Document:

Blueprint

 

Exhibit 10.2

 

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (the “Agreement”) is made
and entered into as of this 28th day of June 2016 (the
“Closing Date”) by and among ENDRA Life Sciences Inc.,
a Delaware corporation (the “Company”), the
“Buyers” named in that certain Securities Purchase
Agreement by and among the Company and the Buyers (the
“Purchase Agreement”) and National Securities
Corporation (“NSC”) (together, the Buyers and NSC are
referred to as the “Holders”) . Capitalized terms used
herein have the respective meanings ascribed thereto in the
Purchase Agreement unless otherwise defined herein.

 

The
parties hereby agree as follows:

 

1.

Certain
Definitions.

 

As used
in this Agreement, the following terms shall have the following
meanings:

 

“Common Stock” means the
common stock, $.0001 par value, of the Company.

 

“Holders” means the
Buyers, together with NSC and any Affiliate or permitted transferee
of NSC who is a subsequent holder of any Registrable
Securities.

 

“Buyers” means the Buyer
identified in the Purchase Agreement and any Affiliate or permitted
transferee of any Buyer who is a subsequent holder of any
Registrable Securities.

 

“Placement
Agent Warrants” means the warrants to purchase shares of
common stock of the Company issued to NSC as the Placement Agent
under the terms of the Purchase Agreement and a Placement Agent
Agreement, in connection with the offering of securities under the
Purchase Agreement.

 

“Prospectus” means (i) any
prospectus (preliminary or final) included in any Registration
Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and
by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated
by reference in such prospectus, and (ii) any “issuer free
writing prospectus” as defined in Rule 433 under the 1933
Act.

 

“Register,”
“registered” and
“registration” refer to a
registration made by preparing and filing a Registration Statement
or similar document in compliance with the 1933 Act (as defined
below), and the declaration or ordering of effectiveness of such
Registration Statement or document.

 

“Registrable Securities”
means (i) the shares of Common Stock that are issuable upon the
conversion of the Notes and upon exercise of the Warrants and the
Placement Agent Warrants, and (ii) any other securities issued or
issuable with respect to or in exchange for the Shares, whether by
merger, charter amendment, or otherwise; provided, that, a security
shall cease to be a Registrable Security upon (A) sale pursuant to
a Registration Statement or Rule 144 under the 1933 Act, or (B)
such security becoming eligible for sale without restriction by a
Holder pursuant to Rule 144.

 

1

 

 

 

“Registration Statement”
means any registration statement of the Company filed under the
1933 Act that covers the resale of any of the Registrable
Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material
incorporated by reference in such Registration
Statement.

 

“Required Holders” means
the Holders beneficially owning a majority of the then Registrable
Securities.

 

“SEC” means the U.S.
Securities and Exchange Commission.

 

“Shares”
means the common stock, $.0001 par value, of the Company that is
issuable upon conversion of the Notes or upon exercise of the
Warrants and the Placement Agent Warrants.

 

“1933
Act” means
the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“1934 Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

2.

Registration.

 

(a) Registration
Statements.

 

(i) Initial
Registration Statement. On or
before the 45th
day after the final Closing Date of
the offering of Notes and Warrants under the Purchase Agreement and
related Transaction Documents (the “Filing Deadline”),
the Company shall prepare and file with the SEC one Registration
Statement on Form S-3 (or, if Form S-3 is not then available to the
Company, on such form of registration statement as is then
available to effect a registration for resale of the Registrable
Securities), covering the resale of the Registrable Securities.
Subject to any SEC comments, such Registration Statement shall
include the plan of distribution attached hereto as
Exhibit
A; provided, however, that no
Holder shall be named as an “underwriter” in the
Registration Statement without the Holder’s prior written
consent, provided, further, any Holder who unreasonably refuses to
be named as an underwriter in the Registration Statement shall be
excluded as a selling shareholder from the Registration Statement.
Such Registration Statement also shall cover, to the extent
allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional
shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities.
Such Registration Statement shall not include any shares of Common
Stock or other securities of the Company for the account of any
other person without the prior written consent of the Required
Holders. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section
3(c) to the Holders prior to its filing or other submission. If a
Registration Statement covering the Registrable Securities is not
filed with the SEC on or prior to the Filing Deadline, the Company
will make pro rata payments to each Holder, as liquidated damages
and not as a penalty, in an amount equal to 1.0% of the aggregate
amount invested by the Holder pursuant to the Purchase Agreement
for each 30-day period or pro rata for any portion thereof
following the Filing Deadline for which no Registration Statement
is filed with respect to the Registrable Securities. Such payments
shall constitute the Holders’ exclusive monetary remedy for
such events, but shall not affect the right of the Holders to seek
injunctive relief. Such payments shall be made to each Holder in
cash no later than three (3) Business Days after the end of each
30-day period.

 

 

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(b) Expenses.
The Company will pay all expenses associated with effecting the
registration of the Registrable Securities, including filing and
printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities
for sale under applicable state securities laws, listing fees and
the Holders’ other reasonable expenses in connection with the
registration, but excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable
Securities being sold and excluding the fees and disbursements of
counsel to any Holder.

 

(c) Effectiveness.

 

(i) The
Company shall use commercially reasonable efforts to have any
Registration Statement declared effective as soon as practicable.
The Company shall notify the Holders by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24)
hours, after any Registration Statement is declared effective and
shall simultaneously provide the Holders with copies of any related
Prospectus to be used in connection with the sale or other
disposition of the securities covered thereby.

 

(ii) For
not more than forty (40) consecutive days or for a total of not
more than sixty (60) days in any twelve (12) month period, the
Company may suspend the use of any Prospectus included in any
Registration Statement contemplated by this Section in the event
that the Company determines in good faith that such suspension is
necessary to (A) delay the disclosure of material non-public
information concerning the Company, the disclosure of which at the
time is not, in the good faith opinion of the Company, in the best
interests of the Company or (B) amend or supplement the affected
Registration Statement or the related Prospectus so that such
Registration Statement or Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading (an
“Allowed Delay”); provided, that the Company shall
promptly (a) notify each Holder in writing of the commencement of
an Allowed Delay, but shall not (without the prior written consent
of an Holder) disclose to such Holder any material non-public
information giving rise to an Allowed Delay, (b) advise the Holders
in writing to cease all sales under the Registration Statement
until the end of the Allowed Delay, and (c) use commercially
reasonable efforts to terminate an Allowed Delay as promptly as
practicable.

 

(d) Rule
415; Cutback If at any time the
SEC takes the position that the offering of some or all of the
Registrable Securities in a Registration Statement is not eligible
to be made on a delayed or continuous basis under the provisions of
Rule 415 under the 1933 Act or requires any Holder to be named as
an “underwriter”, the Company shall use its commercial
best efforts to persuade the SEC that the offering contemplated by
a Registration Statement is a bona fide secondary offering and not
an offering “by or on behalf of the issuer” as defined
in Rule 415 and that none of the Holders is an
“underwriter”. In the event that, despite the
Company’s commercial best efforts and compliance with the
terms of this Section 2(d), the SEC refuses to alter its position,
the Company shall (i) remove from the Registration Statement such
portion of the Registrable Securities (the “Cut Back
Shares”) and/or (ii) agree to such restrictions and
limitations on the registration and resale of the Registrable
Securities as the SEC may require to assure the Company’s
compliance with the requirements of Rule 415 (collectively, the
“SEC Restrictions”). Any cut-back imposed pursuant to
this Section 2(d) shall be allocated among the Holders on a pro
rata basis, unless the SEC Restrictions otherwise require or
provide or the Holders otherwise agree. Any cut-back imposed
pursuant to a SEC comment shall be applied, first,
to securities of the Company that are registered pursuant to an
agreement subsequent to the date of this Agreement and,
second,
to the Registrable Securities on a pro rata basis taken together.
No liquidated damages shall accrue as to any Cut Back Shares until
such date as the Company is able to effect the registration of such
Cut Back Shares in accordance with any SEC Restrictions (such date,
the “Restriction Termination Date” of such Cut Back
Shares). From and after the Restriction Termination Date applicable
to any Cut Back Shares, all of the provisions of this Section 2
(including the liquidated damages provisions) shall again be
applicable to such Cut Back Shares; provided, however, that (i) the
Filing Deadline for the Registration Statement including such Cut
Back Shares shall be ten (10) Business Days after such Restriction
Termination Date, and (ii) the date by which the Company is
required to obtain effectiveness with respect to such Cut Back
Shares under Section 2(c) shall be the 60th
day immediately after the Restriction
Termination Date.

 

 

3

 

 

 

(e) Right
to Piggyback Registration.

 

(i) If
at any time following the date of this Agreement that any
Registrable Securities remain outstanding and are not freely
tradable under Rule 144 (A) there is not one or more effective
Registration Statements covering all of the Registrable Securities
and (B) the Company proposes for any reason to register any shares
of Common Stock under the 1933 Act (other than pursuant to a
registration statement on Form S-4 or Form S-8 (or a similar or
successor form) or a shelf registration statement on Form S-3) with
respect to an offering of Common Stock by the Company for its own
account or for the account of any of its stockholders, it shall at
each such time promptly give written notice to the holders of the
Registrable Securities of its intention to do so (but in no event
less than thirty (30) days before the anticipated filing date) and,
to the extent permitted under the provisions of Rule 415 under the
1933 Act, include in such registration all Registrable Securities
with respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after receipt of the
Company’s notice (a “Piggyback
Registration”).

 

(ii) Notwithstanding
the foregoing, (A) if such registration involves an underwritten
public offering, the Holders must sell their Registrable Securities
to, if applicable, the underwriter(s) at the same price and subject
to the same underwriting discounts and commissions that apply to
the other securities sold in such offering (it being acknowledged
that the Company shall be responsible for other expenses as set
forth in Section 2(b)) and subject to the Holders entering into
customary underwriting documentation for selling stockholders in an
underwritten public offering, and (B) if, at any time after giving
written notice of its intention to register any Registrable
Securities pursuant to Section 2(e)(i) and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to
cause such registration statement to become effective under the
1933 Act, the Company shall deliver written notice to the Holders
and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration;
provided, however, that nothing contained in this Section 2(e)(ii)
shall limit the Company’s liabilities and/or obligations
under this Agreement, including, without limitation, the obligation
to pay liquidated damages under this Section 2.

 

3.

Company
Obligations. The Company will
use commercially reasonable efforts to effect the registration of
the Registrable Securities in accordance with the terms hereof, and
pursuant thereto the Company will, as expeditiously as
possible:

 

(a) use
commercially reasonable efforts to cause such Registration
Statement to become effective and to remain continuously effective
for a period that will terminate upon the earlier of (i) the date
on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold, or (ii) the
date on which all Registrable Securities covered by such
Registration Statement may be sold without restriction pursuant to
Rule 144 (the “Effectiveness Period”) and advise a
Holder in writing when the Effectiveness Period has expired as to
their respective Registrable Securities;

 

 

4

 

 

 

(b) prepare
and file with the SEC such amendments and post-effective amendments
to the Registration Statement and the Prospectus as may be
necessary to keep the Registration Statement effective for the
Effectiveness Period and to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all of the
Registrable Securities covered thereby;

 

(c) provide
copies to the Holders to review each Registration Statement and all
amendments and supplements thereto no fewer than seven (7) days
prior to their filing with the SEC and not file any document to
which the Holder reasonably objects;

 

(d) use
commercially reasonable efforts to (i) prevent the issuance of any
stop order or other suspension of effectiveness and, (ii) if such
order is issued, obtain the withdrawal of any such order at the
earliest possible moment;

 

(e) prior to any public offering of Registrable
Securities, if the Common Stock is not traded on a national
securities exchange (as defined by the SEC) use commercially
reasonable efforts to register or qualify or cooperate with the
Holders in connection with the registration or qualification of
such Registrable Securities for offer and sale under the securities
or blue sky laws of such U.S. jurisdictions requested by the
Holders and do any and all other commercially reasonable acts or
things necessary or advisable to enable the distribution in such
U.S. jurisdictions of the Registrable Securities covered by the
Registration Statement; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (i)
qualify to do business in any U.S. jurisdiction where it would not
otherwise be required to qualify but for this Section 3(f), (ii)
subject itself to general taxation in any jurisdiction where it
would not otherwise be so subject but for this Section 3(f), or
(iii) file a general consent to service of process in any such
jurisdiction;

 

(f) use
commercially reasonable efforts to cause all Registrable Securities
covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which
similar securities issued by the Company are then
listed;

 

(g) immediately
notify the Holders, at any time prior to the end of the
Effectiveness Period, upon discovery that, or upon the happening of
any event as a result of which, the Prospectus includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing,
and promptly prepare, file with the SEC and furnish to such holder
a supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
existing;

 

 

5

 

 

 

(h) otherwise
use commercially reasonable efforts to comply with all applicable
rules and regulations of the SEC under the 1933 Act and the 1934
Act, including, without limitation, Rule 172 under the 1933 Act,
file any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act,
promptly inform the Holders in writing if, at any time during the
Effectiveness Period, the Company does not satisfy the conditions
specified in Rule 172 and, as a result thereof, the Holders are
required to deliver a Prospectus in connection with any disposition
of Registrable Securities and take such other actions as may be
reasonably necessary to facilitate the registration of the
Registrable Securities hereunder; and make available to its
security holders, as soon as reasonably practicable, but not later
than the Availability Date (as defined below), an earnings
statement covering a period of at least twelve (12) months,
beginning after the effective date of each Registration Statement,
which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act, including Rule 158 promulgated thereunder
(for the purpose of this subsection 3(i), “Availability
Date” means the 45th day following the end of the fourth
fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter
is the last quarter of the Company’s fiscal year,
“Availability Date” means the 90th day after the end of
such fourth fiscal quarter); and

 

(i) With
a view to making available to the Holders the benefits of Rule 144
(or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Holders to sell shares of Common
Stock to the public without registration, the Company covenants and
agrees to: (i) make and keep public information available, as those
terms are understood and defined in Rule 144, until such date as
all of the Registrable Securities shall have been resold pursuant
to a Registration Statement, Rule 144 or otherwise in a transaction
in which the transferee receives freely tradable shares; (ii) file
with the SEC in a timely manner all reports and other documents
required of the Company under the 1934 Act; and (iii) furnish to
each Holder upon request, as long as such Holder owns any
Registrable Securities, (A) a written statement by the Company that
it has complied with the reporting requirements of the 1934 Act,
(B) a copy of the Company’s most recent Annual Report on Form
10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail the
Holder of any rule or regulation of the SEC that permits the
selling of any such Registrable Securities without registration. In
the event that the Company fails to comply with the requirements of
this Section 3(i) after the 90th day after the Closing Date, the
Company will make pro rata payments to each Holder, as liquidated
damages and not as a penalty, in an amount equal to 1.0% of the
aggregate amount invested by the Holder pursuant to the Purchase
Agreement for each 30-day period or pro rata for any portion
thereof until such failure is cured; provided, however, that such
liquidated damages shall be payable only to a Holder only to the
extent the Holder continues to hold Registrable Securities prior to
such failure. Such payments shall constitute the Holders’
exclusive monetary remedy for such events, but shall not affect the
right of the Holders to seek injunctive relief. Such payments shall
be made to each Holder in cash no later than three (3) Business
Days after the end of each 30-day period.

 

 

6

 

 

 

4.

Obligations of the
Holders.

 

(a) Each
Holder shall furnish in writing to the Company such information
regarding itself, the Registrable Securities held by it, and the
intended method of disposition of the Registrable Securities held
by it if substantially different from Exhibit
A, as shall be reasonably
required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five
(5) Business Days prior to the first anticipated filing date of any
Registration Statement, the Company shall notify each Holder of the
information the Company requires from the Holder if it elects to
have any of its Registrable Securities included in the Registration
Statement. A Holder shall provide the information to the Company at
least two (2) Business Days prior to the first anticipated filing
date of such Registration Statement if the Holder elects to have
any of the Registrable Securities included in the Registration
Statement. In the event that a Holder does not provide such
information on a timely basis, the Company shall provide prompt
written notice to the Holder that the Registrable Securities
attributable to that Holder will be excluded from the Registration
Statement unless the Holder provides the required information
within one (1) Business Day after its receipt of such notice. If
the Holder does not provide the required information to the Company
by the end of the next Business Day after its receipt of such
notice, the Company shall have the right to exclude the Registrable
Securities attributable to that Holder from the Registration
Statement and the Holder shall not be entitled to receive any
liquidated damages pursuant to the provisions of this Agreement
with respect to such Registration Statement. Notwithstanding
anything in this Agreement to the contrary, any Holder that elects
not to have any of its Registrable Securities included in the
Registration Statement, shall not be entitled to receive any
liquidated damages pursuant to the provisions of this Agreement
with respect to such Registration Statement.

 

(b) Each
Holder, by its acceptance of the Registrable Securities agrees to
cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of a Registration
Statement hereunder, unless the Holder has notified the Company in
writing of its election to exclude all of its Registrable
Securities from such Registration Statement.

 

(c) Each
Holder agrees that, upon receipt of any notice from the Company of
either (i) the commencement of an Allowed Delay pursuant to Section
2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h)
hereof, the Holder will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities, until the Holder is advised
by the Company that such dispositions may again be
made.

 

 

7

 

 

 

5.

Indemnification.

 

(a) Indemnification
by the Company. The Company
will indemnify and hold harmless each Holder, including without
limitation NSC and its respective officers, directors, members,
managers, partners, trustees, employees and agents and other
representatives, successors and assigns, and each other person, if
any, who controls such Holder within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement or omission or
alleged omission of any material fact contained in any Registration
Statement, any Prospectus, or any amendment or supplement thereof;
(ii) any blue sky application or other document executed by the
Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable
Securities under the securities laws thereof (any such application,
document or information herein called a “Blue Sky
Application”); (iii) the omission or alleged omission to
state in a Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not
misleading; (iv) any violation by the Company or its agents of any
rule or regulation promulgated under the 1933 Act applicable to the
Company or its agents and relating to action or inaction required
of the Company in connection with such registration; or (v) any
failure to register or qualify the Registrable Securities included
in any such Registration Statement in any state where the Company
or its agents has affirmatively undertaken or agreed in writing
that the Company will undertake such registration or qualification
on a Holder’s behalf and will reimburse such Holder, and each
such officer, director, shareholder or member and each such
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided,
however,
that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished by the Holder or any such controlling person in writing
specifically for use in such Registration Statement or
Prospectus.

 

(b) Indemnification
by the Holders. Each Holder
agrees, severally but not jointly, to indemnify and hold harmless,
to the fullest extent permitted by law, the Company, its directors,
officers, employees, stockholders and each person who controls the
Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expense (including reasonable
attorney fees) resulting from any untrue statement of a material
fact or any omission of a material fact required to be stated in
the Registration Statement or Prospectus or amendment or supplement
thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or
omission is contained in any information furnished in writing by
the Holder to the Company specifically for inclusion in such
Registration Statement or Prospectus or amendment or supplement
thereto. In no event shall the liability of a Holder be greater in
amount than the dollar amount of the proceeds (net of all expenses
paid by the Holder in connection with any claim relating to this
Section 5 and the amount of any damages the Holder has otherwise
been required to pay by reason of such untrue statement or
omission) received by the Holder upon the sale of the Registrable
Securities included in the Registration Statement giving rise to
such indemnification obligation.

 

 

8

 

 

 

(c) Conduct
of Indemnification Proceedings.
Any person entitled to indemnification hereunder shall (i) give
prompt notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided
that any person entitled to
indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such
person unless (a) the indemnifying party has agreed to pay such
fees or expenses, or (b) the indemnifying party shall have failed
to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of
any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the
indemnifying party with respect to such claims (in which case, if
the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right
to assume the defense of such claim on behalf of such person);
and provided,
further,
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations hereunder, except to the extent that such failure to
give notice shall materially adversely affect the indemnifying
party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection
with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time
for all such indemnified parties. No indemnifying party will,
except with the consent of the indemnified party, consent to entry
of any judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation. The indemnifying party
shall not be liable hereunder for any settlements entered into by
an indemnified party without the indemnifying party’s prior
written consent, which shall not be unreasonably withheld,
conditioned or delayed.

 

(d) Contribution.
If for any reason the indemnification provided for in the preceding
paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be
entitled to contribution from any person not guilty of such
fraudulent misrepresentation. In no event shall the contribution
obligation of a holder of Registrable Securities be greater in
amount than the dollar amount of the proceeds (net of all expenses
paid by such holder in connection with any claim relating to this
Section 5 and the amount of any damages such holder has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the
sale of the Registrable Securities giving rise to such contribution
obligation.

 

 

9

 

 

 

6.

Miscellaneous.

 

(a) Amendments
and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the
written consent of the Company and the Required
Holders.

 

(b) Notices.
All notices and other communications provided for or permitted
hereunder shall be made as set forth in Section13.1 of the Purchase
Agreement.

 

(c) Maximum
Liquidated Damages. The maximum
amount of liquidated damages due to a Holder will be 20% of the
aggregate amount invested by the Holder pursuant to the Purchase
Agreement.

 

(d) Assignments
and Transfers by Holders. The
provisions of this Agreement shall be binding upon and inure to the
benefit of the Holders and their respective successors and assigns.
A Holder may transfer or assign, in whole or from time to time in
part, to one or more persons its rights hereunder in connection
with the transfer of Registrable Securities by the Holder to such
person, provided that the Holder complies with all laws applicable
thereto and provides written notice of assignment to the Company
promptly after such assignment is effected.

 

(e) Assignments
and Transfers by the Company.
This Agreement may not be assigned by the Company (whether by
operation of law or otherwise) without the prior written consent of
the Required Holders; provided,
however, that in the event that
the Company is a party to a merger, consolidation, share exchange
or similar business combination transaction in which the Common
Stock is converted into the equity securities of another Person,
from and after the effective time of such transaction, such Person
shall, by virtue of such transaction, be deemed to have assumed the
obligations of the Company hereunder, the term
“Company” shall be deemed to refer to such Person and
the term “Registrable Securities” shall be deemed to
include the securities received by the Holders in connection with
such transaction unless such securities are otherwise freely
tradable by the Holders after giving effect to such
transaction.

 

(f) Benefits
of the Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the
parties. Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

 

(g) Counterparts;
Faxes. This Agreement may be
executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the
same instrument. This Agreement may be delivered via facsimile or
other form of electronic communication, which shall be deemed an
original.

 

 

10

 

 

 

(h) Titles
and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.

 

(i) Severability.
Any provision of this Agreement that 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 but shall be
interpreted as if it were written so as to be enforceable to the
maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any
provisions hereof prohibited or unenforceable in any
respect.

 

(j) Further
Assurances. The parties shall
execute and deliver all such further instruments and documents and
take all such other actions as may reasonably be required to carry
out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

 

(k) Entire
Agreement. This Agreement is
intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with
respect to such subject matter.

 

(l) Governing
Law; Consent to Jurisdiction; Waiver of Jury
Trial. This Agreement shall be
construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and
performance of this Agreement shall be governed by, the internal
laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State
of New York. The Company hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. In the event that any
provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of
any other provision of this Agreement. Nothing contained herein
shall be deemed or operate to preclude the Holder from bringing
suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to the
Holder, to realize on any collateral or any other security for such
obligations, or to enforce a judgment or other court ruling in
favor of the Holder. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

11

 

IN
WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the
date first above written.

 

The
Company:

ENDRA LIFE SCIENCES
INC.

 

 

 

By:_________________________

Francois
Michelon

President and
CEO

 

 

 

12

 

_________________________________

      (Name
of Holder)

 

 

 

By:_______________________________

Name:

Title:

 

13

 

 

NATIONAL SECURITES
CORPORATION

 

 

 

By:_______________________________

Name:
Jonathan C. Rich

Title:
EVP – Head of Investment Banking

 

 

14Blueprint

 

Exhibit
10.3

 

 

SECURITY AGREEMENT

 

This
SECURITY AGREEMENT (this
“Agreement”),
dated as of June 28, 2018, is made by and among ENDRA Life Sciences
Inc., a Delaware corporation (the “Grantor”), and the secured parties
listed on the signature pages hereof (collectively, the
“Secured
Parties” and each, individually, a “Secured Party”).

 

RECITALS

 

WHEREAS, pursuant to that certain
Securities Purchase Agreement, dated of even date herewith (as may
be amended, restated, supplemented, or otherwise modified from time
to time, including all schedules and exhibits thereto,
collectively, the “Securities Purchase Agreement”), by and among
the Grantor and each of the Secured Parties, Grantor has agreed to
sell, and each of the Secured Parties have each agreed to purchase,
severally and not jointly, certain Notes; and

 

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

 

AGREEMENTS

 

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

 

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

 

(a) “Account” means an
“account” (as that term is defined in Article 9 of the
Code).

 

(b) “Account Debtor” means an
“account debtor” (as that term is defined in Article 9
of the Code).

 

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

 

 

 

1

 

 

 

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

 

(e) “Chattel Paper” means
“chattel paper” (as that term is defined in Article 9
of the Code) and includes tangible chattel paper and electronic
chattel paper.

 

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

 

(g) “Collateral” has the meaning set
forth in Section 2.

 

(h) “Commencement Notice” means a
written notice, given by any Secured Party to the other Secured
Parties in accordance with the notice provisions set forth in the
Securities Purchase Agreement, pursuant to which such Secured Party
notifies the other Secured Parties of the existence of one or more
Events of Default and of such Secured Party’s intent to
commence the exercise of one or more of the remedies provided for
under this Agreement with respect to all or any portion of the
Collateral as a consequence thereof, which notice shall incorporate
a reasonably detailed description of each Event of Default then
existing and of the remedial action proposed to be
taken.

 

(i) “Commercial Tort Claims” means
“commercial tort claims” (as that term is defined in
Article 9 of the Code), and includes those commercial tort claims
listed on Schedule 1
attached hereto.

 

(j) “Equipment” means all
“equipment” (as that term is defined in Article 9
of the Code) in all of its forms of the Grantor, wherever located,
and including, without limitation, all machinery, apparatus,
installation facilities and other tangible personal property, and
all parts thereof and all accessions, additions, attachments,
improvements, substitutions, replacements and proceeds thereto and
therefor.

 

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

 

 

 

2

 

 

 

(l) “Event of Default” has the meaning
set forth in the Notes.

 

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

 

(n) “General Intangibles” means
“general intangibles” (as that term is defined in
Article 9 of the Code) and, in any event, includes payment
intangibles, contract rights, rights to payment, rights arising
under common law, statutes, or regulations, choses or things in
action, goodwill, programming materials, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists,
rights to payment under any royalty or licensing agreements
(including Intellectual Property Licenses), infringement claims,
commercial computer programs, information contained on computer
disks or tapes, software, literature, reports, catalogs, pension
plan refunds, pension plan refund claims, insurance premium
rebates, tax refunds, and tax refund claims, interests in a
partnership or limited liability company which do not constitute a
security under Article 8 of the Code, and any other personal
property other than Commercial Tort Claims, money, Accounts,
Chattel Paper, goods, Negotiable Collateral, and oil, gas, or other
minerals before extraction.

 

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

 

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

 

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

 

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

 

(s)  “Inventory”
means all “inventory” (as that term is defined in
Article 9 of the Code) in all of its forms of the Grantor, wherever
located, including, without limitation, (i) all goods in which the
Grantor has an interest in mass or a joint or other interest or
right of any kind (including goods in which the Grantor has an
interest or right as consignee), and (ii) all goods which are
returned to or repossessed by the Grantor, and all accessions
thereto, products thereof and documents therefor.

 

 

 

3

 

 

 

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

 

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

 

(v) “New Subsidiary” has the meaning
set forth in the Notes.

 

(w) “Notes” has the meaning set forth
in the Securities Purchase Agreement.

 

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

 

(y)  “Permitted
Liens” (i) any Lien for taxes not yet due or
delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in
accordance with GAAP, (ii) any statutory Lien arising in the
ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent or that is being
contested in good faith for which adequate reserves have been
established in accordance with GAAP, (iii) any Lien created by
operation of law, such as materialmen’s liens,
mechanics’ liens and other similar liens, arising in the
ordinary course of business with respect to a liability that is not
yet due or delinquent or that is being contested in good faith by
appropriate proceedings, (iv) Liens on Equipment having a fair
market value of not more than $450,000 in the aggregate, but only
if the lien constitutes a purchase money security interest incurred
in connection with the purchase of such Equipment, and (v) Liens
securing the Company’s obligations under the Transaction
Documents.

 

(z) “Permitted Secured Party” means,
with respect to the exercise of any remedy provided for under this
Agreement, (A) any Secured Party that has delivered a Commencement
Notice with respect to the exercise of such remedy to the other
Secured Parties and has not received a Veto Notice with respect
thereto within the Veto Period or (B) any Significant Secured Party
that has in connection with a Commencement Notice delivered a Veto
Notice to a Secured Party within the Veto Period; provided,
however, there shall only be a single Permitted Secured Party that
may exercise any specific remedy at any one time (it being agreed
that if a Commencement Notice is delivered by more than one Secured
Party with respect to any remedy provided for under this Agreement,
then the first Secured Party to deliver a Commencement Notice and
not receive a Veto Notice within the Veto Period shall be the only
Secured Party that may exercise such remedy).

 

 

 

4

 

 

 

(aa) “Permitted
Transfers” means (i) sales of Inventory in the
ordinary course of business, (ii) licenses for the use of
Intellectual Property in the ordinary course of business that could
not result in a legal transfer of title of the licensed property,
or (iii) dispositions of worn-out, obsolete or surplus Equipment at
fair market value in the ordinary course of business.

 

(bb) “Person”
has the meaning set forth in the Securities Purchase
Agreement.

 

(cc) “Proceeds”
has the meaning set forth in Section 2.

 

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

 

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

 

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

 

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

 

(hh) “Security
Interest” and “Security Interests” have the
meanings set forth in Section 2.

 

(ii) “Significant
Secured Party” means, on any date of determination,
one or more Secured Parties holding alone or in the aggregate
fifteen percent (15%) or more of the aggregate principal amount of
Notes outstanding on such date.

 

(jj) “Supporting
Obligations” means “supporting
obligations” (as such term is defined in Article 9 of the
Code).

 

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

 

 

 

5

 

 

 

(ll) “Transaction
Documents” has the meaning set forth in the Securities
Purchase Agreement.

 

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

 

(nn) “Veto
Notice” means, with respect to any Commencement
Notice, a written notice given by any Significant Secured Party to
the other Secured Parties in accordance with the notice provisions
set forth in the Securities Purchase Agreement pursuant to which
such Significant Secured Party notifies the other Secured Parties
of its objection to the commencement of the remedial action
specified in such Commencement Notice and certifies that, to the
best of its knowledge, it is a Significant Secured
Party.

 

(oo)  “Veto
Period” means, with respect to any Commencement
Notice, the period of ten (10) consecutive calendar days following
the delivery of such Commencement Notice to the Secured
Parties.

 

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

 

(a) Accounts;

 

(b) Books;

 

(c) Chattel
Paper;

 

(d) Equipment and
fixtures;

 

(e) General
Intangibles;

 

(f) Intellectual
Property;

 

(g) Inventory;

 

(h) Negotiable
Collateral;

 

(i) Real
Property;

 

(j) rights in respect
of Supporting Obligations;

 

(k) Commercial Tort
Claims;

 

 

 

6

 

 

 

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

 

(m) all of the proceeds
and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance or Commercial Tort
Claims covering or relating to any or all of the foregoing, and any
and all Accounts, Books, Chattel Paper, Equipment, General
Intangibles, Intellectual Property, Inventory, Negotiable
Collateral, Real Estate, Supporting Obligations, money, or other
tangible or intangible property resulting from the sale, lease,
license, exchange, collection, or other disposition of any of the
foregoing, the proceeds of any award in condemnation with respect
to any of the foregoing, any rebates or refunds, whether for taxes
or otherwise, and all proceeds of any such proceeds, or any portion
thereof or interest therein, and the proceeds thereof, and all
proceeds of any loss of, damage to, or destruction of the above,
whether insured or not insured, and, to the extent not otherwise
included, any indemnity, warranty, or guaranty payable by reason of
loss or damage to, or otherwise with respect to any of the
foregoing (the “Proceeds”).

 

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

 

4. Grantor Remains Liable.
Anything herein to the contrary notwithstanding, (a) the Grantor
shall remain liable under the contracts and agreements included in
the Collateral, to perform all of the duties and obligations
thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Parties, or any of them, of
any of the rights hereunder shall not release the Grantor from any
of its duties or obligations under such contracts and agreements
included in the Collateral, and (c) no Secured Party shall have any
obligation or liability under such contracts and agreements
included in the Collateral by reason of this Agreement, nor shall
any Secured Party be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder. Until an Event
of Default shall occur and be continuing, except as otherwise
provided in this Agreement or any other Transaction Document, the
Grantor shall have the right to possession and enjoyment of the
Collateral for the purpose of conducting the ordinary course of its
businesses, subject to and upon the terms hereof and the other
Transaction Documents.

 

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

 

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

 

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

 

 

 

7

 

 

 

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

 

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

 

(e) No consent,
approval, authorization, or other order or other action by, and no
notice to or filing with, any Governmental Authority or any other
Person is required for the grant of a Security Interest by the
Grantor in and to the Collateral pursuant to this Agreement or for
the execution, delivery, or performance of this Agreement by the
Grantor.

 

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

 

(a) Possession of Collateral. In
the event that any Collateral with a value in excess of $50,000
individually or $200,000 in the aggregate, including proceeds, is
evidenced by or consists of Negotiable Collateral or Chattel Paper,
and if and to the extent that perfection or priority of Secured
Parties’ respective Security Interests is dependent on or
enhanced by possession, the Grantor, immediately upon the written
request of any Secured Party, shall execute such other documents
and instruments as shall be requested by such Secured Party or, if
applicable, endorse and deliver physical possession of such
Negotiable Collateral or Chattel Paper to such Secured Party,
together with such undated powers endorsed in blank as shall be
requested by such Secured Party.

 

(b) Chattel Paper.

 

(i) The Grantor shall
take all steps reasonably necessary to grant each Secured Party
control of all Chattel Paper in accordance with the Code and with
respect to any electronic Chattel Paper having an aggregate value
or face amount in excess of $50,000 all “transferable
records” as that term is defined in Section 16 of the Uniform
Electronic Transactions Act and Section 201 of the federal
Electronic Signatures in Global and National Commerce Act as in
effect in any relevant jurisdiction; and

 

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

 

 

 

8

 

 

(c) Letter-of-Credit Rights. In the
event that the Grantor is or becomes the beneficiary of one or more
letters of credit with a face amount of greater than $50,000
individually or $100,000 in the aggregate, the Grantor shall
promptly (and in any event within five (5) Business Days after
becoming a beneficiary) notify the Secured Parties thereof and,
upon the request by any Secured Party, enter into a multi-party
agreement with the Secured Parties and the issuing or confirming
bank with respect to letter-of-credit rights assigning such
letter-of-credit rights to the Secured Parties and directing all
payments thereunder to the Secured Parties, all in form and
substance satisfactory to the Secured Parties.

 

(d) Commercial Tort Claims. The
Grantor shall promptly (and in any event within five (5) Business
Days of receipt thereof) notify the Secured Parties in writing upon
incurring or otherwise obtaining a Commercial Tort Claim having a
value or involving an asserted claim, in excess of $50,000 in the
aggregate after the date hereof and, upon the written request of
any Secured Party, promptly amend Schedule 1
to this Agreement to describe such after-acquired Commercial Tort
Claim in a manner that reasonably identifies such Commercial Tort
Claim, and hereby authorizes the filing of additional financing
statements or amendments to existing financing statements
describing such Commercial Tort Claims, and agrees to do such other
acts or things deemed necessary by any Secured Party to give the
Secured Parties a first priority, perfected security interest
(subject to Permitted Liens) in any such Commercial Tort
Claim.

 

(e) Transfers and Other Liens. The
Grantor shall not (i) sell, lease, license, assign (by operation of
law or otherwise), transfer or otherwise dispose of, or grant any
option with respect to, any of the Collateral, except for Permitted
Transfers or as expressly permitted by this Agreement and the other
Transaction Documents, or (ii) except for Permitted Liens, create
or permit to exist any Lien upon or with respect to any of the
Collateral without the consent of Secured Parties holding at least
a majority of the aggregate principal amount of the then
outstanding Notes. The inclusion of Proceeds in the Collateral
shall not be deemed to constitute consent by any Secured Party to
any sale or other disposition of any of the Collateral except as
expressly permitted in this Agreement or the other Transaction
Documents.

 

(f) Preservation of
Existence.  The Grantor shall maintain and
preserve its existence, rights and privileges, and become or remain
duly qualified and in good standing in each jurisdiction in which
the character of the properties owned or leased by it or in which
the transaction of its business makes such qualification
necessary.

 

(g) Maintenance of
Properties. The Grantor shall maintain and preserve all
of its properties which are necessary or useful in the proper
conduct of its business in good working order and condition,
ordinary wear and tear excepted, and comply at all times with the
provisions of all leases to which it is a party as lessee or under
which it occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.

 

 

 

9

 

 

 

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

 

(i) Other Actions as to Any and All
Collateral. The Grantor shall promptly and in any event
within five (5) Business Days (or such longer period as agreed
to by the Secured Parties, in their reasonable
discretion) of (i)
acquiring or otherwise obtaining any Collateral after the date
hereof consisting of Chattel Paper (electronic, tangible or
otherwise), documents (as defined in Article 9 of the Code),
promissory notes (as defined in the Code) or instruments (as
defined in the Code) or (ii) any amount payable under or in
connection with any of the Collateral being or becoming evidenced
after the date hereof by any Chattel Paper, documents, promissory
notes, or instruments and, in each such case, of clauses (i) and
(ii) above, having an aggregate value with respect to Collateral of
the same type or an individual value (or face amount) in excess of
$50,000 and, upon the written request of any Secured Party,
promptly execute such other documents, or if applicable, deliver
such Chattel Paper and do such other acts or things reasonably
requested by any Secured Party to protect the Secured
Parties’ respective Security Interests therein.

 

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

 

 

 

10

 

 

 

8. Further
Assurances.

 

(a) The Grantor agrees
that from time to time, at its own expense, it will promptly
execute and deliver all further instruments and documents, and take
all further action, that any Secured Party may reasonably request,
in order to perfect and protect the Security Interests granted or
purported to be granted hereby or to enable any Secured Party to
exercise and enforce its rights and remedies hereunder with respect
to any of the Collateral; provided, however, in no event shall the
Grantor be required to take any action to perfect a Security
Interest in any Collateral represented by a certificate of
title.

 

(b) The Grantor authorizes the filing by any Secured
Party of financing or continuation statements, or amendments
thereto, including, but limited to, the recordation of the security
interests granted hereunder in Patents, Trademarks and Copyrights
in the United States Patent and Trademark Office and the United
States Copyright Office, and Grantor will execute and deliver to
such Secured Party such other instruments or notices, as may be
necessary or as such Secured Party may reasonably request, in order
to perfect and preserve the Security Interests granted or purported
to be granted hereby. Upon the Satisfaction in Full of the Secured
Obligations, each Secured Party shall (at Grantor’s expense)
file a termination statement and/or other necessary documents
terminating and releasing any and all financing statements or Liens
on the Collateral pursuant to Section 24 within
five (5) Business Days following a written request therefor from
Grantor.

 

(c) The Grantor
authorizes any Secured Party at any time and from time to time to
file, transmit, or communicate, as applicable, financing statements
and amendments (i) describing the Collateral as “all real and
personal property of debtor” or “all assets of
debtor” or words of similar effect, (ii) describing the
Collateral as being of equal or lesser scope or with greater
detail, or (iii) that contain any information required by part 5 of
Article 9 of the Code for the sufficiency or filing office
acceptance. The Grantor also hereby ratifies any and all financing
statements or amendments previously filed by any Secured Party in
any jurisdiction. Upon the Satisfaction in Full of the Secured
Obligations, each Secured Party shall (at Grantor’s expense)
file a termination statement and/or other necessary documents
terminating and releasing any and all financing statements or Liens
on the Collateral pursuant to Section 24 within five (5) Business
Days following a written request therefor from
Grantor.

 

(d) The Grantor
acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any
financing statement filed in connection with this Agreement without
the prior written consent of each Secured Party affected thereby,
subject to the Grantor’s rights under Section 9-509(d)(2) of
the Code.

 

(e) Upon one (1)
Business Day (or such longer period as agreed to by the Secured
Parties, in their reasonable discretion) advance notice, the
Grantor shall permit each Secured Party or its employees,
accountants, attorneys or agents, access to examine and inspect any
Collateral or any other property of the Grantor at any time during
ordinary business hours, at such Secured Party’s
expense.

 

 

 

11

 

 

 

9. Secured Parties’ Right to
Perform Contracts, Exercise Rights, etc. Upon the occurrence
and during the continuance of an Event of Default, any Secured
Party may proceed to perform any and all of the obligations of the
Grantor contained in any contract, lease, or other agreement and
exercise any and all rights of the Grantor therein contained as
fully as the Grantor itself could.

 

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

 

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

 

(b) to receive and open
all mail addressed to the Grantor or New Subsidiary and to notify
postal authorities to change the address for the delivery of mail
to the Grantor or New Subsidiary to that of such Secured Party
(provided such Secured Party shall promptly provide a copy of all
such mail to the Grantor);

 

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

 

(d) to file any claims
or take any action or institute any proceedings which such Secured
Party may deem necessary for the collection of any of the
Collateral of the Grantor or New Subsidiary or otherwise to enforce
the rights of any Secured Party with respect to any of the
Collateral; and

 

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

 

 

 

12

 

 

 

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

 

11. Secured Parties May Perform. If
the Grantor fails to perform any agreement contained herein, upon
the occurrence and during the continuance of an Event of Default,
after advance written notice to the Grantor, any Secured Party may
itself perform, or cause performance of, such agreement, and the
reasonable out-of-pocket expenses of such Secured Party incurred in
connection therewith shall be payable by the Grantor.

 

12. Secured Parties’ Duties; Bailee
for Perfection. The powers conferred on the Secured Parties
hereunder are solely to protect the Secured Parties’
respective interests in the Collateral and shall not impose any
duty upon any Secured Party in favor of the Grantor or any other
Secured Party to exercise any such powers. Except for the safe
custody of any Collateral in its actual possession and the
accounting for moneys actually received by it hereunder and except
as provided in the Code, no Secured Party shall have any duty to
the Grantor or any other Secured Party as to any Collateral or as
to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. A
Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its actual
possession if such Collateral is accorded treatment substantially
equal to that which such Secured Party accords its own property.
Each Secured Party agrees that, with respect to any Collateral at
any time or times in its possession and in which any other Secured
Party has a Lien, the Secured Party in possession of any such
Collateral shall be the bailee of each other Secured Party solely
for purposes of perfecting (to the extent not otherwise perfected)
each other Secured Party’s Lien in such Collateral, provided
that no Secured Party shall be obligated to obtain or retain
possession of any such Collateral. Without limiting the generality
of the foregoing, the Secured Parties and the Grantor hereby agree
that any Secured Party that is in possession of any Collateral at
such time as the Secured Obligations owing to such Secured Party
have been paid in full may re-deliver such Collateral to the
Grantor or, if requested by any Secured Party prior to such
re-delivery, may deliver such Collateral (unless otherwise
restricted by applicable law or court order and subject in all
events to the receipt of an indemnification of all liabilities
arising from such delivery) to the requesting Secured Party,
without recourse to or representation or warranty by the Secured
Party in such possession.

 

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

 

 

 

13

 

 

 

14. Reserved

 

15. Reserved.

 

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

 

(a) Any Secured Party
may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein, in the other Transaction
Documents, or otherwise available to it, all the rights and
remedies of a secured party on default under the Code or any other
applicable law. Without limiting the generality of the foregoing,
the Grantor expressly agrees that, in any such event, any Secured
Party without any demand, advertisement, or notice of any kind
(except a notice specified below of time and place of public or
private sale) to or upon the Grantor or any other Person (all and
each of which demands, advertisements and notices are hereby
expressly waived to the maximum extent permitted by the Code or by
any other applicable law), may take immediate possession of all or
any portion of the Collateral and (i) require the Grantor to, and
the Grantor hereby agrees that it will at its own expense and upon
request of such Secured Party forthwith, assemble all or part of
the Collateral as directed by such Secured Party and make it
available to such Secured Party at one or more locations of the
Grantor, and (ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public
or private sale, at any of such Secured Party’s offices or
elsewhere, for cash, on credit, and upon such other terms as such
Secured Party may deem commercially reasonable. The Grantor agrees
that, to the extent notice of sale shall be required by law, at
least 10 days’ notice of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notice
shall constitute a reasonable “authenticated notification of
disposition” within the meaning of Section 9-611 of the Code.
No Secured Party shall be obligated to make any sale of Collateral
regardless of notice of sale having been given. Any Secured Party
may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which
it was so adjourned.

 

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

 

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

 

 

 

14

 

 

 

(d) Notwithstanding
anything in this Agreement to the contrary, each Secured Party
agrees that it will not exercise any remedy provided for under this
Agreement with respect to all or any portion of the Collateral
unless such Secured Party is a Permitted Secured Party (provided
that the foregoing shall not prevent any Secured Party from
commencing or participating in any Insolvency Proceeding or taking
any action (other than with respect to the Collateral) to enforce
the payment or performance of the Grantor’s obligations under
any of the Notes or other Transaction Documents). This Section
16(d) is not intended to confer any rights or benefits upon the
Grantor or any other Person except Secured Parties, and no Person
(including the Grantor) other than the Secured Parties shall have
any right to enforce any of the provisions of this Section
16(d). As between the Grantor and any Secured Party, any action
that such Secured Party may take under this Agreement shall be
conclusively presumed to have been authorized and approved by the
other Secured Parties.

 

(e) Each Secured Party
may, in addition to other rights and remedies provided for herein,
in the other Transaction Documents, or otherwise available to it
under applicable law and without the requirement of notice to or
upon the Grantor or any other Person (which notice is hereby
expressly waived to the maximum extent permitted by the Code or any
other applicable law).

 

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

 

(a)           first,
ratably to pay any expenses due to any of the Secured Parties
(including, without limitation, the reasonable costs and
out-of-pocket expenses paid or incurred by any Secured Party to
correct any default under or enforce any provision of the
Transaction Documents, or after the occurrence of any Event of
Default in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated) or indemnities then
due to any of the Secured Parties under the Transaction Documents,
until paid in full;

 

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

 

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

 

 

15

 

 

 

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

 

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

 

(f)           sixth,
to Grantor or such other Person entitled thereto under applicable
law.

 

18. Remedies Cumulative. Each
right, power, and remedy of any Secured Party as provided for in
this Agreement or in any other Transaction Document or now or
hereafter existing at law or in equity or by statute or otherwise
shall be cumulative and concurrent and shall be in addition to
every other right, power, or remedy provided for in this Agreement
or in the other Transaction Documents or now or hereafter existing
at law or in equity or by statute or otherwise, and the exercise or
beginning of the exercise by any Secured Party, of any one or more
of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by such Secured Party of any or all
such other rights, powers, or remedies. The Grantor acknowledges
that a breach by it of its obligations hereunder will cause
irreparable harm to each Secured Party and that the remedy at law
for any such breach may be inadequate. The Grantor therefore agrees
that, in the event of any breach or any threatened breach, each
Secured Party shall be entitled, in addition to all other available
remedies, to an injunction restraining any such breach or any such
threatened breach, without the necessity of showing economic loss
and without any bond or other security being required.

 

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

 

 

 

16

 

 

 

20. Acknowledgment.

 

(a)           Each
Secured Party hereby agrees and acknowledges that no other Secured
Party has agreed to act for it as an administrative or collateral
agent, and each Secured Party is and shall remain solely
responsible for the attachment, perfection and priority of all
Liens created by this Agreement or any other Security Document in
favor of such Secured Party. No Secured Party shall have by reason
of this Agreement or any other Transaction Document an agency
or fiduciary relationship with any other Secured Party. No Secured
Party (which term, as used in this sentence, shall include
reference to each Secured Party’s officers, directors,
employees, attorneys, agents and affiliates and to the officers,
directors, employees, attorneys and agents of such Secured
Party’s affiliates) shall: (i) have any duties or
responsibilities except those expressly set forth in this Agreement
and the other Security Documents or (ii) be required to take,
initiate or conduct any enforcement action (including any
litigation, foreclosure or collection proceedings hereunder or
under any of the other Security Documents). Without limiting the
foregoing, no Secured Party shall have any right of action
whatsoever against any other Secured Party as a result of such
Secured Party acting or refraining from acting hereunder or under
any of the Security Documents except as a result and to the extent
of losses caused by such Secured Party’s actual gross
negligence or willful misconduct (it being understood and
agreed by each Secured Party that the delivery by any Significant
Secured Party of one or more Veto Notices shall not be deemed to be
or construed as gross negligence or willful misconduct on the part
of the Secured Party delivering any such Veto Notice). No Secured
Party assumes any responsibility for any failure or delay in
performance or breach by the Grantor or any other Secured Party of
its obligations under this Agreement or any other Transaction
Document. No Secured Party makes to any other Secured Party
any express or implied warranty, representation or guarantee with
respect to any Secured Obligations, Collateral, Transaction
Document or the Grantor. No Secured Party nor any of its officers,
directors, employees, attorneys or agents shall be responsible to
any other Secured Party or any of its officers, directors,
employees, attorneys or agents for: (i) any recitals,
statements, information, representations or warranties contained in
any of the Transaction Documents or in any certificate or other
document furnished pursuant to the terms hereof; (ii) the
execution, validity, genuineness, effectiveness or enforceability
of any of the Transaction Documents; (iii) the validity,
genuineness, enforceability, collectability, value, sufficiency or
existence of any Collateral, or the attachment, perfection or
priority of any Lien therein; or (iv) the assets, liabilities,
financial condition, results of operations, business,
creditworthiness or legal status of the Grantor or any Account
Debtor. No Secured Party nor any of its officers, directors,
employees, attorneys or agents shall have any obligation to any
other Secured Party to ascertain or inquire into the existence of
any default or Event of Default, the observance or performance by
the Grantor of any of its duties or agreements under any of
the Transaction Documents or the satisfaction of any conditions
precedent contained in any of the Transaction
Documents.

 

 

17

 

 

 

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

 

21. Indemnity and
Expenses.

 

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

 

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

 

 

 

18

 

 

 

22. Merger, Amendments; Etc. THIS
AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES SOLELY WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS
BETWEEN THE PARTIES. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Grantor and
Secured Parties holding at least a majority of the aggregate
principal amount of the then outstanding Notes, and any amendment
to any provision of this Agreement made in conformity with the
provisions of this Section 22 shall be binding on all Secured
Parties, provided that no such amendment shall be effective to the
extent that it (1) applies to less than all of the Secured Parties
or (2) imposes any obligation or liability on any Secured Party
without such Secured Party’s prior written consent (which may
be granted or withheld in such Secured Party’s sole
discretion). No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party,
provided that all of the single Significant Secured Parties (in a
writing signed by all such Significant Secured Parties) may waive
any provision of this Agreement, and any waiver of any provision of
this Agreement made in conformity with the provisions of this
Section 22 shall be binding on all Secured Parties, provided that
no such waiver shall be effective to the extent that it (1) applies
to less than all the Secured Parties (unless a party gives a waiver
as to itself only) or (2) imposes any obligation or liability on
any Secured Party without such Secured Party’s prior written
consent (which may be granted or withheld in such Secured
Party’s sole discretion).

 

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

 

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

 

 

 

19

 

 

 

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

 

26. Miscellaneous.

 

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

 

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

 

 

 

20

 

 

 

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

 

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

 

(e) The language used
in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party. For clarification
purposes, the Recitals are part of this Agreement.

 

(f) Unless the context
of this Agreement or any other Transaction Document clearly
requires otherwise, references to the plural include the singular,
references to the singular include the plural, the terms
“includes” and “including” are not
limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase
“and/or.” The words “hereof,”
“herein,” “hereby,”
“hereunder,” and similar terms in this Agreement or any
other Transaction Document refer to this Agreement or such other
Transaction Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Transaction
Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement
unless otherwise specified. Any reference in this Agreement or in
any other Transaction Document to any agreement, instrument, or
document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein).
“Satisfaction in Full of the
Secured Obligations” shall mean the indefeasible
payment in full in cash and discharge, or other satisfaction in
accordance with the terms of the Transaction Documents and
discharge, of all Secured Obligations in full. Any reference herein
to any Person shall be construed to include such Person’s
permitted successors and permitted assigns. Any requirement of a
writing contained herein or in any other Transaction Document shall
be satisfied by the transmission of a Record and any Record so
transmitted shall constitute a representation and warranty as to
the accuracy and completeness of the information contained
therein.

 

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

 

[signature
pages follow]

 

 

21

 

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

 

	

GRANTOR:

 

	

ENDRA LIFE SCIENCES INC., a Delaware
corporation

By:                                                                 

      Francois
Michelon

      President
and CEO

 

 

 

 

 

 

 

22

 

 

 

	

SECURED
PARTIES:

	

[________________________]

By:                                                                 

      Name:

      Title:

 

 

 

	
 

 

 

 

 

 

 

23

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