issuer. Further,
except with respect to certificated securities delivered to the Agent, the applicable Debtor shall deliver to Agent an acknowledgement
of pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection by registration)
signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a) it has registered the
pledge on its books and records; and (b) at any time directed by Agent during the continuation of an Event of Default, such issuer
will transfer the record ownership of such Pledged Securities into the name of any designee of Agent, will take such steps as may
be necessary to effect the transfer, and will comply with all other instructions of Agent regarding such Pledged Securities without
the further consent of the applicable Debtor.

 

(ll) In the event that, upon an occurrence
of an Event of Default, Agent shall sell all or any of the Pledged Securities to another party or parties (herein called the “Transferee”)
or shall purchase or retain all or any of the Pledged Securities, each Debtor shall, to the extent applicable: (i) deliver to
Agent or the Transferee, as the case may be, the certificate of incorporation, bylaws, minute books, stock certificate books,
corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account, financial records and all
other Organizational Documents and records of the Debtors and their direct and indirect subsidiaries; (ii) use its best efforts
to obtain resignations of the persons then serving as officers and directors of the Debtors and their direct and indirect subsidiaries,
if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory body
in order to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities
by Agent and allow the Transferee or Agent to continue the business of the Debtors and their direct and indirect subsidiaries.

 

    	10

    	 

    

 

(mm) Without limiting the generality of
the other obligations of the Debtors hereunder, each Debtor shall promptly (i) cause to be registered at the United States Copyright
Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all Intellectual Property
registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded at the applicable
office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license) or creates any additional material
Intellectual Property.

 

(nn) Each Debtor will from time to time,
at the joint and several expense of the Debtors, promptly execute and deliver all such further instruments and documents, and
take all such further action as may be necessary or desirable, or as the Agent may reasonably request, in order to create, perfect,
preserve, protect, confirm and validate any security interest granted or purported to be granted hereby or to enable the Secured
Parties to obtain the full benefit of this Agreement or to exercise and enforce their rights and remedies hereunder and with respect
to any Collateral or to otherwise carry out the purposes of this Agreement.

 

(oo) Schedule F attached hereto
lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain names owned
by any of the Debtors as of the date hereof. Schedule F lists all material licenses in favor of any Debtor for the use of
any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtors
have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors have been duly
recorded at the United States Copyright Office.

 

(pp) Except as set forth on Schedule
G attached hereto, none of the account debtors or other persons or entities obligated on any of the Collateral is a governmental
authority covered by the Federal Assignment of Claims Act or any similar federal, state or local statute or rule in respect of
such Collateral.

 

(qq) Until the Obligations shall have been
paid and performed in full, the Company covenants that it shall promptly direct any direct or indirect subsidiary of the Company
formed or acquired after the date hereof to enter into a Subsidiary Guarantee in favor of the Secured Party, in the form attached
as an exhibit to the Purchase Agreement.

 

(rr)Each Debtor is the legal and beneficial
owner of, and has good and marketable title to, the Pledged Notes pledged by it hereunder, free and clear of any and all liens,
security interests or other encumbrances or options in favor of, or claims of any other person, except for Permitted Liens (as
defined in the Note).

 

(ss)To the extent applicable, each
Debtor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as
the case may be, so that no Event of Default (as defined in the Note) is caused by the failure to take such action or to refrain
from taking such action by such Debtor or any of its subsidiaries.

 

    	11

    	 

    

 

5. Effect of Pledge on Certain Rights.  If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership interests (regardless of class, designation, preference or rights) that may be  converted into voting equity or ownership interests upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions in the Organizational Documents or agreements to which any Debtor is subject or to which any Debtor is party.

 

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

 

(a) The occurrence of an Event of
Default (as defined in the Note) under the Note;  

 

(b) Any representation or warranty
of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made or deemed made;
 

 

(c) The failure by any Debtor to
observe or perform any of its obligations or agreements hereunder which failure is not cured, if possible to cure, within the
earlier of (i) five (5) days after such Debtor has become or should have become aware of such failure or (ii) five (5) days
after delivery to such Debtor of notice of such failure by or on behalf of a Secured Party, unless such default is capable of
cure but cannot be cured within such time frame and such Debtor is using best efforts to cure same in a timely fashion; or
 

 

(d) If any provision of this
Agreement or the Subsidiary Guarantee shall at any time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Debtor or asserted in writing by
any Debtor not to be a legal, valid and binding obligation of any party thereto, or a proceeding shall be commenced by any
Debtor, or by any governmental authority having jurisdiction over any Debtor, seeking to establish the invalidity or
unenforceability thereof, or any Debtor shall deny that any Debtor has any liability or obligation purported to be created
under this Agreement or the Subsidiary Guarantee.

 

7.Duty to Hold in Trust.  

 

(a)Upon the occurrence of any Event of Default and at any time thereafter, each Debtor shall, upon receipt of any revenue,
income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Note or otherwise,
or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same
in trust for the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured
Parties, pro-rata in proportion to their respective then-currently outstanding principal amount of Note for application to the
satisfaction of the Obligations (and if the Note is not outstanding, pro-rata in proportion to the initial purchases of the remaining
Note).  

 

(b)If any Debtor shall become entitled to receive or shall receive any securities or other property (including,
without limitation, shares of Pledged Securities or instruments representing Pledged Securities or Pledged Notes acquired after
the date hereof, or any options, warrants, rights or other similar property
or certificates representing a dividend, or any distribution in connection with any recapitalization, reclassification or increase
or reduction of capital, or issued in connection with any reorganization of such Debtor or any of its direct or indirect subsidiaries)
in respect of the Pledged Securities or the Pledged Notes (whether as an addition to, in substitution of, or in exchange for,
such Pledged Securities or Pledged Notes or otherwise), such Debtor agrees to (i) accept the same as the agent of the Secured
Parties; (ii) hold the same in trust on behalf of and for the benefit of the Secured Parties; and (iii) to deliver any and all
certificates or instruments evidencing the same to Agent on or before the close of business on the fifth business day following
the receipt thereof by such Debtor, in the exact form received together with the Necessary Endorsements, to be held by Agent subject
to the terms of this Agreement as Collateral.

 

    	12

    	 

    

 

8.Rights
and Remedies Upon Default.   (a)Upon the occurrence of any Event of Default
and at any time thereafter, the Secured Parties, acting through the Agent, shall have the right to exercise all of the remedies
conferred hereunder and under the Note, and the Secured Parties shall have all the rights and remedies of a secured party under
the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have the following rights and powers:

 

(i)The Agent 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 each Debtor shall assemble the Collateral and make
it available to the Agent at places which the Agent shall reasonably select, whether at such Debtor's premises or elsewhere, and
make available to the Agent, without rent, all of such Debtor’s respective premises and facilities for the purpose of the
Agent taking possession of, removing or putting the Collateral in saleable or disposable form.

 

(ii)Upon notice to the Debtors by Agent,
all rights of each Debtor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise and
all rights of each Debtor to receive the dividends and interest which it would otherwise be authorized to receive and retain, shall
cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Parties, any interest, cash dividends
or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s discretion all voting rights
pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right (but not the obligation) to exercise
all rights with respect to the Collateral as if it were the sole and absolute owner thereof, including, without limitation, to
vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or any Debtor or any of its direct or indirect subsidiaries.

 

(iii)The Agent shall have the
right to operate the business of each Debtor 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 Agent 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 any Debtor or right of redemption of a Debtor, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Agent, for the benefit of the Secured Parties, 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 any Debtor, which are hereby waived and released.

 

(iv)The Agent shall have the right
(but not the obligation) to notify any account debtors and any obligors under instruments or accounts (including under any Pledged
Notes) to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights against
such account debtors and obligors.

 

(v)The Agent, for the benefit of the
Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person or entity holding any investment
property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.

 

(vi)The Agent may (but is not obligated
to) transfer any or all Intellectual Property registered in the name of any Debtor at the United States Patent and Trademark Office
and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser of any Collateral.

 

(b)The Agent
shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtors
will only be credited with payments actually made by the purchaser. In addition, each Debtor waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including,
without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.

 

    	13

    	 

    

 

(c)For the purpose of enabling the
Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement or applicable law, each Debtor
hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Debtor) to use, license or sublicense following an Event of Default, any
Intellectual Property now owned or hereafter acquired by such Debtor, and wherever the same may be located, and including in such
license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs
used for the compilation or printout thereof.

 

9. Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account of any insurance policy insuring any portion of the Collateral 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 Agent in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then- outstanding principal amounts of Note at the time of any such determination), and to the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the applicable Debtor 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 Parties are legally entitled, the Debtors will be liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Parties to collect such deficiency. To the extent permitted by applicable law, each Debtor waives all claims, damages and demands against the Secured Parties  arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

 

10. Securities
Law Provision. Each Debtor recognizes that Agent may be limited in its ability to effect a sale to the
public of all or part of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended,
or other federal or state securities laws (collectively, the “Securities Laws”), and may be compelled to
resort to one or more sales to a restricted group of purchasers who may be required to agree to acquire the Pledged
Securities for their own account, for investment and not with a view to the distribution or resale thereof. Each Debtor
agrees that sales so made may be at prices and on terms less favorable than if the Pledged Securities were sold to the
public, and that Agent has no obligation to delay the sale of any Pledged Securities for the period of time necessary to
register the Pledged Securities for sale to the public under the Securities Laws. Each Debtor shall cooperate with Agent in
its attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration thereunder if
requested by Agent) applicable to the sale of the Pledged Securities by Agent.

 

11.
Costs and Expenses.  Each Debtor 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 pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or any expenses of any searches reasonably required
by the Agent. The Debtors shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably
likely to prejudice, imperil or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon
demand, pay to the Agent 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 Agent, for the benefit of the Secured Parties, may incur in connection with the creation,
perfection, protection, satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration,
continuance, amendment or enforcement of this Agreement and pay to the Agent 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 Agent, for the benefit of the Secured
Parties, and the Secured Parties may incur in connection with (i) the enforcement of this 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 Parties under the Note. 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.

 

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12. Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations
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. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i)
has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any
rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b)
each Debtor shall remain obligated and liable under each contract or agreement included in the Collateral
to be observed or performed by such Debtor thereunder. Neither the Agent nor any Secured Party shall have any obligation or liability
under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured
Party of any payment relating to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to
perform any of the obligations of any Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent or any
Secured Party may be entitled at any time or times.

 

13.
Security Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute
and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Subsidiary Guarantee, the
Note 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 Note 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 guarantee, or any other security, for all or any of the Obligations; (d) any action by the
Secured Parties 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 a Debtor, or a discharge of all or any part of the Security Interests granted hereby.
Until the Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the
Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy.
Each Debtor 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 Parties 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
Parties, then, in any such event, each Debtor’s obligations hereunder shall survive cancellation of this Agreement, and
shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid
and binding obligation enforceable in accordance with the terms and provisions hereof. Each Debtor waives all right to require
the Secured Parties to proceed against any other person or entity or to apply any Collateral which the Secured Parties may hold
at any time, or to marshal assets, or to pursue any other remedy. Each Debtor waives any defense arising by reason of the application
of the statute of limitations to any obligation secured hereby.

 

14. Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on
which all payments under the Note have been indefeasibly paid in full and all other Obligations have been paid or discharged;
provided, however, that all indemnities of the Debtors contained in this Agreement (including, without limitation, Annex B
hereto) shall survive and remain operative and in full force and effect regardless of the termination of this
Agreement.

 

    	15

    	 

    

 

15. Power of
Attorney; Further Assurances.   (a) Each Debtor authorizes the Agent, and does hereby make, constitute and appoint the
Agent and its officers, agents, successors or assigns with full power of substitution, as such Debtor’s true and lawful
attorney-in-fact, with power, in the name of the Agent or such Debtor, to, after the occurrence and during the continuance of
an Event of Default, (i) endorse any note, 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 Agent; (ii)
to sign and endorse any financing statement pursuant to the UCC 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; (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual Property;
and (vi) generally, at the option of the Agent, and at the expense of the Debtors, at any time, or from time to time, to execute
and deliver any and all documents and instruments and to do all acts and things which the Agent deems necessary to protect, preserve
and realize upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement and
the Note all as fully and effectually as the Debtors might or could do; and each Debtor 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 Agreement and thereafter as long as any of the Obligations shall be outstanding. The designation set forth
herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or
agreements to which any Debtor is subject or to which any Debtor is a party. Without limiting the generality of the foregoing,
after the occurrence and during the continuance of an Event of Default, each Secured Party is specifically authorized to execute
and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual
Property with the United States Patent and Trademark Office and the United States Copyright Office.

 

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

 

(c)Each Debtor hereby irrevocably
appoints the Agent as such Debtor’s attorney-in-fact, with full authority
in the place and instead of such Debtor and in the name of such Debtor, from time to time in the Agent’s discretion, to
take any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this
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 such Debtor where permitted by law, which financing statements may
(but need not) describe the Collateral as “all assets” or “all personal property” or words of like import,
and ratifies all such actions taken by the Agent. This power of attorney is coupled with an interest and shall be irrevocable
for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.

 

16. Notices. All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement (as such term is defined in the Note).

 

17.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 Agent 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 Parties’ rights and
remedies hereunder.

 

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18. Appointment of Agent. The Secured Parties hereby appoint OJSC Pharmsynthez to act as their agent (Pharmsynthez or “Agent”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. Such appointment shall continue until revoked in writing by a Majority in Interest, at which time a Majority in Interest shall appoint a new Agent, provided that Pharmsynthez may not be removed as Agent unless Pharmsynthez shall then hold less than $100,000 in principal amount of the Note; provided, further, that such removal may occur only if each of the other Secured Parties shall then hold not less than an aggregate of $25,000 in principal amount of the Note. The Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.

 

19.Miscellaneous.
  (a) No course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in
exercising, on the part of the Secured Parties, any right, power or privilege hereunder or under the Note 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 Parties with respect to the Collateral, whether established hereby or by the Note or by any other agreements, instruments
or documents or by law shall be cumulative and may be exercised singly or concurrently.

 

(c)This Agreement and the other Transaction
Documents represent the entire agreement of the Guarantors and the Purchaser with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by the Purchaser relative to subject matter hereof and thereof
not expressly set forth or referred to herein or in the other Transaction Documents. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors and the Secured
Parties holding 67% or more of the principal amount of Note then outstanding, or, in the case of a waiver, by the party against
whom enforcement of any such waived provision is sought.

 

(d)If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplatedbysuchterm,provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void
or unenforceable.

 

(e)No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission
of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

    	17

    	 

    

 

(f)This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted assigns. The Company and the Guarantors may not
assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other than
by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Purchase
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound,
with respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”

 

(g)Language. This Agreement is made
in both the English and the Russian languages. In case of any inconsistencies between the English and the Russian versions the
English version of this Agreement shall prevail.

 

(h)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 Agreement.

 

(i)Except to the extent mandatorily
governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law thereof. Except to the extent mandatorily governed by
the jurisdiction or situs where the Collateral is located, each Debtor agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and the Note (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in the City of New York, Borough of Manhattan. Except to the extent mandatorily governed
by the jurisdiction or situs where the Collateral is located, each Debtor 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 proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that
such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for 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.

 

(j)This 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 agreement. In the event that any signature is delivered by facsimile or electronic (i.e., “pdf”
or “tiff”) transmission, such signature shall create a valid binding obligation of the party executing (or on whose
behalf such signature is executed) the same and shall be effective as delivery of a manually signed original.

 

(k)All Debtors shall jointly and severally
be liable for the obligations of each Debtor to the Secured Parties hereunder.

 

(l) Each Debtor shall indemnify, reimburse
and hold harmless the Agent and the Secured Parties and their respective partners, members, shareholders, officers, directors,
employees and agents (and any other persons with other titles that have similar functions) (collectively, “Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature,
(including fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against
such Indemnitee in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such
losses, claims, liabilities, damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct
of the Indemnitee as determined by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision
is in addition to, and not in limitation of, any other indemnification provision in the Note, the Purchase Agreement (as such term
is defined in the Note) or any other agreement, instrument or other document executed or delivered in connection herewith or therewith.

 

    	18

    	 

    

 

(m)Nothing in this Agreement shall
be construed to subject Agent or any Secured Party to liability as a partner in any Debtor or any if its direct or indirect subsidiaries
that is a partnership or as a member in any Debtor or any of its direct or indirect subsidiaries that is a limited liability company,
nor shall Agent or any Secured Party be deemed to have assumed any obligations under any partnership agreement or limited liability
company agreement, as applicable, of any such Debtor or any of its direct or indirect subsidiaries or otherwise, unless and until
any such Secured Party exercises its right to be substituted for such Debtor as a partner or member, as applicable, pursuant hereto.

 

(n)To the extent that the grant of
the security interest in the Collateral and the enforcement of the terms hereof require the consent, approval or action of any
partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or compliance with any provisions
of any of the Organizational Documents, the Debtors hereby grant such consent and approval and waive any such noncompliance with
the terms of said documents.

 

(o)
EACH DEBTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASER, HEREBY IRREVOCABLYAND UNCONDITIONALLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBYANDFORANY COUNTERCLAIM THEREIN.

 

[SIGNATURE PAGES FOLLOW]

 

 

    	19

    	 

    

 

 

 

    	20

    	 

    

 

 

SCHEDULE A

 

Books and Records

 

	Debtor	Location
of Books/Records
	Xenetic Biosciences, Inc.	
        99 Hayden Avenue, Suite 230

        Lexington, MA 02421

	Xenetic Biosciences (UK) Limited	
        99 Hayden Avenue, Suite 230

        Lexington, MA 02421

	Lipoxen Technologies Limited	
        99 Hayden Avenue, Suite 230

        Lexington, MA 02421

	Xenetic Bioscience, Incorporated	
        99 Hayden Avenue, Suite 230

        Lexington, MA 02421

	Symbiotec GMBH	
        99 Hayden Avenue, Suite 230

        Lexington, MA 02421

 

Location of Collateral

 

	Debtor	
        Location of

        Collateral
	Real Property Owner of Location (If Other than Debtor)	ThirdParty
Possessory Interest(If Any)
	Xenetic  Biosciences, Inc.	
        99 Hayden Avenue, Suite 230

        Lexington,MA 02421
	None	None
	[Xenetic  Biosciences (UK) Limited]	
        99 Hayden Avenue, Suite 230

        Lexington,MA 02421
	None	None
	[Lipoxen Technologies Limited]	
        99 Hayden Avenue, Suite 230

        Lexington,MA 02421
	None	None
	[Xenetic   Bioscience, Incorporated]	
        99 Hayden Avenue, Suite 230

        Lexington,MA 02421
	None	None
	[Symbiotec GMBH]	
        99 Hayden Avenue, Suite 230

        Lexington,MA 02421
	None	None

 

 

 

    	21

    	 

    

 

SCHEDULE B

 

None

 

 

 

 

 

 

 

 

 

    	22

    	 

    

 

SCHEDULE C

 

There are no known existing liens on the Collateral of the Debtor
or on any of the guarantors.

 

 

    	23

    	 

    

 

SCHEDULE D

 

Legal Names and Organizational Identification
Numbers

 

 

 

	
         

         

         

        Company Name
	Date
of Incorporation	State/Country
of Incorporation	
         

         

        Tax ID

	Xenetic Bioscience (UK) Limited	06/12/1996	United
Kingdom	03213174
	Xenetic Bioscience, Incorporated	05/07/2012	Delaware,
USA	45-5241537
	Lipoxen Technologies Limited	07/10/1997	United Kingdom	03401495
	SymbioTec GmbH	12/29/1999	Germany	040 118 00268

 

    	24

    	 

    

 

SCHEDULE E

 

Names; Mergers and Acquisitions

 

Other than the trade
names noted in Schedule D and the trade names and mergers and acquisitions noted within the Annual Report on Form 10-K filed on
April 15, 2015, refer to the Scheme of Arrangement (including the Equivalent Document) attached to the Current Report on Form 8-K
filed on November 25, 2013 for any additional trade names utilized within the last five years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	25

    	 

    

 

SCHEDULE F

 

Intellectual Property

 

 

See attached pages for the master list of
the Company’s intellectual property.

 

 

 

 

 

 

 

 

 

 

 

 

 

    	26

    	 

    

SCHEDULE G

 

Account Debtors

 

 

The Debtor (the Company)
is the sole owner of all Collateral (except for non-exclusive licenses granted by the Debtor in the ordinary course of business).
Please refer to the Annual Report on Form 10-K filed on April 15, 2015 for a description of the licenses granted by the Debtor.
None of the Collateral consist of receivables from a governmental authority covered by the Federal Assignment of Claims Act or
similar state or local law.

 

 

 

 

 

 

 

 

    	27

    	 

    

 

SCHEDULE H

 

Pledged Securities

 

	Registered Owner	Issuer	Percentage
of Outstanding Shares of Issuer to be Pledged
	XeneticBiosciences, Inc.	Xenetic Biosciences (UK) Limited	
        All issued and outstanding

	XeneticBiosciences (UK) Limited	Lipoxen Technologies Limited	
        All issued and outstanding

	XeneticBiosciences (UK) Limited.	Xenetic Bioscience, Incorporated	
        All issued and outstanding

	XeneticBiosciences (UK) Limited.	Symbiotec GMBH	
        All issued and outstanding

 

 

SCHEDULE I

 

Notes

 

A $395,000 Note owed to an affiliated Shareholder

 

 

SCHEDULE J

UCC Filing Locations

 

	Debtor	Jurisdiction
	Xenetic Biosciences, Inc.	Nevada
	Xenetic Bioscience, Incorporated	Delaware
	Xenetic Biosciences (UK) Limited	UK
	Lipoxen Technologies Limited	UK
	Symbiotec GMBH	Germany

 

 

    	28

    	 

    

 

ANNEX A

to SECURITY

AGREEMENT

 

FORM OF ADDITIONAL DEBTOR JOINDER

 

Security Agreement dated as of , 2015 made by Xenetic Biosciences, Inc. and its subsidiaries party thereto from time to time, as Debtors to and in favor of the Secured Parties identified therein (the “Security Agreement”)

 

Reference is made to the Security Agreement
as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in,
or by reference in, the Security Agreement.  

 

The undersigned hereby agrees that upon
delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned shall (a) be an Additional
Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtors under the Security Agreement as fully
and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to have made the representations
and warranties set forth therein as of the date of execution and delivery of this Additional Debtor Joinder. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL
AS MORE FULLY SET FORTH IN THE SECURITYAGREEMENTAND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET
FORTH THEREIN.

 

Attached hereto are
supplemental and/or replacement Schedules to the Security Agreement, as applicable.

 

An executed copy
of this Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth herein on
or after the date hereof. This Joinder shall not be modified, amended or terminated without the prior written consent of the Secured
Parties.

 

IN WITNESS WHEREOF, the undersigned has
caused this Joinder to be executed in the name and on behalf of the undersigned.

 

 

[Name of Additional Debtor] 

 

By:

Name:

Title:

 

Address:

 

 

 

 

 

Dated:

 

    	29

    	 

    

 

ANNEX B

to SECURITY

AGREEMENT

 

 

THE AGENT

 

1. Appointment. The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings provided in the Security Agreement to which this Annex B is attached (the "Agreement")), by their acceptance of the benefits of the Agreement, hereby designate OJSC Pharmsynthez (Pharmsynthez or “Agent”) as the Agent to act as specified herein and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its behalf under the provisions of the Agreement and any other Transaction Document (as such term is defined in the Purchase Agreement) and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or through its agents or employees.

 

2.
Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement.
Neither the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be
liable for any action taken or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith,
be responsible for the consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by its
or their gross negligence or willful misconduct as determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by
reason of the Agreement or any other Transaction Document a fiduciary relationship in respect of any Debtor or any Secured Party;
and nothing in the Agreement or any other Transaction Document, expressed or implied, is intended to or shall be so construed
as to impose upon the Agent any obligations in respect of the Agreement or any other Transaction Document except as expressly
set forth herein and therein.

 

3.
Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs
of the Company and its subsidiaries in connection with such Secured Party’s investment in the Debtors, the creation and
continuance of the Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any
action in connection therewith, and (ii) its own appraisal of the creditworthiness of the Company and its subsidiaries, and of
the value of the Collateral from time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Secured Party with any credit, market or other
information with respect thereto, whether coming into its possession before any Obligations are incurred or at any time or times
thereafter. The Agent shall not be responsible to the Debtors or any Secured Party for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other writing delivered in connection herewith, or for
the execution, effectiveness, genuineness, validity, enforceability, perfection,  collectibility, priority or sufficiency
of the Agreement or any other Transaction Document, or for the financial condition of the Debtors or the value of any of the Collateral,
or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions
of the Agreement or any other Transaction Document, or the financial condition of the Debtors, or the value of any of the Collateral,
or the existence or possible existence of any default or Event of Default under the Agreement, the Note or any of the other Transaction
Documents.

 

    	30

    	 

    

 

4.
Certain Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf
of all of the Secured Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect
to any material act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and
shall be entitled to act or refrain from acting in accordance with the instructions of a Majority in Interest; if such instructions
are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such
action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions
to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without
limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and
the Debtors shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to
the foregoing and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected
to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.

 

5.
Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the
other Transaction Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining
to this Agreement and the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it.
Anything to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the
Collateral exists or is owned by the Debtors or is cared for, protected or insured or that the liens granted pursuant to the Agreement
have been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.

 

6. Indemnification. To the extent that the Agent is not reimbursed and indemnified by the Debtors, the Secured Parties will  jointly and severally reimburse and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Note, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder or under the Agreement or any other Transaction Document, or in any way relating to or arising out of the Agreement or any other Transaction Document except for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction to have resulted solely from the Agent's own gross negligence or willful misconduct. Prior to taking any action hereunder as Agent, the Agent may require each Secured Party to deposit with it sufficient sums as it determines in good faith is necessary to protect the Agent for costs and expenses associated with taking such action.

 

7. Resignation by the Agent.

 

(a)The Agent may resign from the
performance of all its functions and duties under the Agreement and the other Transaction Documents at any time by giving 30 days'
prior written notice (as provided in the Agreement) to the Debtors and the Secured Parties. Such resignation shall take effect
upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.

 

(b)Upon any such notice of resignation,
the Secured Parties, acting by a Majority in Interest, shall appoint a successor Agent hereunder.

 

(c)If a successor Agent
shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent who shall serve as
Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor Agent has not
been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead the Debtors
and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not limited to,
extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable by the Debtors
on demand.

 

    	31

    	 

    

 

8. Rights
with respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that it
shall not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether
pursuant to any other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against
the Agent or any of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such
action arising from the breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the
Collateral other than as set forth in this Agreement and the other Transaction Documents. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its
duties and obligations under the Agreement. After any retiring Agent’s resignation or removal hereunder as Agent, the
provisions of the Agreement including this Annex B shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent.

 

    	32Exhibit 10.5

 

SUBSIDIARY GUARANTEE

 

SUBSIDIARY GUARANTEE, dated
as of July 1, 2015 (this “Guarantee”), made by each of the signatories hereto (together with any other entity that
may become a party hereto as provided herein, the “Guarantors”), in favor of the Purchaser (together with its permitted
assigns, the “Purchaser”) signatory to that certain Securities Purchase Agreement, dated as of the date hereof, between
Xenetic Biosciences, Inc., a Nevada corporation (the “Company”) and the Purchaser (the “Purchase Agreement”).

 

W
I T N E S S E T H :

 

WHEREAS, pursuant to the Purchase Agreement,
dated as of the date hereof, by and between the Company and the Purchaser, the Company has agreed to sell and issue to the Purchaser,
and the Purchaser has agreed to purchase from the Company the Note, subject to the terms and conditions set forth therein; and

 

WHEREAS, each Guarantor will derive substantial
direct and indirect benefits from the extension of credit to the Company represented by the issuance of the Note; and

 

NOW, THEREFORE, in consideration of the
premises and to induce the Purchaser to enter into the Purchase Agreement and to carry out the transactions contemplated thereby,
each Guarantor hereby agrees with the Purchaser as follows:

 

1. Definitions. Unless otherwise
defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the Purchase Agreement.
The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import
when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and
Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such terms. The following terms shall have the following meanings:

 

“Guarantee” means this
Subsidiary Guarantee, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Obligations” means,
in addition to all other costs and expenses of collection incurred by the Purchaser in enforcing any of such Obligations and/or
this Guarantee, all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or
to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the Company or any Guarantor to the
Purchaser, including, without limitation, all obligations under this Guarantee, the Note, the Security Agreement and any other
instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, 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 increased, 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 Purchaser as a preference, fraudulent transfer or otherwise as such obligations
may be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality of the foregoing,
the term “Obligations” shall include, without limitation: (i) principal of, and interest on the Note and the
loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Company or
any Guarantor from time to time under or in connection with this Guarantee, the Note, the Security Agreement and any other instruments,
agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but
not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations
to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Company or any Guarantor.

 

    	1

    	 

    

 

2. Guarantee.

 

(a) Guarantee.

 

(i) The Guarantors hereby, jointly and severally, unconditionally
and irrevocably, guarantee to the Purchaser and its respective successors, indorsees, transferees and assigns, the prompt and complete
payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

 

(ii) Each Guarantor further agrees that all or part
of the Obligations may be increased, extended, substituted, amended, renewed or otherwise modified without notice to or consent
from such Guarantor and such actions shall not affect the liability of such Guarantor hereunder. Without limiting the generality
of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Obligations and would
be owed by any other Guarantor or the Company to the Purchaser under or in respect of the Transaction Documents but for the fact
that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving
such other Guarantor or the Company.

 

(iii) Anything herein or in any other Transaction
Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Transaction Documents
shall in no event exceed the maximum amount which can be guaranteed by such Guarantor under applicable federal, state or foreign
laws relating to the insolvency of debtors, or fraudulent conveyance or transfer, or affecting the rights of creditors generally
or other similar applicable laws (after giving effect to the right of contribution established in Section 2(b)).

 

(iv) Each Guarantor agrees that the Obligations may
at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of the Purchaser hereunder.

 

(v) The guarantee contained in this Section 2 shall
remain in full force and effect until all the Obligations and the obligations of each Guarantor under the guarantee contained in
this Section 2 shall have been satisfied by indefeasible payment in full.

 

(vi) No
payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Purchaser
from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off
or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed
to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment
(other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor
in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until
the Obligations are indefeasibly paid in full.

 

    	2

    	 

    

 

(vii) Notwithstanding anything
to the contrary in this Guarantee, with respect to any defaulted non-monetary Obligations the specific performance of which by
the Guarantors is not reasonably possible (e.g. the issuance of the Company's Common Stock), the Guarantors shall only be liable
for making the Purchaser whole on a monetary basis for the Company's failure to perform such Obligations in accordance with the
Transaction Documents.

 

(b) Right of Contribution.
Subject to Section 2(c), each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other
Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be
subject to the terms and conditions of Section 2(c). The provisions of this Section 2(b) shall in no respect limit the obligations
and liabilities of any Guarantor to the Purchaser and each Guarantor shall remain liable to the Purchaser for the full amount guaranteed
by such Guarantor hereunder.

 

(c) Agreement to Pay; No Subrogation.

 

Without limiting any other right
that the Purchaser has at law or in equity against any Guarantor, if the Company or any other Guarantor fails to pay any Obligation
when and as due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor agrees to promptly
pay the amount of such unpaid Obligations to the Purchaser in cash. Notwithstanding any payment made by any Guarantor hereunder
or any set-off or application of funds of any Guarantor by the Purchaser, no Guarantor shall be entitled to be subrogated to any
of the rights of the Purchaser against the Company or any other Guarantor or any collateral security or guarantee or right of offset
held by the Purchaser for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution
or reimbursement from the Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts
owing to the Purchaser by the Company and the Guarantors on account of the Obligations are indefeasibly paid in full. If any amount
shall be paid to any Guarantor on account of such subrogation, exoneration, contribution, reimbursement, indemnity or similar rights
at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust
for the benefit of the Purchaser, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor,
be turned over to the Purchaser in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Purchaser,
if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Purchaser may determine.

 

(d) Amendments, Etc. With
Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the
Obligations made by the Purchaser may be rescinded by the Purchaser and any of the Obligations continued, and the Obligations,
or the liability of any other person upon or for any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Purchaser, and the Purchase Agreement and the other Transaction Documents and
any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole
or in part, as the Purchaser may deem advisable from time to time, and any collateral security, guarantee or right of offset at
any time held by the Purchaser for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The
Purchaser shall have no obligation to protect, secure, perfect or insure any Lien at any time held by them as security for the
Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

 

    	3

    	 

    

 

(e)
Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the Purchaser upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this
Section 2; and all dealings between the Company and any of the Guarantors, on the one hand, and the Purchaser, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section
2. Each Guarantor waives to the extent permitted by law diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees
that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment
and performance without regard to (a) the illegality or validity or enforceability of the Purchase Agreement or any other Transaction
Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Purchaser, (b) any change in the time, place or manner of payment of, or in
any other term of, the Obligations or any other obligation of the Company or any Guarantor under any Transaction Document, or any
rescission, waiver, amendment or other modification of any Transaction Document or any other agreement, including any increase
in the Obligations resulting from any extension of additional credit or otherwise, (c) any taking, exchange, substitution, release,
impairment or non-perfection of any collateral, or any taking, release, impairment, amendment, waiver or other modification of
any guaranty, for the Obligations, (d) any manner of sale, disposition or application of proceeds of any collateral or other assets
to all or part of the Obligations, (e) any default, failure or delay, willful or otherwise, in the performance of the Obligations,
(f) any change, restructuring or termination of the corporate structure, ownership or existence of the Company or any Guarantor
or any of their subsidiaries or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or
its assets or any resulting release or discharge of any Obligation, (g) any failure of the Purchaser to disclose to the Company
or any Guarantor any information relating to the business, condition (financial or otherwise), operations, performance, properties
or prospects of any other Guarantor or the Company now or hereafter known to the Purchaser (each Guarantor waiving any duty of
the Purchaser to disclose such information), (h) the failure of any other Person to execute or deliver this Guarantee, any Assumption
Agreement referred to Section 5(m) hereof or any other guaranty or agreement or the release or reduction of liability of any Guarantor
or other guarantor or surety with respect to the Obligations, (i) the failure of the Purchaser to assert any claim or demand or
to exercise or enforce any right or remedy under the provisions of any Transaction Document or otherwise, (j) any defense, set-off
or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Company
or any other Person against the Purchaser, or (k) any other circumstance whatsoever (with or without notice to or knowledge of
the Company or such Guarantor) which constitutes, or might be construed
to constitute, an equitable or legal discharge of the Company for the Obligations, or of such Guarantor under the guarantee contained
in this Section 2, in bankruptcy or in any other instance (including, without limitation, any statute of limitations). When making
any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Purchaser may, but shall
be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against the Company,
any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Purchaser to make any such demand, to pursue such other rights or remedies or to collect
any payments from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Purchaser against any
Guarantor. For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.

 

    	4

    	 

    

 

(f) Each Guarantor acknowledges
that the Purchaser may, at its election and without notice to or demand upon such Guarantor, foreclose on any collateral held by
it by one or more judicial or non-judicial sales, accept an assignment of any such collateral in lieu of foreclosure, compromise
or adjust any part of the Obligations, make any other accommodation with the Company or any other guarantor or exercise any other
right or remedy available to it against the Company or any other guarantor, without affecting or impairing in any way the liability
of any Guarantor hereunder except to the extent the Obligations have been paid in full or collateralized in full in cash. Each
Guarantor hereby waives any defense arising out of such election even though such election operates, pursuant to applicable law,
to impair or to extinguish any right of subrogation, reimbursement, exoneration, contribution or indemnification or other right
or remedy of such Guarantor against the Company or any other guarantor or any collateral.

 

(g) Reinstatement. The
guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Purchaser or any other
Person upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or
as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any
Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

(h) Payments. Each Guarantor
hereby guarantees that payments hereunder will be paid to the Purchaser without set-off or counterclaim in U.S. dollars at the
address set forth or referred to in the Signature Pages to the Purchase Agreement.

 

3. Representations and Warranties.
Each Guarantor hereby makes the following representations and warranties to Purchaser as of the date hereof:

 

(a) Organization and Qualification.
The Guarantor is an entity, duly organized, validly existing and in good standing under the laws of the applicable jurisdiction
set forth on Schedule 1, with the requisite corporate power and authority to own and use its properties and assets and to carry
on its business as currently conducted. The Guarantor has no subsidiaries other than those identified as such on the Disclosure
Schedules to the Purchase Agreement. The Guarantor is duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate,
(x) adversely affect the legality, validity or enforceability of any of this Guarantee in any material respect, (y) have a material
adverse effect on the results of operations, assets, business, prospects, or condition (financial or otherwise) of the Guarantor
or (z) adversely impair in any material respect the Guarantor's ability to perform fully on a timely basis its obligations under
this Guarantee (a “Material Adverse Effect”).

 

    	5

    	 

    

 

(b) Authorization; Enforcement.
The Guarantor has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by
this Guarantee, and otherwise to carry out its obligations hereunder. The execution and delivery of this Guarantee by the Guarantor
and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite corporate action
on the part of the Guarantor. This Guarantee has been duly executed and delivered by the Guarantor and constitutes the valid and
binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.

 

(c) No Conflicts. The
execution, delivery and performance of this Guarantee by the Guarantor and the consummation by the Guarantor of the transactions
contemplated thereby do not and will not (i) conflict with or violate any provision of its Certificate of Incorporation or By-laws
or (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which the Guarantor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Guarantor is subject (including Federal and State securities
laws and regulations), or by which any material property or asset of the Guarantor is bound or affected, except in the case of
each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations
as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of the Guarantor is not
being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually
or in the aggregate, do not have a Material Adverse Effect.

 

(d) Consents and Approvals.
The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with,
any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution,
delivery and performance by the Guarantor of this Guarantee.

 

(e) Purchase Agreement.
The representations and warranties of the Company set forth in the Purchase Agreement as they relate to such Guarantor, each of
which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made
pursuant to such Purchase Agreement, and the Purchaser shall be entitled to rely on each of them as if they were fully set forth
herein, provided that each reference in each such representation and warranty to the Company's knowledge shall, for the purposes
of this Section 3, be deemed to be a reference to such Guarantor's knowledge.

 

(f) Foreign Law. Each
Guarantor has consulted with appropriate foreign legal counsel with respect to any of the above representations for which non-U.S.
law is applicable. Such foreign counsel have advised each applicable Guarantor that such counsel knows of no reason why any of
the above representations would not be true and accurate. Such foreign counsel were provided with copies of this Guarantee and
the other Transaction Documents prior to rendering their advice.

 

    	6

    	 

    

 

(g) Independent Analysis.
Each Guarantor has, independently and without reliance upon the Purchaser and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Guarantee and any other Transaction Document to
which it is or may become a party, and has established adequate procedures for continually obtaining information pertaining to,
and is now and at all times will be completely familiar with, the business, condition (financial or otherwise), operations, performance,
properties and prospects of the Company and each other Guarantor.

 

4. Covenants.

 

(a) Each Guarantor covenants
and agrees with the Purchaser that, from and after the date of this Guarantee until the Obligations shall have been indefeasibly
paid in full, such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action
that is necessary to be taken or not taken, as the case may be, so that no Event of Default (as defined in the Note) is caused
by the failure to take such action or to refrain from taking such action by such Guarantor.

 

(b) So long as any of the Obligations
are outstanding, unless Holders holding at least 67% of the aggregate principal amount of the then outstanding Note shall otherwise
consent in writing, each Guarantor will not directly or indirectly on or after the date of this Guarantee:

 

(i) enter into, create, incur,
assume or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with
respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

(ii) enter into, create, incur,
assume or suffer to exist any liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom (other than liens in favor of the Purchaser granted under or pursuant
to any of the Transaction Documents);

 

(iii) amend its certificate
of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Purchaser;

 

(iv) repay, repurchase or offer
to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations;

 

(v) pay cash dividends on any
equity securities of the Company;

 

(vi) enter into any transaction
with any Affiliate of the Guarantor which would be required to be disclosed in any public filing of the Company with the Commission,
unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors
of the Company (even if less than a quorum otherwise required for board approval); or

 

(vii) enter into any agreement
with respect to any of the foregoing.

 

    	7

    	 

    

 

5. Miscellaneous.

 

(a) Amendments in Writing. None
of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except in writing by the
Purchaser.

 

(b) Notices. All notices, requests
and demands to or upon the Purchaser or any Guarantor hereunder shall be effected in the manner provided for in the Purchase Agreement,
provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address
set forth on Schedule 5(b).

 

(c) No Waiver By Course Of Conduct;
Cumulative Remedies. The Purchaser shall not by any act (except by a written instrument pursuant to Section 5(a)), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default under
the Transaction Documents or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Purchaser,
any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Purchaser of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Purchaser would otherwise have on any future occasion. The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

 

(d) Enforcement Expenses; Indemnification.

 

(i) Each Guarantor agrees to pay, or reimburse
the Purchaser for, all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section
2 or otherwise enforcing or preserving any rights under this Guarantee and the other Transaction Documents to which such Guarantor
is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Purchaser.

 

(ii) Each Guarantor agrees to pay, and
to save the Purchaser harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions
contemplated by this Guarantee.

 

(iii) Each Guarantor agrees to pay, and
to save the Purchaser harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance
and administration of this Guarantee to the extent the Company would be required to do so pursuant to the Purchase Agreement.

 

(iv) The agreements in this Section
shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement and the other Transaction
Documents.

 

    	8

    	 

    

 

(e) Successor and Assigns. This
Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Purchaser and
their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights or obligations
under this Guarantee without the prior written consent of the Purchaser.

 

(f) Set-Off. Each Guarantor hereby
irrevocably authorizes the Purchaser at any time and from time to time while an Event of Default under any of the Transaction Documents
shall have occurred and be continuing, without prior notice to such Guarantor or any other Guarantor, any such notice being expressly
waived by each Guarantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional
or final but excluding trust accounts), in any currency, and any other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchaser to or
for the credit or the account of such Guarantor, or any part thereof in such amounts as the Purchaser may elect, against and on
account of the obligations and liabilities of such Guarantor to the Purchaser hereunder and claims of every nature and description
of the Purchaser against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Transaction
Document or otherwise, as the Purchaser may elect, whether or not the Purchaser have made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The Purchaser shall notify such Guarantor promptly of any such
set-off and the application made by the Purchaser of the proceeds thereof, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of the Purchaser under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off) which the Purchaser may have.

 

(g) Counterparts. This Guarantee
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 agreement. In the event that any signature is delivered by facsimile or electronic
(i.e., “pdf” or “tiff”) transmission, such signature shall create a valid binding obligation of the party
executing (or on whose behalf such signature is executed) the same and shall be effective as delivery of a manually signed original.

 

(h) Severability. Any provision
of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

(i) Section Headings. The Section
headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken
into consideration in the interpretation hereof.

 

    	9

    	 

    

 

(j) Integration. This Guarantee
and the other Transaction Documents represent the entire agreement of the Guarantors and the Purchaser with respect to the subject
matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Purchaser relative to
subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents.

 

(k) Governing Laws. All questions
concerning the construction, validity, enforcement and interpretation of this Guarantee shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.
Each of the Company and the Guarantors agree that all proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Guarantee (whether brought against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in
the City of New York, Borough of Manhattan. Each of the Company and the Guarantors 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 proceeding, any claim that it is not personally subject to the jurisdiction of any such
court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to
process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Guarantee 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.

 

(l) Language. This Guarantee is
made in both the English and the Russian languages. In case of any inconsistencies between the English and the Russian versions
the English version of this Agreement shall prevail.

 

(m) Acknowledgements. Each Guarantor
hereby acknowledges that:

 

(i) it has been advised by counsel in the
negotiation, execution and delivery of this Guarantee and the other Transaction Documents to which it is a party;

 

(ii) the Purchaser have no fiduciary relationship
with or duty to any Guarantor arising out of or in connection with this Guarantee or any of the other Transaction Documents, and
the relationship between the Guarantors, on the one hand, and the Purchaser, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and

 

(iii) no joint venture is created
hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors
and the Purchaser.

 

    	10

    	 

    

 

(n) Additional Guarantors. The Company shall
cause each of its direct and indirect subsidiaries formed or acquired on or subsequent to the date hereof to become a Guarantor
for all purposes of this Guarantee by executing and delivering an Assumption Agreement in the form of Annex 1 hereto.

 

(o) Release of Guarantors.
Each Guarantor will be released from all liability hereunder concurrently with the indefeasible repayment in full of all amounts
owed under the Purchase Agreement, the Note and the other Transaction Documents. Any such release of a Guarantor shall be deemed
subject to the provision that the liability of the Guarantor hereunder shall be reinstated if after such release any portion of
any payment in respect of the Obligations shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor or any substantial part of its property,
or otherwise, all as though such payment had not been made.

 

(p) Seniority. The Obligations
of each of the Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in the Purchase Agreement) of
such Guarantor.

 

(q) WAIVER OF JURY TRIAL.
EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASER, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM THEREIN.

 

 

*********************

 

 

 

(Signature Pages Follow

 

 

 

 

 

    	11

    	 

    

IN WITNESS WHEREOF, each of the undersigned
has caused this Guarantee to be duly executed and delivered as of the date first above written

 

XENETIC BIOSCIENCES (UK) LIMITED

 

	By: /s/ M. S. Maguire	 	 
	Name: M. S. Maguire	 	 
	Title:	 	 

 

 

LIPOXEN TECHNOLOGIES LIMITED

 

	By: /s/ M. S. Maguire	 	 
	Name: M. S. Maguire	 	 
	Title:	 	 

 

 

XENETIC BIOSCIENCE, INCORPORATED

 

	By: /s/ M. S. Maguire	 	 
	Name:  M. S. Maguire	 	 
	Title:	 	 

 

 

SYMBIOTEC GMBH

 

	By:/s/ M. S. Maguire 	 	 
	Name: M. S. Maguire	 	 
	Title:	 	 

  

    	12

    	 

    

 

SCHEDULE 1

 

The following are the names, notice addresses
and jurisdiction of organization of each Guarantor.

 

	 	JURISDICTION OF INCORPORATION	COMPANY OWNED BY PERCENTAGE	 

 

 

Xenetic Biosciences (UK) Limited

 

 

 

Lipoxen Technologies Limited

 

 

 

Xenetic Bioscience, Incorporated

 

 

 

SymbioTec GmbH

 

 

 

 

 

    	13

    	 

    

 

Annex 1 to

 

SUBSIDIARY GUARANTEE

 

ASSUMPTION AGREEMENT, dated
as of __________, _____ made by _____________, a corporation (the “Additional Guarantor”), in favor of
the Purchaser pursuant to the Purchase Agreement referred to below. All capitalized terms not defined herein shall have the meaning
ascribed to them in such Purchase Agreement.

 

W
I T N E S S E T H :

 

WHEREAS, Xenetic Biosciences,
Inc., a Nevada corporation (the “Company”) and the Purchaser has entered into a Securities Purchase Agreement,
dated as of __, 2015 (as amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”);

 

WHEREAS, in connection with
the Purchase Agreement, the Subsidiaries of the Company (other than the Additional Guarantor) have entered into the Subsidiary
Guarantee, dated as of , 2015 (as amended, supplemented or otherwise modified from time to time, the “Guarantee”)
in favor of the Purchaser;

 

WHEREAS, the Purchase Agreement
requires the Additional Guarantor to become a party to the Guarantee; and

 

WHEREAS, the Additional Guarantor
has agreed to execute and

 

deliver this Assumption Agreement in order to become
a party to the Guarantee;

 

NOW, THEREFORE, IT IS AGREED:

 

1. Guarantee. By executing
and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 5(m) of the Guarantee, hereby becomes
a party to the Guarantee as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor
thereunder. The information set forth in Annex 1 hereto is hereby added to the information set forth in

 

Schedule 1 to the Guarantee.
The Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 3
of the Guarantee is true and correct on and as the date hereof as to such Additional Guarantor (after giving effect to this Assumption
Agreement) as if made on and as of such date.

 

2. Governing Law. THIS
ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

 

IN WITNESS
WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

 

 

	 	[ADDITIONAL GUARANTOR]	 
	 	 	 
	 	 	 
	 	By: 	 
	 	Name: 	 
	 	Title:	 

 

 

 

    	14

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