Document:

Exhibit 10.2

 

NEITHER
THIS SECURITY NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE BEEN REGISTERED UNDER EITHER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

	Principal
    Amount: $262,500.00	Issue
    Date: January _, 2020
	Purchase
    Price: $250,000.00	 

 

SECURED
CONVERTIBLE PROMISSORY NOTE

 

FOR
VALUE RECEIVED, Cardax, Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of
Harbor Gates Capital, LLC, a Wyoming limited liability company (together with its
successors and assigns, the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum
of $262,500.00 on June 30, 2020 (the “Maturity Date”), unless extended by mutual written agreement of the parties,
or such earlier date as required or permitted hereunder, and to pay interest to the Holder in accordance with the provisions hereof.
This Secured Convertible Promissory Note (the “Note”) is issued pursuant to the terms of that certain Securities
Purchase Agreement (the “Purchase Agreement”) by and between the Company and the Holder, and may be prepaid
or converted into common stock of the Company, par value $0.001 per share (the “Common Stock”) as set forth
herein. The Company acknowledges that the principal amount of this Note exceeds its purchase price and that such excess is an
original issue discount equal to five percent (5%) of the purchase price, which shall be fully earned and charged to the Company
upon the execution of this Note, and shall be paid to the Holder as part of the outstanding principal amount set forth in this
Note. By acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement.

 

The
following terms shall apply to this Note:

 

Article
I. MANNER OF PAYMENT

 

1.1 Method
of Payment. All payments hereunder shall be made in lawful money of the United States of America no later than 5:00 PM Pacific
Time on the date on which such payment is due by check, certified check payable to the Holder, or by wire transfer of immediately
available funds to the Holder’s account at a bank specified by the Holder in writing to the Company from time to time.

 

1.2 Business
Day Convention. Whenever any amount expressed to be due by the terms of this Note is due on any day that is not a business
day, the same shall instead be due on the next succeeding business day. As used in this Note, the term “business day”
shall mean any day except any Saturday, any Sunday, any day that is a federal legal holiday in the United States, or any day on
which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

    	 

    	 

    

 

Article
II. INTEREST

 

2.1 Interest
Charge. This Note shall bear a one-time interest charge (the “Interest Charge”) equal to ten percent (10%)
of the principal amount of the Note. The Interest Charge shall be due and payable upon maturity of Note unless otherwise converted
in accordance with Section 3.

 

2.2 Interest
Rate Limitation. If at any time and for any reason whatsoever, the effective interest rate payable on the Note shall exceed
the maximum rate of interest permitted to be charged by the Holder to the Company under applicable law, such interest rate shall
be reduced automatically to the maximum rate of interest permitted to be charged under applicable law. That portion of each sum
paid attributable to that portion of such interest rate that exceeds the maximum rate of interest permitted by applicable law
shall be deemed a voluntary prepayment of principal.

 

Article
III. CONVERSION

 

3.1 Method
of Conversion. At any time while this Note is outstanding, this Note shall be convertible, in whole or in part, into shares
(the “Conversion Shares”) of Common Stock at the Conversion Price (as defined below), at the option of the
Holder, at any time and from time to time. The Holder shall effect conversions by delivering to the Company a Notice of Conversion,
the form of which is attached hereto as Exhibit I (each, a “Notice of Conversion”), specifying
therein the outstanding principal amount of this Note, plus at the Holder’s option, any accrued and unpaid interest thereon,
to be converted and the date on which such conversion shall be effected (such date, a “Conversion Date”). If
no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder.

 

3.2 Conversion
Price. The conversion price (the “Conversion Price”) per share of Common Stock in effect on any Conversion
Date shall be equal to $14.00, subject to adjustment as provided below.

 

(a) One
Time Reset. On the thirty-first (31st) calendar day following the Issue Date of the Note (the “Conversion
Price Reset Date”) the Conversion Price shall be subject to a mandatory, automatic, one-time modification to a price
equal to the average of the volume weighted average prices of the Company’s Common Stock during the five (5) Trading Days
prior to the Conversion Price Reset Date, wherein “trading day” shall mean any day on which the Common Stock is tradable
on the OTCQB or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
The Holder shall provide written notice to the Company, as soon as reasonably practicable, of the adjustment that was the result
of the one-time reset.

 

(b) Adjustment
Upon Stock Split. If at any time while this Note is outstanding, the Company: (i) subdivides outstanding shares of Common
Stock into a larger number of shares, (ii) combines (including by way of a reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (iii) issues, in the event of a reclassification of shares of the Common Stock, any shares
of capital stock of the Company, then the Conversion Price shall be equitably adjusted. The Company shall, contemporaneously with
the public notification (e.g., press release or filing with the SEC or OTCMarkets) of the stock split, provide equivalent notice
to the Holder. If the stock split is not publicly announced, then the Company shall provide notice of such event to the Holder
within one (1) trading day upon the effectiveness of such event. Failure of the Company to provide the above referenced notice
shall have no effect on the event to be reported and any adjustment made pursuant to this Section 3.2(a) shall become effective
immediately after the effective date of the subdivision, combination, or re-classification.

 

(c) Adjustment
Upon Maturity. If this Note, or any portion thereof, remains outstanding upon the Maturity Date, then the Conversion Price
shall be equal to the lower of the Conversion Price then in effect (taking into account the adjustments provided for above) or
70% of the average of the two (2) lowest daily volume-weighted average prices of the Common Stock for the fifteen (15) trading
days prior to the Conversion Date.

 

    	2

    	 

    

 

3.3 Mechanics
of Conversion.

 

(a) Conversion
Shares Issuable Upon Conversion. The number of Conversion Shares issuable upon a conversion hereunder shall be determined
by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted, plus at the Holder’s
option, any accrued and unpaid interest thereon to be converted, by (y) the Conversion Price, subject to adjustment as provided
herein.

 

(b) No
Fractional Shares Upon Conversion. No fractional shares shall be issued upon the conversion of this Note. As to any fraction
of a share that the Holder would otherwise be entitled to upon such conversion, the Company shall at its election, either pay
a cash adjustment in an amount equal to such fraction multiplied by the Conversion Price, subject to adjustment as provided herein,
or round up to the next whole share.

 

(c)
Delivery of Certificate Upon Conversion. On the Conversion Date, or promptly thereafter, the Company shall issue and deliver
or cause to be issued and delivered a certificate or certificates representing the Conversion Shares.

 

(d) Surrender of Note
Upon Conversion. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the
Company unless the entire outstanding principal amount of this Note, plus all accrued and unpaid interest thereon, is to be converted.
Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note and accrued and unpaid interest
thereon, in an amount equal to the applicable conversion, and all rights with respect to the portion of this Note being so converted
shall forthwith terminate except the right to receive the Conversion Shares, as provided herein. The Holder and the Company shall
maintain records showing the principal and interest amount(s) converted and the date of such conversion(s). In the event of any
dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The
Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the
amount stated on the face hereof.

 

(e) Authorized
Shares. The Company shall reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive
rights, to provide for the issuance of Common Stock upon the full conversion of this Note. The Company represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable.

 

(f) Reservation
of Shares Issuable Upon Conversion. The Company shall instruct its transfer agent to establish a reserve of shares of the
Company’s authorized and unissued Common Stock in the amount of initially 1,000,000 shares, but no less than five (5) times
the number of Conversion Shares issuable upon conversion of the Note as provided herein. The Company shall instruct its transfer
agent not to reduce the reserve under any circumstances, except for the issuance of the Conversion Shares, unless such reduction
is pre-approved in writing by the Holder.

 

3.4 Limitation
on Beneficial Ownership. Notwithstanding anything to the contrary contained herein, the Holder shall not be entitled to convert
this Note in accordance with Section 3 to the extent that such conversion would cause the Holder to become, directly or
indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) of a number of shares of Common Stock that exceeds 4.99% of the shares of Common Stock
outstanding at such time. This limitation on beneficial ownership may be increased (but only up to 9.99% of the shares of Common
Stock outstanding at such time), decreased, or terminated, in the Holder’s sole discretion, upon sixty-one (61) days’
notice to the Company by the Holder.

 

    	3

    	 

    

 

Article
IV. PREPAYMENT

 

4.1 Prepayment.
Notwithstanding anything to the contrary contained in this Note, the Company may prepay the amounts outstanding hereunder pursuant
to the following terms and conditions:

 

(a) The
Company shall have the right, exercisable on not less than two (2) trading days prior written notice (a “Prepayment Notice”)
to the Holder, to prepay the Note (outstanding principal and accrued interest), in whole or in part, according to the following
schedule:

 

(i) From
the issuance date of this Note until March 31, 2020, this Note may be prepaid with a prepayment penalty equal to fifteen percent
(15%) of the principal amount to be prepaid;

 

(ii) From
April 1, 2020 until May 15, 2020, this Note may be prepaid with a prepayment penalty equal to twenty-five percent (25%) of the
principal amount to be prepaid;

 

(iii) From
May 16, 2020 until June 30, 2020, this Note may be prepaid with a prepayment penalty equal to thirty percent (30%) of the principal
amount to be prepaid;

 

(iv) After
June 30, 2020, this Note may not be prepaid without approval from the Holder.

 

(b) Notwithstanding
the Prepayment Notice, upon receipt of such notice and prior to the prepayment date (the “Prepayment Date”)
specified by the Company in the Prepayment Notice, the Holder may elect to convert any outstanding portion of the Note, including
any accrued interest, by submitting a Notice of Conversion to the Company as set forth in this Note.

 

Article
V. CERTAIN COVENANTS

 

5.1 Sale
or Disposition of Assets. So long as the Company shall have any obligation under this Note, the Company shall not, without
the Holder’s written consent, sell, lease, or otherwise dispose of all or substantially all of its assets outside the ordinary
course of business unless the proceeds of any disposition of its assets shall be used to repay this Note.

 

5.2 Non-Circumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate or Articles of Incorporation
or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance
or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms
of this Note, and will at all times in good faith carry out all the provisions of this Note and take all action as may be required
to protect the rights of the Holder.

 

    	4

    	 

    

 

Article
VI. EVENTS OF DEFAULT

 

6.1 Events
of Default. The occurrence of any of the following events shall constitute an “Event of Default”:

 

(a) Failure
to Pay Principal or Interest. The Company fails to pay the principal hereof or interest thereon when due on this Note and
such non-payment continues for a period of fifteen (15) days.

 

(b) Failure
to Deliver Conversion Shares. The Company fails to issue and deliver or cause to issue and deliver the Conversion Shares to
the Holder for a period of fifteen (15) days from the Conversion Date, provided that, an Event of Default shall not occur under
this Section 6.1(b) if the Company shall have delivered proper issuance instructions for the Conversion Shares to its stock
transfer agent prior to such date.

 

(c) Failure
to Maintain Reserve. The Company fails to establish or maintain the required reserve of shares of Common Stock as provided
under Section 3.3(f) and such breach continues for a period of fifteen (15) days.

 

(d) Breach
of Covenants. The Company breaches any material covenant or other material term or condition contained in this Note or any
other Transaction Documents and such breach continues for a period of fifteen (15) days.

 

(e) Breach
of Representations or Warranties. Any representation or warranty of the Company made in this Note or any other Transaction
Documents shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time
will have) a material adverse effect on the rights of the Holder with respect to this Note or any other Transaction Documents,
and such breach continues for a period of fifteen (15) days.

 

(f) Bankruptcy.
Bankruptcy, insolvency, reorganization, or liquidation proceedings, or other proceedings, voluntary or involuntary, for relief
under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company or any subsidiary
of the Company; or the Company admits in writing its inability to pay its debts generally as they mature, provided that, any disclosure
of the Company’s ability to continue as a “going concern” shall not be an admission that the Company cannot
pay its debts as they become due; or the Company or any subsidiary of the Company shall make an assignment for the benefit of
creditors or commence proceedings for its dissolution, or apply for or consent to the appointment of a receiver or trustee for
it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed for the Company
or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after
such appointment; or any dissolution, liquidation, or winding up of Company or any substantial portion of its business.

 

(g) Change
of Control. The occurrence after the date hereof of any of (a) an acquisition by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company,
other than in connection with an underwritten public offering, (b) the Company consummates a merger or similar transaction, after
giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of
the aggregate voting power of the Company or the successor entity of such transaction, or (c) the Company sells or transfers all
or substantially all of its assets and the stockholders of the Company immediately prior to such transaction own less than 50%
of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within
a two year period of more than half of the members of the Board of Directors, if not approved by a majority of the Board of Directors,
(e) David G. Watumull and David M. Watumull shall both have been terminated by the Company as Chief Executive Officer and Chief
Operating Officer other than for cause, or (f) the execution by the Company of an agreement to which the Company is a party or
by which it is bound, providing for any of the events set forth in clauses (a) through (e) above

 

    	5

    	 

    

 

(h) Judgments.
Any money judgment, writ, or similar process shall be entered or filed against the Company or any subsidiary of the Company or
any of its property or other assets for more than $500,000, and shall remain unvacated, unbonded, or unstayed for a period of
one-hundred eighty (180) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

(i) Failure
to Comply with the Exchange Act. The Company shall fail to comply with the reporting requirements of the Exchange Act (including
but not limited to becoming delinquent in its filings) and/or the Company shall cease to be subject to the reporting requirements
of the Exchange Act, and such failure continues for a period of fifteen (15) days.

 

(j) Suspension
of Trading of Common Stock. Any suspension of trading of the Common Stock on at least one on the OTCQB or on the principal
securities exchange or other securities market on which the Common Stock is then being traded, and such suspension of trading
shall continue for a period of five consecutive (5) trading days.

 

(k) Delisting
of Common Stock. The Company shall fail to maintain the listing of the Common Stock on the OTCQB or on the principal securities
exchange or other securities market on which the Common Stock is then being traded, and such delisting continues for a period
of fifteen (15) days.

 

6.2 Remedies
Upon Event of Default. Upon an Event of Default, the outstanding principal amount of this Note multiplied by 105%, plus accrued
and unpaid interest, shall become, at the Holder’s election, immediately due and payable in cash. In lieu of cash payment,
the Holder may elect to receive from time to time all or part of the outstanding principal amount of this Note, plus accrued and
unpaid interest, in Conversion Shares. Such acceleration may be rescinded and annulled by the Holder at any time prior to payment
hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment
pursuant to this Section 6.2. No such rescission or annulment shall affect any subsequent Event of Default or impair any
right consequent thereon.

 

[signature
page follows]

 

    	6

    	 

    

 

 

IN
WITNESS WHEREOF, Company has caused this Note to be signed in its name by its duly authorized officer as of the date first above
written.

 

	 	CARDAX, INC.
	 	 
	 	By:	
	 	Name:	David
    G. Watumull
	 	Title:	President
    and CEO

 

    	7

    	 

    

 

EXHIBIT
I

NOTICE
OF CONVERSION 

 

The
undersigned hereby elects to convert $_________________ principal amount of the Note (defined below) together with $________________
of accrued and unpaid interest thereto, totaling $_____________ into that number of shares
of Common Stock of Cardax, Inc., a Delaware corporation (the “Company”), to
be issued pursuant to the conversion of the Note as set forth below, according to the conditions of the Secured Convertible
Promissory Note of the Company dated as of January _, 2020 (the “Note”), as of the date written below. No
fee will be charged to the Holder for any conversion, except for transfer taxes, if any. This Notice of Conversion is irrevocable
unless otherwise agreed by the Company.

 

Delivery
instructions:

 

	 	[  ]
    	The
    Company shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
    undersigned or its nominee with DTC through its Deposit Withdrawal At Custodian system (“DWAC Transfer”), provided
    that such shares are eligible for deposit.

 

	 	 	Name
of DTC Prime Broker: ____________________________________________
	 	 	DTC
    Participant Number:  _______________________________________________
	 	 	Account
    Number:  _____________________________________________________

 

	 	[  ]
    	The
    undersigned hereby requests that the Company issue the number of shares of Common Stock set forth below (which numbers are
    based on the Holder’s calculation attached hereto) in the name(s) and form specified immediately below or, if additional
    space is necessary, on an attachment hereto:

 

	 	 	Name:
_____________________________________________________________    
	 	 	Address:
    ___________________________________________________________
	 	 	Form:
    [  ] Physical Certificate      [  ] Book Entry

 

	Date
    of Conversion:	 	_____________
	 	 	 
	Applicable
    Conversion Price:	 	$____________
	 	 	
	Number
    of Shares of Common Stock to be Issued	 	
	Pursuant
    to Conversion of the Note:	 	_____________
	 	 	 
	Amount
    of Principal Balance Due Remaining	 	 
	Under
    the Note after this Conversion:	 	$____________
	 	 	 
	Accrued
    and Unpaid Interest Remaining:	 	$____________

 

Harbor
Gates Capital, LLC

 

	By:	 	 	 
	Name: 	 	 	Date
	Title:Exhibit 10.3

 

SECURITY
AGREEMENT

 

This
SECURITY AGREEMENT, dated as of January _, 2020 (this “Agreement”), is by and between Cardax, Inc.,
a Delaware corporation (the “Debtor”) and Harbor Gates Capital, LLC (the “Payee”), its endorsees,
transferees, and assigns (collectively, with the Payee, the “Secured Parties”).

 

W
I T N E S S E T H:

 

WHEREAS,
the Debtor has executed and delivered to the Payee that certain Securities Purchase Agreement (the “SPA”),
pursuant to which the Debtor sold and issued a Convertible Promissory Note in the original aggregate principal amount of $262,500
(the “Note”) to the Secured Parties;

 

WHEREAS,
as a material inducement to the Payee to execute and deliver the SPA, and to purchase the Note, and to enter into all of the other
agreements to be entered into in connection with the transactions contemplated by the SPA and the Note (collectively, the “Transaction
Documents”), the Payee has requested the Debtor to enter into this Security Agreement and to cause its Subsidiary to
enter into the Subsidiary Guarantee;

 

WHEREAS,
pursuant to a certain Subsidiary Guarantee, dated as of the date hereof (the “Subsidiary Guarantee”), the Guarantors
(as defined in the Subsidiary Guarantee) have jointly and severally agreed to guarantee and act as surety for payment of the Note
and each of the other obligations of the Debtor represented by the Transaction Documents; and

 

WHEREAS,
in order to induce the Payee to extend the loans evidenced by the Note and to enter into all of the other agreements to be entered
into in connection with the transactions contemplated thereby and by the SPA, the Debtor has agreed to execute and deliver to
the Payee this Agreement and to cause the Guarantors to execute and deliver the Subsidiary Guarantee such that the Debtor and
the Guarantors shall have granted to the Payee and the other Secured Parties, pari passu with each Secured Party, a security
interest in certain property of the Debtor and Guarantors to secure the prompt payment, performance and discharge in full of all
of the Debtor’s obligations under the Note and the other Transaction Documents and the Guarantors’ obligations under
the Subsidiary Guarantee.

 

NOW,
THEREFORE, in consideration of the premises and for such other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto intending to be legally bound 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 Party is granted a security interest by this Agreement and that shall include the following
personal property of the Debtor, 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:

 

(i) All
finished goods, including, without limitation, all inventory;

 

    	 	1	 

    	 

    

 

(ii) All
accounts, together with all instruments, all documents of title representing any of the foregoing, and all right, title, security
and guaranties with respect to each account, including any right of stoppage in transit; and

 

(iii) the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ii), above.

 

All
items of Collateral shall be listed on Schedule A, which listing the Debtor shall update on the first business day of each
month and shall cause each of the Guarantors similarly to update the Collateral in respect of the Subsidiary Guarantee.

 

Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset that, 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.

 

(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) “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 the Debtor to the Secured Party, including, without
limitation, all obligations under this Agreement, the Note, the Subsidiary 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 Party 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 Debtor from time
to time under or in connection with this Agreement, the Note, the Subsidiary 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
the Debtor and the Guarantors.

 

    	 	2	 

    	 

    

 

(d) “Permitted
Liens” shall be those liens evidenced by the security interests listed on Exhibit A.

 

(e) “UCC”
means the Uniform Commercial Code of the State of California and or any other applicable law of any state or states that 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. Subject to the Permitted Liens, as an inducement for the Payee 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, of all of the
Obligations, the Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Party 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. Representations,
Warranties, Covenants, and Agreements of the Debtor. Except as set forth under the corresponding section of the disclosure
schedules delivered to the Secured Party concurrently herewith (the “Disclosure Schedules”), which Disclosure
Schedules shall be deemed a part hereof, the Debtor represents and warrants to, and covenants and agrees with, the Secured Party
as follows:

 

(a) The
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 the Debtor of this Agreement
and the filings contemplated therein have been duly authorized by all necessary action on the part of the Debtor and no further
action is required by the Debtor. This Agreement has been duly executed by the Debtor. This Agreement constitutes the legal, valid,
and binding obligation of the Debtor, enforceable against the 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.

 

    	 	3	 

    	 

    

 

(b) The
Debtor has no place of business or offices where its 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, the 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 the Permitted Liens. 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 and except as set forth on Schedule B attached hereto, the Debtor are the sole owner of the Collateral
(except for non-exclusive licenses granted by the Debtor in the ordinary course of business), free and clear of any liens, security
interests, encumbrances, rights or claims, and 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 Party 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 Debtor 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 Party pursuant to the terms of
this Agreement).

 

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

 

(e) The
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 Party at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate
financing statements 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 Party a valid, perfected and continuing perfected first priority
lien in the Collateral.

 

(f) This
Agreement creates in favor of the Secured Party a valid security interest in the Collateral, subject only to Permitted Liens securing
the payment and performance of the Obligations. Upon making the filings described in the immediately following paragraph, all
security interests created hereunder in any Collateral that may be perfected by filing Uniform Commercial Code financing statements
shall have been duly perfected. Except for the filing of the Uniform Commercial Code financing statements referred to in the immediately
following paragraph, 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 Debtor, 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, 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 Secured Party hereunder.

 

    	 	4	 

    	 

    

 

(g) The
Debtor hereby authorizes the Secured Party to file one or more financing statements under the UCC, with respect to the Security
Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it.

 

(h) The
execution, delivery and performance of this Agreement by the Debtor does not (i) violate any of the provisions of any Organizational
Documents of the Debtor or any judgment, decree, order, or award of any court, governmental body or arbitrator or any applicable
law, rule or regulation applicable to the Debtor or (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
the Debtor’s debt or otherwise) or other understanding to which the Debtor is a party or by which any property or asset
of the Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors
of the Debtor) necessary for the Debtor to enter into and perform its obligations hereunder have been obtained.

 

(i) Except
for Permitted Liens, the 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 Party until this Agreement and
the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. The Debtor hereby agrees to defend the same
against the claims of any and all persons and entities. The Debtor shall safeguard and protect all Collateral for the account
of the Secured Party. At the request of the Secured Party, the Debtor will sign and deliver to the Secured Party at any time or
from time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Secured Party and
will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Secured Party to be, necessary
or desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Debtor
shall pay all fees, taxes and other amounts necessary to maintain the Collateral and the Security Interests hereunder, and the
Debtor shall obtain and furnish to the Secured Party from time to time, upon demand, such releases and/or subordinations of claims
and liens that may be required to maintain the priority of the Security Interests hereunder.

 

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

 

    	 	5	 

    	 

    

 

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

 

(l) The
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. The Debtor shall cause each insurance policy issued in connection herewith to provide, and
the insurer issuing such policy to certify to the Secured Party, that (i) the Secured Party will be named as lender loss payee
and additional insured under each such insurance policy; (ii) if such insurance be proposed to be cancelled or materially changed
for any reason whatsoever, such insurer will promptly notify the Secured Party and such cancellation or change shall not be effective
as to the Secured Party for at least thirty (30) days after receipt by the Secured Party of such notice, unless the effect of
such change is to extend or increase coverage under the policy; and (iii) the Secured Party 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 $100,000, 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 the Debtor after an Event of Default occurs and is continuing or in excess of $100,000 for any occurrence
or series of related occurrences shall be paid to the Secured Party and, if received by the Debtor, shall be held in trust for
the Secured Party and immediately paid over to the Secured Party unless otherwise directed in writing by the Secured Party. Copies
of such policies or the related certificates, in each case, naming the Secured Party as lender loss payee and additional insured
shall be delivered to the Secured Party at least annually and at the time any new policy of insurance is issued.

 

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

 

(n) The
Debtor shall promptly execute and deliver to the Secured Party such further deeds, mortgages, assignments, security agreements,
financing statements, or other instruments, documents, certificates, and assurances and take such further action as the Secured
Party may from time to time request and may in its sole discretion deem necessary to perfect, protect, or enforce the Secured
Party’s security interest in the Collateral including, without limitation in which the Secured Party has been granted a
security interest hereunder substantially in a form reasonably acceptable to the Secured Party.

 

(o) The
Debtor shall permit the Secured Party 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 Secured Party from time to time.

 

    	 	6	 

    	 

    

 

(p) The
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.

 

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

 

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

 

(s) The
Debtor 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.

 

(t) The
Debtor will not 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 thirty (30)
days’ prior written notice to the Secured Party of such change and, at the time of such written notification, the Debtor
provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests
granted and evidenced by this Agreement.

 

(u) The
Debtor may not 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 Secured Party, which shall not be unreasonably withheld, delayed, denied,
or conditioned.

 

(v) The
Debtor may not relocate its chief executive office to a new location without providing 30 days prior written notification thereof
to the Secured Party and so long as, at the time of such written notification, the Debtor provides any financing statements or
fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

 

(w) The
Debtor was organized and remains organized solely under the laws of the state of Delaware.

 

(x) The
Debtor does not have any trade names except, has not used any name other than that stated in the preamble hereto, and no entity
has merged into the Debtor or been acquired by the Debtor within the past five years.

 

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

 

(z) The
Debtor will from time to time, at its expense, 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 Secured Party may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby or to enable the Secured Party 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.

 

    	 	7	 

    	 

    

 

4. Reserved.

 

5. 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 the Debtor in this Agreement shall prove to have been incorrect in any material respect when made;

 

(c) The
failure by the Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to it of notice
of such failure by or on behalf of the Secured Party unless such default is capable of cure but cannot be cured within such time
frame and the Debtor is using commercially reasonable efforts to cure same in a timely fashion; or

 

(d) If
any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by the Debtor, or a proceeding shall be commenced by the Debtor, or by any governmental authority having
jurisdiction over the Debtor, seeking to establish the invalidity or unenforceability thereof, or the Debtor shall deny that the
Debtor has any liability or obligation purported to be created under this Agreement.

 

6. Duty
to Hold in Trust. Upon the occurrence of any Event of Default and at any time thereafter, the 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 Party and shall forthwith endorse and transfer any such sums or instruments, or both, to
the Secured Party, for application to the satisfaction of the Obligations.

 

7. Rights
and Remedies Upon Default.

 

(a) Upon
the occurrence of any Event of Default and at any time thereafter, the Secured Party, shall have the right to exercise all of
the remedies conferred hereunder and under the Note, and the Secured Party shall have all the rights and remedies of a secured
party under the UCC. Without limitation, the Secured Party shall have the following rights and powers:

 

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

 

    	 	8	 

    	 

    

 

(ii) The
Secured Party shall have the right to operate the business of the 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 Debtor may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to
the Debtor or right of redemption of the Debtor, that are hereby expressly waived. Upon each such sale, lease, assignment or other
transfer of Collateral, the Debtor, for the benefit of the Secured Party, may, unless prohibited by applicable law that cannot
be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption
and equities of the Debtor, that are hereby waived and released.

 

(iii) The
Secured Party shall have the right (but not the obligation) to notify any account Debtor and any obligors under instruments or
accounts to make payments directly to the Secured Party, and to enforce the Debtor’s rights against such account Debtor
and obligors.

 

(iv) The
Secured Party 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 Secured Party, or its designee.

 

b) The
Secured Party 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 Secured Party may sell the
Collateral without giving any warranties and may specifically disclaim such warranties. If the Secured Party sells any of the
Collateral on credit, the Debtor will only be credited with payments actually made by the purchaser. In addition, the Debtor waives
any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Secured Party’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.

 

(c) For
the purpose of enabling the Secured Party to further exercise rights and remedies under this Section 8 or elsewhere provided by
agreement or applicable law, the Debtor hereby grants to the Secured Party, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to the Debtor) to use, license or sublicense following an Event of Default, any
Intellectual Property now owned or hereafter acquired by the Debtor relating to the inventory of the 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.

 

8. 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 Secured
Party in enforcing its rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to
satisfaction of the Obligations pro rata among the Secured Party (based on then-outstanding principal amounts of the Note at the
time of any such determination), and to the payment of any other amounts required by applicable law, after which the Secured Party
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 Party is legally entitled, the Debtor will be liable
for the deficiency, together with interest thereon, at the rate of ten percent (10%) per annum or the lesser amount permitted
by applicable law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Party
to collect such deficiency. To the extent permitted by applicable law, the Debtor waives all claims, damages and demands against
the Secured Party 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 Party as determined by a final judgment (not subject to further appeal) of a court
of competent jurisdiction.

 

    	 	9	 

    	 

    

 

10. Costs
and Expenses. The 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 Secured
Party. The Debtor shall also pay all other claims and charges that in the reasonable opinion of the Secured Party are reasonably
likely to prejudice, imperil, or otherwise affect the Collateral or the Security Interests therein. The Debtor will also, upon
demand, pay to the Secured Party the amount of any and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that the Secured Party 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 Secured Party the amount of any and all reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents, that the Secured Party 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 Party 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.

 

11. Responsibility
for Collateral. The Debtor 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) the Secured Party does not have any (i) 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) obligation to clean-up or otherwise prepare the Collateral for sale and (b) the Debtor shall remain
obligated and liable under each contract or agreement included in the Collateral to be observed or performed by it. The Secured
Party shall not 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 Secured Party of any payment relating to any of the Collateral, nor shall the Secured Party be obligated
in any manner to perform any of the obligations of the 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 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 that may have been assigned to the Secured Party or to which the Secured
Party may be entitled at any time or times.

 

    	 	10	 

    	 

    

 

12. Security
Interests Absolute. All rights of the Secured Party and all obligations of the Debtor hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement, 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 Party to obtain, adjust, settle
and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any
other circumstance that 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 Party shall continue even if the Obligations are barred for any reason, including, without limitation, the running
of the statute of limitations or bankruptcy. The 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 Party hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference
or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due
to any party other than the Secured Party, then, in any such event, the 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. The Debtor waives
all right to require the Secured Party to proceed against any other person or entity or to apply any Collateral that the Secured
Party may hold at any time, or to marshal assets, or to pursue any other remedy. The Debtor waives any defense arising by reason
of the application of the statute of limitations to any obligation secured hereby.

 

13. 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 Debtor contained in this Agreement shall survive and remain operative and in full force and effect regardless
of the termination of this Agreement.

 

14. Power
of Attorney; Further Assurances.

 

(a) The
Debtor authorizes the Secured Party and does hereby make, constitute and appoint the Secured Party, its officers, agents, successors
or assigns with full power of substitution, as the Debtor’s true and lawful attorney-in-fact, with power, in the name of
the Secured Party or the 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 Secured Party; (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
Debtor, 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 Secured Party and at the expense of the Debtor, 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 that the Secured Party 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 Debtor might or could do; and the 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 the Debtor is subject or to which the Debtor is a party.

 

    	 	11	 

    	 

    

 

(b) On
a continuing basis, the 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 Exhibit C
attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as
reasonably requested by the Secured Party, to perfect the Security Interests granted hereunder and otherwise to carry out the
intent and purposes of this Agreement, or for assuring and confirming to the Secured Party the grant or perfection of a perfected
security interest in all the Collateral under the UCC.

 

(c) The
Debtor hereby irrevocably appoints the Secured Party as the Debtor’s attorney-in-fact, with full authority in the place
and instead of the Debtor and in the name of the Debtor, from time to time in the Secured Party’s discretion, to take any
action and to execute any instrument that the Secured Party 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 the 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 Secured Party. 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.

 

15. Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Note.

 

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

 

17. Miscellaneous.

 

(a) No
course of dealing between the Debtor and the Secured Party, nor any failure to exercise, nor any delay in exercising, on the part
of the Secured Party, any right, power or privilege hereunder or under the 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.

 

    	 	12	 

    	 

    

 

(b) All
of the rights and remedies of the Secured Party 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, together with the exhibit hereto, contains the entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, that the parties
acknowledge have been merged into this Agreement and the exhibits and schedules hereto. 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 Debtor and
the Secured Party 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 contemplated
by such term, 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.

 

(f) This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtor
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Secured Party. The
Secured Party may assign any or all of its rights under this Agreement to any entity or person to whom the 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 Party.

 

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

 

(h) 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 California, 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, the 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 State of New York. Except to the extent
mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in New York City 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. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby.

 

    	 	13	 

    	 

    

 

(i) 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
transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature
is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

 

(j) The
Debtor shall indemnify, reimburse and hold harmless the Secured Party and its partners, members, shareholders, officers, directors,
employees and agents (and any other persons with other titles that have similar functions) (collectively, the “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 that 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 or any
other agreement, instrument or other document executed or delivered in connection herewith or therewith.

 

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

 

(l) 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 the Debtor or any direct or indirect subsidiary of the Debtor or
compliance with any provisions of any of the Organizational Documents, the Debtor hereby grant such consent and approval and waive
any such noncompliance with the terms of said documents.

 

    	 	14	 

    	 

    

 

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

 

	CARDAX,
    INC.	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

[SIGNATURE
PAGE OF HOLDERS FOLLOWS]

 

    	 	15	 

    	 

    

 

[SIGNATURE
PAGE OF HOLDERS TO SECURITY AGREEMENT]

 

Name
of Investing Entity: Harbor Gates Capital, LLC

 

Signature
of Authorized Signatory of Investing entity: _________________________

 

Name
of Authorized Signatory: _________________________

 

Title
of Authorized Signatory: __________________________

 

    	 	16	 

    	 

    

 

EXHIBIT
B

 

PERMITTED
LIENS

 

None.

 

    	 	17	 

    	 

    

 

ANNEX
A

to

SECURITY
AGREEMENT

 

FORM
OF ADDITIONAL DEBTOR JOINDER

 

Security
Agreement dated as of January _, 2020 made by Cardax, Inc. as Debtor 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 Debtor
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 SECURITY AGREEMENT AND 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:

 

    	 	18

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