Document:

TOUGHBUILT
INDUSTRIES, INC.

 

2018 EQUITY INCENTIVE PLAN

 

ToughBuilt
Industries, Inc. (the “Company”), a Nevada corporation, hereby adopts the following 2018 Equity Incentive Plan (the
“Plan”).

 

1.
PURPOSE OF THE PLAN

 

The purpose
of the Plan is to assist the Company and its Subsidiaries in attracting and retaining selected individuals to serve as employees,
directors, consultants and/or advisors who are expected to contribute to the Company’s success and to achieve long-term objectives
that will benefit stockholders of the Company through the additional incentives inherent in the Awards hereunder.

 

2.
DEFINITIONS

 

2.1. “Affiliate”
shall mean (i) any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, provided
each corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the other corporations in such chain, and (ii) any corporation
(other than the Company) in an unbroken chain of corporations beginning with the Company, provided each corporation (other than
the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain. The Board shall have the authority to determine
(i) the time or times at which the ownership tests are applied, and (ii) whether “Affiliate” includes entities other
than corporations within the foregoing definition.

 

2.2. “Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Other Share-Based Award,
Performance Award or any other right, interest or option relating to Shares or other property (including cash) granted pursuant
to the provisions of the Plan.

 

2.3. “Award
Agreement” shall mean any agreement, contract or other instrument or document evidencing any Award hereunder, whether
in writing or through an electronic medium.

 

2.4. “Board”
shall mean the board of directors of the Company.

 

    	 	 	 

    	 

    

 

2.5. “Cause”
shall mean with respect to a Participant, the occurrence of any of the following: (i) the Participant commits an act of dishonesty
in connection with the Participant’s responsibilities as an Employee or Consultant; (ii) the Participant commits a felony
or any act of moral turpitude; (iii) the Participant commits any willful or grossly negligent act that constitutes gross misconduct
and/or injures, or is reasonably likely to injure, the Company or any Affiliate; or (iv) the Participant willfully and materially
violates (A) any written policies or procedures of the Company or any Affiliate, or (B) the Participant’s obligations to
the Company or any Affiliate. The determination that a termination is for Cause shall be made by the Company in its sole discretion.
Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes
of outstanding Awards held by such Participant shall have no effect upon any determination of the rights or obligations of the
Company or such Participant for any other purpose.

 

2.6.
“Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of
any one or more of the following events:

 

(a) Any Exchange
Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting
power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (i) on account of the acquisition of securities
of the Company by an investor, any affiliate thereof or any other Exchange Act Person from the Company in a transaction or series
of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities
or (ii) solely because the level of ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated
percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities
by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation
of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject
Person becomes the owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred,
increases the percentage of the then outstanding voting securities owned by the Subject Person over the designated percentage threshold,
then a Change in Control shall be deemed to occur;

 

(b) There is
consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after
the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto
do not Own, directly or indirectly, either (i) outstanding voting securities representing more than 50% of the combined outstanding
voting power of the surviving Entity in such merger, consolidation or similar transaction or (ii) more than 50% of the combined
outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case
in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior
to such transaction;

 

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(c) The stockholders
of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution
or liquidation of the Company shall otherwise occur;

 

(d) There is
consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries to an entity, more than 50% of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the same proportions as their ownership of the outstanding voting
securities of the Company immediately prior to such sale, lease, license or other disposition; or

 

(e) Individuals
who, on the date this Plan is adopted by the Board, are members of the Board (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or
nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board.

 

For avoidance
of doubt, the term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the
purpose of changing the domicile of the Company.

 

Notwithstanding
the foregoing, to the extent that the Company determines that any of the payments or benefits under this Plan that are payable
in connection with a Change in Control constitute deferred compensation under Section 409A that may only be paid on a transaction
that meets the standard of Treasury Regulation Section 1.409A-3(a)(5), the foregoing definition of Change in Control shall apply
only to the extent the transaction also meets the definition used for purposes of Treasury Regulation Section 1.409A-3(a)(5), that
is, as defined under Treasury Regulation Section 1.409A-3(i)(5).

 

Notwithstanding
the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual
written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect
to Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set
forth in such an individual written agreement, the foregoing definition shall apply.

 

2.7. “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

2.8. “Committee”
shall mean a committee consisting of members of the Board to whom authority has been delegated by the Board in accordance
with Section 4.2(c). Initially, and until further action by the Board, “Committee” shall mean the Compensation
Committee of the Board or a subcommittee thereof formed by the Compensation Committee to act as the Committee hereunder. The
Committee shall consist of no fewer than two Directors, each of whom is (i) a “Non-Employee Director” within the
meaning of Rule 16b-3 under the Exchange Act, (ii) an “outside director” within the meaning of Section 162(m) of
the Code, and (iii) an “independent director” for purpose of the rules of the applicable stock market or exchange
on which the Shares are quoted or traded, to the extent required by such rules. The Board may designate one or more Directors
as alternate members of the Committee who may replace any absent or disqualified member at any meeting of the Committee.

 

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2.9. “Consultant”
shall mean any consultant or advisor who is a natural person and who provides services to the Company or any Subsidiary, so long
as such person (i) renders bona fide services that are not in connection with the offer and sale of the Company’s securities
in a capital-raising transaction and (ii) does not directly or indirectly promote or maintain a market for the Company’s
securities.

 

2.10. “Continuous
Service” shall mean that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director
or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company
or an Affiliate from a Consultant to Employee shall not terminate a Participant’s Continuous Service. Furthermore, a change
in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s
service with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service. However, if the corporation
for which a Participant is rendering service ceases to qualify as an Affiliate, as determined by the Board in its sole discretion,
such Participant’s Continuous Service shall be considered to have terminated on the date such corporation ceases to qualify
as an Affiliate. A leave of absence shall be treated as Continuous Service for purposes of vesting in an Award to such extent as
may be provided in the Company’s leave of absence policy or in the written terms of the Participant’s leave of absence.

 

2.11. “Corporate
Transaction” shall mean the occurrence, in a single transaction or in a series of related transactions, of any one or
more of the following events:

 

(a) a sale
or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets
of the Company and its Subsidiaries;

 

(b) a sale
or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;

 

(c) the consummation
of a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(d) the consummation
of a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common
Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of
the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

2.12. “Covered
Employee” shall mean an employee of the Company or its Subsidiaries who is a “covered employee” within the
meaning of Section 162(m) of the Code.

 

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2.13. “Director”
shall mean a non-employee member of the Board.

 

2.14. “Disability”
shall mean with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of
the Code, and shall be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.

 

2.15. “Dividend
Equivalents” shall have the meaning set forth in Section 12.4.

 

2.16. “Employee”
shall mean any employee of the Company or any Subsidiary and any prospective employee conditioned upon, and effective not earlier
than, such person becoming an employee of the Company or any Subsidiary.

 

2.17. “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

2.18. “Exchange
Act Person” shall mean any natural person, entity or “group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act), except that “Exchange Act Person” shall not include (i) the Company or any Subsidiary of the
Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, (iv) an entity owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the Company; or (v) any natural person, entity or
“group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the effective date of the Plan
as set forth in Section 13, is the owner, directly or indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities.

 

2.19. “Fair
Market Value” shall mean, with respect to Shares as of any date, (i) the closing sale price of the Shares reported as
having occurred on the principal U.S. national securities exchange on which the Shares are listed and traded on such date, or,
if there is no such sale on that date, then on the last preceding date on which such a sale was reported; (ii) if the Shares are
not listed on any U.S. national securities exchange but are quoted in an inter-dealer quotation system on a last sale basis, the
final ask price of the Shares reported on such date, or, if there is no such sale on such date, then on the last preceding date
on which a sale was reported; or (iii) if the Shares are not listed on a U.S. national securities exchange nor quoted on an inter-dealer
quotation system on a last sale basis, the amount determined by the Committee to be the fair market value of the Shares as determined
by the Committee in its sole discretion. The Fair Market Value of any property other than Shares shall mean the market value of
such property determined by such methods or procedures as shall be established from time to time by the Committee.

 

2.20. “Incentive
Stock Option” shall mean an Option which when granted is intended to qualify as an incentive stock option for purposes
of Section 422 of the Code.

 

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2.21. “Non-Employee
Director” shall mean a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does
not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant
or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a)
of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest
in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered
a “non-employee director” for purposes of Rule 16b-3.

 

2.22. “Option”
shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices
and during such period or periods as the Board shall determine.

 

2.23. “Other
Share-Based Award” shall have the meaning set forth in Section 8.1.

 

2.24. “Outside
Director” shall mean a Director who either (i) is not a current employee of the Company or an “affiliated corporation”
(within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company
or an “affiliated corporation” who receives compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year, has not been an officer of the Company or an “affiliated corporation,” and
does not receive remuneration from the Company or an “affiliated corporation,” either directly or indirectly, in any
capacity other than as a Director, or (ii) is otherwise considered an “outside director” for purposes of Section 162(m)
of the Code.

 

2.25. “Participant”
shall mean an Employee, Director or Consultant who is selected by the Committee to receive an Award under the Plan.

 

2.26. “Payee”
shall have the meaning set forth in Section 13.2.

 

2.27. “Performance
Award” shall mean any Award of Performance Cash, Performance Shares or Performance Units granted pursuant to Article
9.

 

2.28. “Performance
Cash” shall mean any cash incentives granted pursuant to Article 9 payable to the Participant upon the achievement of
such performance goals as the Committee shall establish.

 

2.29. “Performance
Criteria” shall mean one or more of the criteria specified in Section 10.2 and selected by the Board for purposes of
establishing the Performance Goals for a Performance Period.

 

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2.30. “Performance
Goals” shall mean, for a Performance Period, the one or more goals established by the Board for the Performance
Period based upon the Performance Criteria. Performance Goals may be set on a Company-wide basis, with respect to one or more
business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to internally generated
business plans, approved by the Board, the performance of one or more comparable companies or the performance of one or more
relevant indices. To the extent consistent with Section 162(m) of the Code and the regulations thereunder, the Board is
authorized to make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as
follows: (i) to exclude restructuring and/or other nonrecurring charges (including but not limited to the effect of tax or
legal settlements); (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated net sales and
operating earnings; (iii) to exclude the effects of changes to generally accepted accounting standards required by the
Financial Accounting Standards Board; (iv) to exclude the effects of any statutory adjustments to corporate tax rates; (v) to
exclude stock-based compensation expense determined under generally accepted accounting principles; (vi) to exclude any other
unusual, non-recurring gain or loss or extraordinary item; (vii) to respond to, or in anticipation of, any unusual or
extraordinary corporate item, transaction, event or development; (viii) to respond to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions; (ix) to exclude the dilutive effects of
acquisitions or joint ventures; (x) to assume that any business divested by the Company achieved performance objectives at
targeted levels during the balance of a Performance Period following such divestiture; (xi) to exclude the effect of any
change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock
repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other
similar corporate change, or any distributions to common shareholders other than regular cash dividends; (xii) to reflect a
corporate transaction, such as a merger, consolidation, separation (including a spinoff or other distribution of stock or
property by a corporation), or reorganization (whether or not such reorganization comes within the definition of such term in
Section 368 of the Code); (xiii) to reflect any partial or complete corporate liquidation; (xiv) to exclude the effect of
in-process research and development expenses; and (xv) to exclude the income tax effect of non-GAAP pre-tax adjustments from
the provision for income taxes. The Board also retains the discretion to reduce or eliminate the compensation or economic
benefit due upon attainment of Performance Goals.

 

2.31. “Performance
Period” shall mean the period established by the Committee during which any performance goals specified by the Committee
with respect to a Performance Award are to be measured.

 

2.32. “Performance
Share” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated number of Shares, which
value will be paid to the Participant upon achievement of such performance goals as the Committee shall establish.

 

2.33. “Performance
Unit” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated amount of cash or property
other than Shares, which value will be paid to the Participant upon achievement of such performance goals during the Performance
Period as the Committee shall establish.

 

2.34. “Permitted
Assignee” shall have the meaning set forth in Section 12.2.

 

2.35. “Restricted
Stock” shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such
Share and with such other restrictions as the Committee, in its sole discretion, may impose, which restrictions may lapse separately
or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

 

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2.36. “Restricted
Stock Award” shall have the meaning set forth in Section 7.1.

 

2.37. “Restricted
Stock Unit” means an Award that is valued by reference to a Share, which value may be paid to the Participant by delivery
of such property as the Board shall determine, which restrictions may lapse separately or in combination at such time or times,
in installments or otherwise, as the Board may deem appropriate.

 

2.38. “Restricted
Stock Unit Award” shall have the meaning set forth in Section 7.1

 

2.39. “Shares”
shall mean the shares of common stock of the Company, par value $0.001 per share.

 

2.40. “Stock
Appreciation Right” shall mean the right granted to a Participant pursuant to Article 6.

 

2.41. “Subsidiary”
shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the
relevant time each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one of the other corporations in the chain.

 

2.42. Substitute
Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for,
awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company
or any Subsidiary or with which the Company or any Subsidiary combines.

 

2.43. “Vesting
Period” shall mean the period of time specified by the Committee during which vesting restrictions for an Award are applicable.

 

3.
SHARES SUBJECT TO THE PLAN

 

3.1. Number
of Shares.

 

(a) Subject
to adjustment as provided in Section 11.1, the number of shares of Common Stock issued or transferred and covered by outstanding
awards granted under this Plan shall not in the aggregate exceed 2,000,000 shares of Common Stock (or 200,000 to any one person
in any 12 month period hereunder), which may be Common Stock of original issuance or Common Stock held in treasury, or a combination
thereof. Subject to the provisions of Section 11.1 regarding adjustments in the event of stock splits, reverse stock splits and
other recapitalization events, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise
of Incentive Stock Options shall be 1,000,000. The Company shall at all times during the term of the Plan, and while any Stock
Awards are outstanding, retain as authorized and unissued Common Stock or as treasury Common Stock, at least the number of shares
of Common Stock required under the provisions of this Plan, or otherwise assure itself of its ability to perform its obligations
hereunder.

 

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(b) If any
Shares subject to an Award are forfeited, an Award expires or otherwise terminates without issuance of Shares, or an Award is settled
for cash (in whole or in part) or otherwise does not result in the issuance of all or a portion of the Shares subject to such Award
(including on payment in Shares on exercise of a Stock Appreciation Right), such Shares shall, to the extent of such forfeiture,
expiration, termination, cash settlement or non-issuance, again be available for issuance under the Plan.

 

(c) In the
event that (i) any Option or other Award granted hereunder is exercised through the tendering of Shares (either actually or by
attestation) or by the withholding of Shares by the Company, or (ii) withholding tax liabilities arising from such Option or other
Award are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company,
then the Shares so tendered or withheld shall be available for issuance under the Plan.

 

(d) Substitute
Awards shall not reduce the Shares authorized for grant under the Plan or the applicable limitations for grant to a Participant
under Section 10.4, nor shall Shares subject to a Substitute Award again be available for Awards under the Plan to the extent of
any forfeiture, expiration or cash settlement as provided in paragraph (b) or (c) above. Additionally, in the event that a company
acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing
plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant
pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment
or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of
common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce
the Shares authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the date
awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall
only be made to individuals who were not Employees or Directors prior to such acquisition or combination.

 

(e) The Board
may grant Incentive Stock Options to any employee of the Company or any present or future Parent or Subsidiary as defined in Sections
424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under
the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company
shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive
Stock Option is not an Incentive Stock Option or for any action taken by the Board, including without limitation the conversion
of an Incentive Stock Option to a Nonstatutory Stock Option.

 

3.2. Source
of Shares. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares
or shares purchased in the open market or otherwise.

 

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4. ELIGIBILITY
AND ADMINISTRATION

 

4.1. Eligibility.
Any Employee, Director or Consultant shall be eligible to be selected as a Participant. The Board may grant Substitute Awards to
holders of equity awards issued by a company acquired by the Company or with which the Company combines.

 

4.2. Administration.

 

(a) The Board
shall administer the Plan unless and until the Board delegates administration of the Plan to a Committee, as provided in Section
3(c).

 

(b) The Board
or authorized Committee shall have the power, subject to, and within the limitations of, the express provisions of the Plan and
subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the
Board, to: (i) select the Employees, Directors or Consultants to whom Awards may from time to time be granted hereunder; (ii) determine
the type or types of Awards to be granted to each Participant hereunder; (iii) determine the number of Shares to be covered by
each Award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any
Award granted hereunder; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares
or other property; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other property and other
amounts payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the Participant;
(vii) determine whether, to what extent and under what circumstances any Award shall be canceled or suspended; (viii) interpret
and administer the Plan and any instrument or agreement entered into under or in connection with the Plan, including any Award
Agreement; (ix) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and
to the extent that the Committee shall deem desirable to carry it into effect; (x) establish, amend, suspend or waive such rules
and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) determine
whether any Award will have Dividend Equivalents; and (xii) make any other determination and take any other action that the Committee
deems necessary or desirable for administration of the Plan.

 

(c) The Board
may delegate all or a portion of the administration of the Plan to a Committee, as follows:

 

(i)
The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration is delegated
to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by
the Board that have been delegated to the Committee, including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from
time to time by the Board or the Committee (as applicable). The Board may retain the authority to concurrently administer the Plan
with the Committee and may, at any time, re-vest in the Board some or all of the powers previously delegated.

 

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(ii)
In the sole discretion of the Board, the Committee may consist solely of two or more Outside Directors, in accordance with Section
162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3 of the Exchange Act. In
addition, the Board in its sole discretion, may (1) delegate to a committee of one or more members of the Board who need not be
Outside Directors the authority to grant Awards to eligible persons who are either (a) not then Covered Employees and are not expected
to be Covered Employees at the time of recognition of income resulting from such Award, or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code, and/or (2) delegate to a committee of two or more members of the
Board who need not be Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section
16 of the Exchange Act.

 

(iii)
Until further action is taken by the Board, the full powers and administration of the Plan are hereby delegated to the Compensation
Committee of the Board, which shall be constituted to comply with the membership requirements of Section 16b-3 of the Exchange
Act and Section 162(m) of the Code.

 

(d) The Board
or Committee may delegate to one or more officers of the Company the authority to do one or both of the following (i) designate
Employees of the Company or any of its Subsidiaries to be recipients of Options, Stock Appreciation Rights and, to the extent permitted
by applicable law, other Awards and, to the extent permitted by applicable law, the terms thereof, and (ii) determine the number
of shares of Common Stock to be subject to such Awards granted to such Employees; provided, however, that the Board resolutions
regarding such delegation shall specify the total number of shares of Common Stock that may be subject to the Options granted by
such Officer. Any such Stock Awards granted by Officers will be granted on the form of Award Agreement most recently approved for
use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority. Notwithstanding
anything to the contrary in this Section 4.2(d), the Board may not delegate to an Officer authority to determine the Fair Market
Value of the Common Stock pursuant to Section 2.19 above.

 

(e) All determinations,
interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.

 

(f) Neither
the Board nor any Committee shall have the authority to: (i) reprice any outstanding Awards under the Plan, or (ii) cancel and
re-grant any outstanding Awards under the Plan, unless the stockholders of the Company have approved such an action within 12 months
prior to such an event, provided, however, that this provision shall not prevent cancellations of Awards upon expiration or termination
of such Awards and the return of the underlying shares of Common Stock to the Plan for future issuance pursuant to Section 3.1(b)
hereof.

 

(g) In
connection with the Company’s desire to comply as broadly as possible with Section 162(m) of the Code, and subject to
adjustment in the event of stock splits, reverse stock splits and other events of recapitalization as provided in Section
11.1 hereof, no individual Participant shall be eligible to be granted Awards whose value is determined by reference to an
increase over an exercise or strike price of at least 100% of the Fair Market Value of the Common Stock on the date of grant
covering more than 500,000 shares of Common Stock in any calendar year.

 

    	 	11	 

    	 

    

 

5.
OPTIONS

 

5.1. Grant
of Options. Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the
Plan. Any Option shall be subject to the terms and conditions of this Article and to such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Board shall deem desirable. Options may be designated as Incentive Stock Options,
as determined by the Board.

 

5.2. Award
Agreements. All Options shall be evidenced by a written Award Agreement in such form and containing such terms and conditions
as the Committee shall determine which are not inconsistent with the provisions of the Plan. The terms of Options need not be the
same with respect to each Participant. Granting an Option pursuant to the Plan shall impose no obligation on the recipient to exercise
such Option. Any individual who is granted an Option pursuant to this Article may hold more than one Option granted pursuant to
the Plan at the same time.

 

5.3. Option
Price. Other than in connection with Substitute Awards, the option price per each Share purchasable under any Option granted
pursuant to this Article shall not be less than 100% of the Fair Market Value of one Share on the date of grant of such Option;
provided, however, that in the case of an Incentive Stock Option granted to a Participant who, at the time of the grant,
owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Subsidiary, the option
price per share Shall be no less than 110% of the Fair Market Value of one Share on the date of grant. Other than pursuant to Section
11.1 and other than in connection with the grant of a Substitute Award, the Committee shall not without the approval of the Company’s
stockholders (a) lower the option price per Share of an Option after it is granted, (b) cancel an Option when the option price
per Share exceeds the Fair Market Value of the underlying Shares in exchange for cash or another Award, and (c) take any other
action with respect to an Option that would be treated as a repricing under the rules and regulations of the principal securities
exchange on which the Shares are traded, if any.

 

5.4. Option
Term. The term of each Option shall be fixed by the Board in its sole discretion; provided that no Option shall be exercisable
after the expiration of 10 years from the date the Option is granted, except in the event of death or disability (other than with
respect to an Incentive Stock Option); provided, however, that the term of the Option shall not exceed five years from the date
the Option is granted in the case of an Incentive Stock Option granted to a Participant who, at the time of the grant, owns stock
representing more than 10% of the voting power of all classes of stock of the Company or any Subsidiary.

 

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5.5. Exercise
of Options.

 

(a) Vested
Options granted under the Plan shall be exercised by the Participant or by a Permitted Assignee (as defined in Section 12.2) thereof
(or by the Participant’s executors, administrators, guardian or legal representative, as may be provided in an Award Agreement)
as to all or part of the Shares covered thereby, by giving notice of exercise to the Company or its designated agent, specifying
the number of Shares to be purchased. The notice of exercise shall be in such form, made in such manner, and in compliance with
such other requirements consistent with the provisions of the Plan as the Committee may prescribe from time to time

 

(b) Full payment
of the exercise price of an Option shall be made at the time of exercise and shall be made (i) in cash or cash equivalents (including
certified check or bank check or wire transfer of immediately available funds), (ii) by tendering previously acquired Shares (either
actually or by attestation, valued at their then Fair Market Value), (iii) by delivery of other consideration having a Fair Market
Value on the exercise date equal to the total purchase price, (iv) by withholding Shares otherwise issuable in connection with
the exercise of the Option, (v) through any other method specified in an Award Agreement (including same-day sales through a broker),
or (vi) any combination of any of the foregoing, as may be provided in the Award Agreement. The notice of exercise, accompanied
by such payment, shall be delivered to the Company at its principal business office or such other office as the Committee may from
time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe. In no event may any Option granted hereunder be exercised for a fraction of a
Share.

 

5.6. Excess
Grant over Incentive Stock Option Limit. To the extent that the aggregate Fair Market Value (determined at the time of grant)
of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any
calendar year (under all plans of the Company and any Affiliates) exceeds $100,000, the Options or portions thereof that exceed
such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement(s).

 

5.7.
Transferability of Options. The Board may, in its sole discretion, impose such limitations on the transferability of Options
as the Board shall determine. In the absence of such a determination by the Board to the contrary, the following restrictions on
the transferability of Options shall apply:

 

(a) An Option
shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime
of the Optionholder only by the Optionholder.

 

(b) Notwithstanding
the foregoing, an Option may be transferred pursuant to a domestic relations order; provided, however, that if an Option
is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

    	 	13	 

    	 

    

 

(c) Notwithstanding
the foregoing, the Optionholder may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory
to the Company and any broker designated by the Company to effect Option exercises, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the Option. In the absence of such a designation, the executor
or administrator of the Optionholder’s estate shall be entitled to exercise the Option. However, the Company may prohibit
designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent
with the provisions of applicable laws.

 

5.8. Termination
of Continuous Service Generally. In the event that an Optionholder’s Continuous Service terminates (other than for Cause
or upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service) but only within such period
of time ending on the earlier of (i) the date three months following the termination of the Optionholder’s Continuous Service
(or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth
in the Option Agreement. If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within
the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.

 

5.9.
Extension of Exercise Period. An Optionholder’s Option Agreement may provide that if the exercise of the Option following
the termination of the Optionholder’s Continuous Service (other than upon the Optionholder’s death or Disability) would
be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of a period of three months after the
termination of the Optionholder’s Continuous Service (or such longer or shorter period specified in the Option Agreement)
during which the exercise of the Option would not be in violation of such registration requirements, or (ii) the expiration of
the term of the Option as set forth in the Option Agreement.

 

5.10.
Termination Due to Disability. In the event that an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled
to exercise such Option as of the date of termination of Continuous Service), but only within such period of time ending on the
earlier of (i) the date 12 months following such termination of Continuous Service (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination
of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement
(as applicable), the Option shall terminate.

 

5.11. Termination
Due to Death. In the event that (i) an Optionholder’s Continuous Service terminates as a result of
the Optionholder’s death, or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder’s Continuous Service for a reason other than death, then the Option may be
exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the
Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionholder’s death, but only within the period ending on the
earlier of (i) the date 12 months following the date of death (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, after the
Optionholder’s death, the Option is not exercised within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.

 

    	 	14	 

    	 

    

 

5.12.
Termination for Cause. In the event that an Optionholder’s Continuous Service is terminated for Cause, the Option
shall terminate immediately and cease to remain outstanding and the Option shall cease to be exercisable with respect to any shares
of Common Stock (whether vested or unvested) at the time of such termination.

 

6.
STOCK APPRECIATION RIGHTS

 

6.1.
Grant and Exercise. The Committee may provide Stock Appreciation Rights (a) in tandem with all or part of any Option
granted under the Plan or at any subsequent time during the term of such Option, (b) in tandem with all or part of any Award (other
than an Option) granted under the Plan or at any subsequent time during the term of such Award, or (c) without regard to any Option
or other Award in each case upon such terms and conditions as the Committee may establish in its sole discretion.

 

6.2.
Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with
the provisions of the Plan, as shall be determined from time to time by the Committee, including the following:

 

(a)
Upon the exercise of a Stock Appreciation Right, the holder shall have the right to receive the excess of (i) the Fair Market
Value of one Share on the date of exercise (or such amount less than such Fair Market Value as the Committee shall so determine
at any time during a specified period before the date of exercise) over (ii) the grant price of the Stock Appreciation Right on
the date of grant, which, except in the case of Substitute Awards or in connection with an adjustment provided in Section 11.1,
shall not be less than the Fair Market Value of one Share on such date of grant of the Stock Appreciation Right.

 

(b)
The Committee shall determine in its sole discretion whether payment of a Stock Appreciation Right shall be made in cash, in whole
Shares or other property, or any combination thereof.

 

(c)
The provisions of Stock Appreciation Rights need not be the same with respect to each recipient.

 

(d)
The Committee may impose such other conditions or restrictions on the terms of exercise and the grant price of any Stock Appreciation
Right, as it shall deem appropriate. A Stock Appreciation Right shall have (i) a grant price not less than 100% of the Fair Market
Value of one Share on the date of grant (subject to the requirements of Section 409A of the Code with respect to a Stock Appreciation
Right granted in tandem with, but subsequent to, an Option), and (ii) a term not greater than 10 years except in the event of
death or disability (other than with respect to a Stock Appreciation Right granted in tandem with an Incentive Stock Option).

 

    	 	15	 

    	 

    

 

(e)
An Award Agreement may provide that if on the last day of the term of a Stock Appreciation Right the Fair Market Value of one
Share exceeds the grant price per Share of the Stock Appreciation Right, the Participant has not exercised the Stock Appreciation
Right or the tandem Option (if applicable) and neither the Stock Appreciation Right nor the Option has expired, the Stock Appreciation
Right shall be deemed to have been exercised by the Participant on such day. In such event the Company shall make payment to the
Participant in accordance with this Section, reduced by the number of Shares (or cash) required for withholding taxes; any fractional
Share shall be settled in cash.

 

(f)
Without the approval of the Company’s stockholders, other than pursuant to Section 11.1 and other than in connection with
the grant of a Substitute Award, the Committee shall not (i) reduce the grant price of any Stock Appreciation Right after the
date of grant (ii) cancel any Stock Appreciation Right when the grant price per Share exceeds the Fair Market Value of the underlying
Shares in exchange for cash or another Award, and (iii) take any other action with respect to a Stock Appreciation Right that
would be treated as a repricing under the rules and regulations of the principal securities exchange on which the Shares are traded.

 

(g)
In the event that a Participant’s Continuous Service terminates (other than for Cause or upon the Participant’s death
or Disability), the Participant may exercise his or her Stock Appreciation Right (to the extent that the Participant was entitled
to exercise such Stock Appreciation Right as of the date of termination of Continuous Service) but only within such period of
time ending on the earlier of (i) the date three months following the termination of the Participant’s Continuous Service
(or such longer or shorter period specified in the Stock Appreciation Right Agreement), or (ii) the expiration of the term of
the Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement. If, after termination of Continuous Service,
the Participant does not exercise his or her Stock Appreciation Right within the time specified herein or in the Stock Appreciation
Right Agreement (as applicable), the Stock Appreciation Right shall terminate.

 

(h)
A Participant’s Stock Appreciation Right Agreement may provide that if the exercise of the Stock Appreciation Right following
the termination of the Participant’s Continuous Service (other than upon the Participant’s death or Disability) would
be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under
the Securities Act, then the Stock Appreciation Right shall terminate on the earlier of (i) the expiration of a period of three
months after the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the
Stock Appreciation Right Agreement) during which the exercise of the Stock Appreciation Right would not be in violation of such
registration requirements, or (ii) the expiration of the term of the Stock Appreciation Right as set forth in the Stock Appreciation
Right Agreement.

 

(i)
In the event that a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant
may exercise his or her Stock Appreciation Right (to the extent that the Participant was entitled to exercise such Stock Appreciation
Right as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the
date 12 months following such termination of Continuous Service (or such longer or shorter period specified in the Stock Appreciation
Right Agreement), or (ii) the expiration of the term of the Stock Appreciation Right as set forth in the Stock Appreciation Right
Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Stock Appreciation Right
within the time specified herein or in the Stock Appreciation Right Agreement (as applicable), the Stock Appreciation Right shall
terminate.

 

    	 	16	 

    	 

    

 

(j)
In the event that (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii)
the Participant dies within the period (if any) specified in the Stock Appreciation Right Agreement after the termination of the
Participant’s Continuous Service for a reason other than death, then the Stock Appreciation Right may be exercised (to the
extent the Participant was entitled to exercise such Stock Appreciation Right as of the date of death) by the Participant’s
estate, by a person who acquired the right to exercise the Stock Appreciation Right by bequest or inheritance or by a person designated
to exercise the Stock Appreciation Right upon the Participant’s death, but only within the period ending on the earlier
of (i) the date 12 months following the date of death (or such longer or shorter period specified in the Stock Appreciation Right
Agreement), or (ii) the expiration of the term of such Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement.
If, after the Participant’s death, the Stock Appreciation Right is not exercised within the time specified herein or in
the Stock Appreciation Right Agreement (as applicable), the Stock Appreciation Right shall terminate.

 

(k)
In the event that a Participant’s Continuous Service is terminated for Cause, the Stock Appreciation Right shall terminate
immediately and cease to remain outstanding and the Stock Appreciation Right shall cease to be exercisable with respect to any
shares of Common Stock (whether vested or unvested) at the time of such termination.

 

7.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

7.1.
Grants. Awards of Restricted Stock and of Restricted Stock Units may be issued hereunder to Participants either alone
or in addition to other Awards granted under the Plan (a “Restricted Stock Award” or “Restricted Stock Unit
Award” respectively), and such Restricted Stock Awards and Restricted Stock Unit Awards shall also be available as a form
of payment of Performance Awards and other earned cash-based incentive compensation. The Committee has absolute discretion to
determine whether any consideration (other than services) is to be received by the Company or any Subsidiary as a condition precedent
to the issuance of Restricted Stock or Restricted Stock Units.

 

7.2.
Award Agreements. The terms of any Restricted Stock Award or Restricted Stock Unit Award granted under the Plan shall
be set forth in an Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan.
The terms of Restricted Stock Awards and Restricted Stock Unit Awards need not be the same with respect to each Participant.

 

    	 	17	 

    	 

    

 

7.3.
Rights of Holders of Restricted Stock and Restricted Stock Units. Unless otherwise provided in the Award Agreement,
beginning on the date of grant of the Restricted Stock Award and subject to execution of the Award Agreement, the Participant
shall become a stockholder of the Company with respect to all Shares subject to the Award Agreement and shall have all of the
rights of a stockholder, including the right to vote such Shares and the right to receive distributions made with respect to such
Shares. A Participant receiving a Restricted Stock Unit Award shall not possess voting rights with respect to such Award. Except
as otherwise provided in an Award Agreement any Shares or any other property (other than cash) distributed as a dividend or otherwise
with respect to any Restricted Stock Award or Restricted Stock Unit Award as to which the restrictions have not yet lapsed shall
be subject to the same restrictions as such Restricted Stock Award or Restricted Stock Unit Award. The Committee may provide in
an Award Agreement that an Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election
with respect to the Award under Section 83(b) of the Code. If a Participant makes an election pursuant to 83(b) of the Code with
respect to an Award of Restricted Stock, the Participant shall be required to file promptly a copy of such election with the Company.

 

7.4.
Issuance of Shares. Any Restricted Stock granted under the Plan may be evidenced in such manner as the Board may deem
appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates
shall be held by the Company. Such certificate or certificates shall be registered in the name of the Participant and shall bear
an appropriate legend referring to the restrictions applicable to such Restricted Stock.

 

7.5.
Transferability. Rights to acquire shares of Common Stock under the Award Agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the Award Agreement, as the Board shall determine in its sole discretion,
so long as Common Stock awarded under the Award Agreement remains subject to the terms of the Award Agreement.

 

7.6.
Termination of Continuous Service. Except as otherwise provided in the applicable Award Agreement, such portion of
the Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.

 

8.
OTHER SHARE-BASED AWARDS

 

8.1.
Grants. Other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise
based on, Shares or other property (“Other Share-Based Awards”), including deferred stock units, may be granted hereunder
to Participants either alone or in addition to other Awards granted under the Plan. Other Share-Based Awards shall also be available
as a form of payment of other Awards granted under the Plan and other earned cash-based compensation.

 

8.2.
Award Agreements. The terms of Other Share-Based Award granted under the Plan shall be set forth in an Award Agreement
which shall contain provisions determined by the Committee and not inconsistent with the Plan. The terms of such Awards need not
be the same with respect to each Participant.

 

    	 	18	 

    	 

    

 

8.3.
Payment. Except as may be provided in an Award Agreement, Other Share-Based Awards may be paid in cash, Shares, other
property, or any combination thereof, in the sole discretion of the Committee. Other Share-Based Awards may be paid in a lump
sum or in installments or, in accordance with procedures established by the Committee, on a deferred basis subject to the requirements
of Section 409A of the Code.

 

9.
PERFORMANCE AWARDS

 

9.1.
Grants. Performance Awards in the form of Performance Cash, Performance Shares or Performance Units, as determined
by the Committee in its sole discretion, may be granted hereunder to Participants, for no consideration or for such minimum consideration
as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance goals
to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria
set forth in Section 10.2.

 

9.2.
Award Agreements. The terms of any Performance Award granted under the Plan shall be set forth in an Award Agreement
which shall contain provisions determined by the Committee and not inconsistent with the Plan, including whether such Awards shall
have Dividend Equivalents. The terms of Performance Awards need not be the same with respect to each Participant.

 

9.3.
Terms and Conditions. The performance criteria to be achieved during any Performance Period and the length of the Performance
Period shall be determined by the Committee upon the grant of each Performance Award. The amount of the Award to be distributed
shall be conclusively determined by the Committee.

 

9.4.
Payment. Except as provided in Section 11.1 or as may be provided in an Award Agreement, Performance Awards will be
distributed only after the end of the relevant Performance Period. Performance Awards may be paid in cash, Shares, other property,
or any combination thereof, in the sole discretion of the Committee. Performance Awards may be paid in a lump sum or in installments
following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis
subject to the requirements of Section 409A of the Code.

 

10.
CODE SECTION 162(m) PROVISIONS

 

10.1.
Covered Employees. Notwithstanding any other provision of the Plan, if the Committee determines at the time a Restricted
Stock Award, a Restricted Stock Unit Award, a Performance Award or an Other Share-Based Award is granted to a Participant who
is, or is likely to be, as of the end of the tax year in which the Company would claim a tax deduction in connection with such
Award, a Covered Employee, then the Committee may provide that this Article 10 is applicable to such Award.

 

    	 	19	 

    	 

    

 

10.2.
Performance Criteria.

 

(a)
If the Committee determines that a Restricted Stock Award, a Restricted Stock Unit, a Performance Award or an Other Share-Based
Award is intended to be subject to this Article 10, the lapsing of restrictions thereon and the distribution of cash, Shares or
other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals
established by the Committee, which shall be based on the attainment of specified levels of one or any combination of the following,
or such other performance criteria as may be later determined by the Committee: (i) net sales; (ii) revenue; (iii) revenue growth
or product revenue growth; (iv) operating income (before or after taxes); (v) pre- or after-tax income (before or after allocation
of corporate overhead and bonus); earnings per share; net income (before or after taxes); (vi) return on equity; (vii) total shareholder
return; (viii) return on assets or net assets; (ix) appreciation in and/or maintenance of the price of the Shares or any other
publicly-traded securities of the Company; (x) market share; gross profits; (xi) earnings (including earnings before taxes, earnings
before interest and taxes or earnings before interest, taxes, depreciation and amortization); (xii) economic value-added models
or equivalent metrics; (xiii) comparisons with various stock market indices; (xiv) reductions in costs; (xv) cash flow or cash
flow per share (before or after dividends); (xvi) return on capital (including return on total capital or return on invested capital);
(xvii) cash flow return on investment; (xviii) improvement in or attainment of expense levels or working capital levels; (xiv)
operating margins, gross margins or cash margin; (xx) year-end cash; (xxi) debt reduction; (xxii) stockholder equity; (xxiii)
financing and other capital raising transactions (including sales of the Company’s equity or debt securities); (xxiv) factoring
transactions; sales or licenses of the Company’s assets, including its intellectual property, whether in a particular jurisdiction
or territory or globally; or through partnering transactions; and (xxv) implementation, completion or attainment of measurable
objectives with respect to research, development, manufacturing, commercialization, products or projects, production volume levels,
acquisitions and divestitures and recruiting and maintaining personnel.

 

(b)
Such performance goals also may be based solely by reference to the Company’s performance or the performance of a Subsidiary,
division, business segment or business unit of the Company, or based upon the relative performance of other companies or upon
comparisons of any of the indicators of performance relative to other companies.

 

(c)
The Committee may also exclude charges related to an event or occurrence which the Committee determines should appropriately be
excluded, including (i) restructuring and/or other nonrecurring charges (including but not limited to the effect of tax or legal
settlements); (ii) exchange rate effects, as applicable, for non-U.S. dollar denominated net sales and operating earnings; (iii)
the effects of changes to generally accepted accounting standards required by the Financial Accounting Standards Board; (iv) to
exclude the effects of any statutory adjustments to corporate tax rates; (v) stock-based compensation expense determined under
generally accepted accounting principles; (vi) any other unusual, non-recurring gain or loss or extraordinary item; (vii) a response
to, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development; (viii) a response to,
or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions; (ix) the dilutive
effects of acquisitions or joint ventures; (x) the assumption that any business divested by S&W achieved performance objectives
at targeted levels during the balance of a performance period following such divestiture; (xi) the effect of any change in the
outstanding shares of our common stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization,
merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to
common shareholders other than regular cash dividends; (xii) the reflection of a corporate transaction, such as a merger, consolidation,
separation (including a spinoff or other distribution of stock or property by a corporation), or reorganization (whether or not
such reorganization comes within the definition of such term in Section 368 of the Code); (xiii) the reflection of any partial
or complete corporate liquidation; (xiv) the effect of in-process research and development expenses; and (xv) the income tax effect
of non-GAAP pre-tax adjustments from the provision for income taxes.

 

    	 	20	 

    	 

    

 

(d)
Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the
requirements of, Section 162(m) of the Code, and the regulations thereunder.

 

10.3.
Adjustments. Notwithstanding any provision of the Plan, with respect to any Restricted Stock Award, Restricted Stock
Unit Award, Performance Award or Other Share-Based Award that is subject to this Article 10, the Committee may adjust downwards,
but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable
performance goals, except in the case of the death or disability of the Participant or as otherwise determined by the Committee
in special circumstances.

 

10.4.
Restrictions. The Committee shall have the power to impose such other restrictions on Awards subject to this Article
10 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation”
within the meaning of Section 162(m) of the Code. In no event shall the number of Shares that are subject to performance-based
vesting conditions and which are granted to any Participant in a single calendar year exceed 500,000 Shares, subject to adjustment
in accordance with Section 11.1.

 

11.
ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS

 

11.1.
Capitalization Adjustments. If any change is made in, or other events occur with respect to, the Common Stock subject
to the Plan or subject to any Stock Award after the effective date of the Plan set forth in Section 13 without the receipt of
consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend,
dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or other transaction not involving the receipt of consideration by the Company (each a “Capitalization
Adjustment”)), the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of securities
subject to the Plan pursuant to Section 3.1(a), (ii) the class(es) and maximum number of securities that may be issued pursuant
to the exercise of Incentive Stock Options pursuant to Section 3.1(a), (iii) the class(es) and maximum number of securities that
may be awarded to any person pursuant to Sections 4.2(g) and 10.4, and (iv) the class(es) and number of securities and price per
share of stock subject to outstanding Awards. The Board shall make such adjustments, and its determination shall be final, binding
and conclusive. Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated
as a transaction “without receipt of consideration” by the Company.

 

    	 	21	 

    	 

    

 

11.2.
Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, all outstanding Awards
(other than Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s
right of repurchase) shall terminate immediately prior to the completion of such dissolution or liquidation, and the shares of
Common Stock subject to the Company’s repurchase option or subject to the forfeiture condition may be repurchased or reacquired
by the Company notwithstanding the fact that the holder of such Award is providing Continuous Service, provided, however,
that the Board may, in its sole discretion, cause some or all Awards to become fully vested, exercisable and/or no longer subject
to repurchase or forfeiture (to the extent such Awards have not previously expired or terminated) before the dissolution or liquidation
is completed but contingent on its completion.

 

11.3.
Corporate Transaction. The following provisions shall apply to Awards in the event of a Corporate Transaction
unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of the Award or unless otherwise
expressly provided by the Board at the time of grant of a Award:

 

(a)
In the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s
parent company) may assume or continue any or all Awards outstanding under the Plan or may substitute similar stock awards for
Awards outstanding under the Plan (including, but not limited to, awards to acquire the same consideration paid to the stockholders
of the Company pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect
of Common Stock issued pursuant to Awards may be assigned by the Company to the successor of the Company (or the successor’s
parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation may choose
to assume or continue only a portion of a Stock Award or substitute a similar stock award for only a portion of a Stock Award.
The terms of any assumption, continuation or substitution shall be set by the Board in accordance with the provisions of Section
4.2(b).

 

(b)
In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does
not assume or continue any or all outstanding Awards or substitute similar stock awards for such outstanding Awards, then with
respect to Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service
has not terminated prior to the effective time of the Corporate Transaction (referred to as the “Current Participants”),
the vesting of such Awards (and, if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the
effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction
as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five days prior to the effective
time of the Corporate Transaction), and such Awards shall terminate if not exercised (if applicable) at or prior to the effective
time of the Corporate Transaction, and any reacquisition or repurchase rights held by the Company with respect to such Awards
shall lapse (contingent upon the effectiveness of the Corporate Transaction). No vested Restricted Stock Unit Award shall terminate
pursuant to this Section 11.3(b) without being settled by delivery of shares of Common Stock, their cash equivalent, any combination
thereof, or in any other form of consideration, as determined by the Board, prior to the effective time of the Corporate Transaction.

 

    	 	22	 

    	 

    

 

(c)
In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does
not assume or continue any or all outstanding Awards or substitute similar stock awards for such outstanding Awards, then with
respect to Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants,
the vesting of such Awards (and, if applicable, the time at which such Award may be exercised) shall not be accelerated and such
Awards (other than a Award consisting of vested and outstanding shares of Common Stock not subject to the Company’s right
of repurchase) shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction; provided,
however, that any reacquisition or repurchase rights held by the Company with respect to such Awards shall not terminate and
may continue to be exercised notwithstanding the Corporate Transaction. No vested Restricted Stock Unit Award shall terminate
pursuant to this Section 11.3(c) without being settled by delivery of shares of Common Stock, their cash equivalent, any combination
thereof, or in any other form of consideration, as determined by the Board, prior to the effective time of the Corporate Transaction.

 

(d)
Notwithstanding the foregoing, in the event a Award will terminate if not exercised prior to the effective time of a Corporate
Transaction, the Board may provide, in its sole discretion, that the holder of such Award may not exercise such Award but will
receive a payment, in such form as may be determined by the Board, equal in value to the excess, if any, of (i) the value of the
property the holder of the Award would have received upon the exercise of the Award immediately prior to the effective time of
the Corporate Transaction, over (ii) any exercise price payable by such holder in connection with such exercise.

 

11.4.
Change in Control. An Award may be subject to additional acceleration of vesting and exercisability upon or after a
Change in Control as may be provided in the agreement for such Award or as may be provided in any other written agreement between
the Company or any Affiliate and the Participant. An Award may vest as to all or any portion of the shares subject to the Award
(i) immediately upon the occurrence of a Change in Control, whether or not such Award is assumed, continued, or substituted by
a surviving or acquiring entity in the Change in Control, or (ii) in the event a Participant’s Continuous Service is terminated,
actually or constructively, within a designated period following the occurrence of a Change in Control. In the absence of such
provisions, no such acceleration shall occur.

 

    	 	23	 

    	 

    

 

12.
GENERALLY APPLICABLE PROVISIONS

 

12.1.
Amendment and Termination of the Plan. The Board may, from time to time, alter, amend, suspend or terminate the Plan
as it shall deem advisable, subject to any requirement for stockholder approval imposed by applicable law, including the rules
and regulations of the principal securities market on which the Shares are traded; provided that the Board may not, without the
approval of the Company’s stockholders, amend the Plan to (a) increase the number of Shares that may be the subject of Awards
under the Plan (except for adjustments pursuant to Section 11.1), (b) expand the types of awards available under the Plan, (c)
materially expand the class of persons eligible to participate in the Plan, (d) amend any provision of Section 5.3 or Section
6.2(e), (e) increase the maximum permissible term of any Option specified by Section 5.4 or the maximum permissible term of a
Stock Appreciation Right specified by Section 6.2(d), or (f) increase the limitations set forth in Sections 3.1(a), 4.2(g) or
10.4. No amendments to, or termination of, the Plan shall impair the rights of a Participant under any Award previously granted
without such Participant’s consent.

 

12.2.
Transferability of Awards. Except as provided elsewhere herein, no Award and no Shares that have not been issued or
as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged
or otherwise encumbered, other than by will or the laws of descent and distribution, and such Award may be exercised during the
life of the Participant only by the Participant or the Participant’s guardian or legal representative. To the extent and
under such terms and conditions as determined by the Board, a Participant may assign or transfer an Award (each transferee thereof,
a “Permitted Assignee”) to (i) the Participant’s spouse, children or grandchildren (including any adopted and
step children or grandchildren), parents, grandparents or siblings, (ii) to a trust for the benefit of one or more of the Participant
or the persons referred to in clause (i), or (iii) to a partnership, limited liability company or corporation in which the Participant
or the persons referred to in clause (i) are the only partners, members or stockholders; provided that such Permitted Assignee
shall be bound by and subject to all of the terms and conditions of the Plan and the Award Agreement relating to the transferred
Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant
shall remain bound by the terms and conditions of the Plan. The Company shall cooperate with any Permitted Assignee and the Company’s
transfer agent in effectuating any transfer permitted under this Section.

 

12.3.
Termination of Employment. The Board shall determine and set forth in each Award Agreement whether any Awards granted
in such Award Agreement will continue to be exercisable, continue to vest or be earned and the terms of such exercise, vesting
or earning, on and after the date that a Participant ceases to be employed by or to provide services to the Company or any Subsidiary
(including as a Director), whether by reason of death, disability, voluntary or involuntary termination of employment or services,
or otherwise. The date of termination of a Participant’s employment or services will be determined by the Board, which determination
will be final.

 

12.4.
Deferral; Dividend Equivalents. The Board shall be authorized to establish procedures pursuant to which the
payment of any Award may be deferred. Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award
may, if so determined by the Board, be entitled to receive, currently or on a deferred basis, cash, stock or other property dividends
in amounts equivalent to cash, stock or other property dividends on Shares (“Dividend Equivalents”) with respect to
the number of Shares covered by the Award, as determined by the Board, in its sole discretion. The Board may provide that such
amounts and Dividend Equivalents (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested
and may provide that such amounts and Dividend Equivalents are subject to the same vesting or performance conditions as the underlying
Award.

 

    	 	24	 

    	 

    

 

13.
MISCELLANEOUS

 

13.1.
Award Agreements. Each Award Agreement shall either be (a) in writing in a form approved by the Board and executed
by the Company by an officer duly authorized to act on its behalf, or (b) an electronic notice in a form approved by the Board
and recorded by the Company (or its designee) in an electronic recordkeeping system used for the purpose of tracking one or more
types of Awards as the Board may provide; in each case and if required by the Board, the Award Agreement shall be executed or
otherwise electronically accepted by the recipient of the Award in such form and manner as the Board may require. The Board may
authorize any officer of the Company to execute any or all Award Agreements on behalf of the Company. The Award Agreement shall
set forth the material terms and conditions of the Award as established by the Board consistent with the provisions of the Plan.

 

13.2.
Tax Withholding. The Company shall have the right to make all payments or distributions pursuant to the Plan to a Participant
(or a Permitted Assignee thereof) (any such person, a “Payee”) net of any applicable federal, state and local taxes
required to be paid or withheld as a result of (a) the grant of any Award, (b) the exercise of an Option or Stock Appreciation
Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in connection with any Award or (e) any other event
occurring pursuant to the Plan. The Company or any Subsidiary shall have the right to withhold from wages or other amounts otherwise
payable to such Payee such withholding taxes as may be required by law, or to otherwise require the Payee to pay such withholding
taxes. If the Payee shall fail to make such tax payments as are required, the Company or its Subsidiaries shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Payee or to take
such other action as may be necessary to satisfy such withholding obligations. The Committee shall be authorized to establish
procedures for election by Participants to satisfy such obligation for the payment of such taxes by tendering previously acquired
Shares (either actually or by attestation, valued at their then Fair Market Value), or by directing the Company to retain Shares
(up to the Participant’s minimum required tax withholding rate or such other rate that will not cause an adverse accounting
consequence or cost) otherwise deliverable in connection with the Award.

 

13.3.
Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of an Award hereunder shall confer
upon any Employee, Director or Consultant the right to continue in the employment or service of the Company or any Subsidiary
or affect any right that the Company or any Subsidiary may have to terminate the employment or service of (or to demote or to
exclude from future Awards under the Plan) any such Employee, Director or Consultant at any time for any reason. Except as specifically
provided by the Board, the Company shall not be liable for the loss of existing or potential profit from an Award granted in the
event of termination of an employment or other relationship. No Employee, Director or Consultant shall have any claim to be granted
any Award under the Plan, and there is no obligation for uniformity of treatment of Employees, Directors Consultants or Participants
under the Plan.

 

    	 	25	 

    	 

    

 

13.4.
Substitute Awards. Notwithstanding any other provision of the Plan, the terms of Substitute Awards may vary from the
terms set forth in the Plan to the extent the Board deems appropriate to conform, in whole or in part, to the provisions of the
awards in substitution for which they are granted.

 

13.5.
Cancellation of Award; Forfeiture of Gain. Notwithstanding anything to the contrary contained herein, an Award Agreement
may provide that the Award shall be canceled if the Participant, without the consent of the Company, while employed by the Company
or any Subsidiary or after termination of such employment or service, violates a non- competition, non-solicitation or non-disclosure
covenant or agreement or otherwise engages in activity that is in conflict with or adverse to the interest of the Company or any
Subsidiary (including conduct contributing to any financial restatements or financial irregularities), as determined by the Board
in its sole discretion. The Board may provide in an Award Agreement that if within the time period specified in the Agreement
the Participant establishes a relationship with a competitor or engages in an activity referred to in the preceding sentence,
the Participant will forfeit any gain realized on the vesting or exercise of the Award and must repay such gain to the Company.

 

13.6.
Stop Transfer Orders. All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to
such stop-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal
or state securities law, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference
to such restrictions.

 

13.7.
Nature of Payments. All Awards made pursuant to the Plan are in consideration of services performed or to be performed
for the Company or any Subsidiary, division or business unit of the Company. Any income or gain realized pursuant to Awards under
the Plan constitutes a special incentive payment to the Participant and shall not be taken into account, to the extent permissible
under applicable law, as compensation for purposes of any of the employee benefit plans of the Company or any Subsidiary except
as may be determined by the Board.

 

13.8.
Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable
only in specific cases.

 

13.9.
Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive compensation.
With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant
any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Board may authorize the
creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the Shares or payments in lieu
of or with respect to Awards hereunder; provided, however, that the existence of such trusts or other arrangements is consistent
with the unfunded status of the Plan.

 

    	 	26	 

    	 

    

 

13.10.
Foreign Employees. Awards may be granted to Participants who are foreign nationals or employed outside the United States,
or both, on such terms and conditions different from those applicable to Awards to Employees, Directors or Consultants providing
services in the United States as may, in the judgment of the Board, be necessary or desirable in order to recognize differences
in local law or tax policy. The Board also may impose conditions on the exercise or vesting of Awards in order to minimize the
Company’s obligation with respect to tax equalization for Employees or Consultants on assignments outside their home country.

 

13.11.
Compliance with Section 409A of the Code. This Plan is intended to comply and shall be administered in a manner that
is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. To
the extent that an Award or the payment, settlement or deferral thereof is subject to Section 409A of the Code, the Award shall
be granted, paid, settled or deferred in a manner that will comply with Section 409A of the Code, including regulations or other
guidance issued with respect thereto, except as otherwise determined by the Committee. Any provision of this Plan that would cause
the grant of an Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended
to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations
and other guidance issued under Section 409A of the Code.

 

13.12.
Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer,
other employee, or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other
person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally
liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director,
officer, other employee, or agent of the Company. The Company will indemnify and hold harmless each director, officer, other employee,
or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will
be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement
of a claim with the Board’s approval) arising out of any act or omission to act concerning this Plan unless arising out
of such person’s own fraud or bad faith.

 

13.13.
Retroactive Effect. To the extent permitted by law, all of the provisions of this Amended and Restated Plan shall be
made retroactive to all Awards granted prior to the date of the amendment and restatement.

 

13.14.
Use of Proceeds. Proceeds from the sale of shares of Common Stock pursuant to Stock Awards shall constitute general
funds of the Company.

 

    	 	27	 

    	 

    

 

13.15.
Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common
Stock under any Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and
experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together
with the purchaser representative, the merits and risks of exercising the Award; and (ii) to give written assurances satisfactory
to the Company stating that the Participant is acquiring Common Stock subject to the Award for the Participant’s own account
and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise or acquisition
of Common Stock under the Award has been registered under a then currently effective registration statement under the Securities
Act, or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company,
place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

 

13.16.
Securities Law Compliance. The Company shall seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise of
the Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act
the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company
is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for
the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such Awards unless and until such authority is obtained. A Participant shall not be eligible
for the grant of a Stock Award or the subsequent issuance of Common Stock pursuant to the Stock Award if such grant or issuance
would be in violation of any applicable securities laws.

 

13.17.
Withholding Obligations. Unless prohibited by the terms of a Stock Award Agreement or the written terms of a Performance
Cash Award, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to
an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding
shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with a Stock
Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax
required to be withheld by law (or such lower amount as may be necessary to avoid classification of the Stock Award as a liability
for financial accounting purposes); (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts
otherwise payable to the Participant; or (v) by such other method as may be set forth in the Award agreement.

 

13.18.
Electronic Delivery. Any reference herein to a “written” agreement or document shall include any agreement
or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s
intranet.

 

    	 	28	 

    	 

    

 

13.19.
Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery
of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred
and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be
made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions
while a Participant is still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals
of Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments,
following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent
with the provisions of the Plan and in accordance with applicable law.

 

13.20.
Non-Exempt Employees. No Award granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards
Act of 1938, as amended, shall be first exercisable for any shares of Common Stock until at least six months following the date
of grant. Notwithstanding the foregoing, consistent with the provisions of the Worker Economic Opportunity Act, (i) in the event
of the Participant’s death or Disability, (ii) upon a Corporate Transaction in which such Award is not assumed, continued,
or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in
the Participant’s Stock Award agreement or another applicable agreement or in accordance with the Company’s then current
employment policies and guidelines), any vested Awards may be exercised earlier than six months following the date of grant. The
foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise
or vesting of a Award will be exempt from his or her regular rate of pay.

 

13.21.
No Obligation to Notify or Minimize Taxes; Company may Pay Individual Tax Liability. The Company shall have no duty
or obligation to any Participant to advise such holder as to the time or manner of exercising such Award. Furthermore, the Company
shall have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Award or
a possible period in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences
of a Award to the holder of such Stock Award. The foregoing notwithstanding, in the sole discretion of the Plan Administrator,
the Company may, but is under no obligation to, agree to pay all or a portion of the individual tax liability of one or more Plan
Participants whose awards do not satisfy the conditions for exemption under Code section 409A.

 

13.22.
Corporate Action Constituting Grant of Stock Awards. Corporate action constituting a grant by the Company of an Award
to any Participant shall be deemed completed as of the date of such corporate action, unless otherwise determined by the Board,
regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted
by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting
the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares)
that are inconsistent with those in the Award Agreement or the written terms of a Performance Cash Award as a result of a clerical
error in the papering of the Award agreement, the corporate records will control.

 

    	 	29	 

    	 

    

 

13.23.
Governing Law. The Plan and all determinations made and actions taken thereunder, to the extent not otherwise governed
by the Code or the laws of the United States, shall be governed by the laws of the State of Nevada, without reference to principles
of conflict of laws, and construed accordingly.

 

13.24.
Effective Date of Plan; Termination of Plan. The Plan originally became effective on July 1, 2018. Awards may be granted
under the Plan at any time and from time to time on or prior to the fifth anniversary of the effective date of the Plan, on which
date the Plan will expire except as to Awards then outstanding under the Plan. Such outstanding Awards shall remain in effect
until they have been exercised or terminated, or have expired.

 

13.25.
Construction. As used in the Plan, the words “include” and “including,” and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without
limitation.”

 

13.26.
Captions. The captions in the Plan are for convenience of reference only, and are not intended to narrow, limit or
affect the substance or interpretation of the provisions contained herein.

 

13.27.
Severability. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or
in part by a court of competent jurisdiction, such provision shall (a) be deemed limited to the extent that such court of competent
jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect
any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment
or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable by
a court of competent jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in full or the provision of any other benefit required
under the Plan in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability
shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid
or unenforceable, and the maximum payment or benefit that would not be unlawful, invalid or unenforceable shall be made or provided
under the Plan.

 

    	 	30Exhibit
10.2

 

SECURITY
AGREEMENT

 

This
SECURITY AGREEMENT, dated as of October 17, 2016 (this “Agreement”), is among ToughBuilt Industries, Inc.,
a Nevada corporation (the “Company” and including such subsidiaries, that may hereafter be formed, the “Debtors”)
and the holders of the Company’s 8% Original Issue Discount Senior Secured Convertible Debentures due September 1, 2018,
in the original aggregate principal amount of $5,700,000 (collectively, the “Debentures”) signatory hereto,
their endorsees, transferees and assigns (collectively, the “Secured Parties”).

 

WITNESSETH:

 

WHEREAS,
pursuant to the Purchase Agreement (as defined in the Debentures), the Secured Parties have severally agreed to extend the loans
to the Company evidenced by the Debentures; and

 

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

 

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

 

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

 

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

 

    	 	1	 

    	 

    

 

(i)
All goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships,
appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind
and nature and wherever situated, together with all documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items
used and useful in connection with any Debtor’s businesses and all improvements thereto; and (B) all inventory;

 

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

 

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

 

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

 

(v)
All commercial tort claims;

 

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

 

(vii)
All investment property;

 

(viii)
All supporting obligations; and

 

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

 

(x)
the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.

 

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

 

    	 	2	 

    	 

    

 

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

 

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

 

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

 

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

 

    	 	3	 

    	 

    

 

(e)
“Obligations” means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint
or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the
Secured Parties, including, without limitation, all obligations under this Agreement, the Debentures, any future subsidiary guarantees
and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each
case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated,
whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise
as such obligations may be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality
of the foregoing, the term “Obligations” shall include, without limitation: (i) principal of, and interest on the
Debentures and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities
of the Debtors from time to time under or in connection with this Agreement, the Debentures, future subsidiary guarantees and
any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii)
all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the
fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization
or similar proceeding involving any Debtor.

 

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

 

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

 

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

 

    	 	4	 

    	 

    

 

3.
Delivery of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, the Company shall deliver
or cause to be delivered to the Agent any and all certificates and other instruments or documents representing any of the other
Collateral, in each case, together with all Necessary Endorsements.

 

4.
Representations, Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section
of the disclosure schedules delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”),
which Disclosure Schedules shall be deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:

 

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

 

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

 

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

 

    	 	5	 

    	 

    

 

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

 

(e)
Each Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of
business and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of
account and records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation
(i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence
that appropriate financing statements under the UCC and other necessary documents have been filed and recorded and other steps
have been taken to perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing
perfected first priority lien in the Collateral.

 

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

 

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

 

    	 	6	 

    	 

    

 

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

 

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

 

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

 

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

 

    	 	7	 

    	 

    

 

(1)
Each Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including
Collateral hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities
of established reputation having similar properties similarly situated and in such amounts as are customarily carried under similar
circumstances by other such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient
to cover the full replacement cost thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide,
and the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional
insured under each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed for any reason
whatsoever, such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the Agent
for at least thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in
the payment of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined
in the Debentures) exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss
payments in each instance will be applied by the applicable Debtor to the repair and/or replacement of property with respect to
which the loss was incurred to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the
extent not so applied, shall be payable to the applicable Debtor; provided, however, that payments received by any
Debtor after an Event of Default occurs and is continuing or in excess of $100,000 for any occurrence or series of related occurrences
shall be paid to the Agent on behalf of the Secured Parties and, if received by such Debtor, shall be held in trust for the Secured
Parties and immediately paid over to the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the
related certificates, in each case, naming the Agent as lender loss payee and additional insured shall be delivered to the Agent
at least annually and at the time any new policy of insurance is issued.

 

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

 

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

 

    	 	8	 

    	 

    

 

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

 

(p)
Each Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the Collateral.

 

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

 

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

 

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

 

(t)
No Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it
has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior
written notice to the Secured Parties of such change and, at the time of such written notification, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced
by this Agreement.

 

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

 

(v)
No Debtor may relocate its chief executive office to a new location without providing 30 days prior written notification thereof
to the Secured Parties and so long as, at the time of such written notification, such Debtor provides any financing statements
or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

 

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

 

    	 	9	 

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

(dd)
If any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties
in a writing signed by such Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory
to the Agent.

 

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

 

    	 	10	 

    	 

    

 

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

 

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

 

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

 

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

 

    	 	11	 

    	 

    

 

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

 

(kk)
Until the Obligations shall have been paid and performed in full, the Company covenants that it shall promptly direct any direct
or indirect subsidiary of the Company formed or acquired after the date hereof to enter into a Subsidiary Guarantee in favor of
the Secured Party, in the form acceptable to the Agent and such subsidiary shall become party to this Agreement as a Debtor.

 

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

 

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

 

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

 

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

 

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

 

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

 

    	 	12	 

    	 

    

 

7.
Duty To Hold In Trust.

 

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

 

(b)
If any Debtor shall become entitled to receive or shall receive any securities or other property, such Debtor agrees to (i) accept
the same as the agent of the Secured Parties; (ii) hold the same in trust on behalf of and for the benefit of the Secured Parties;
and (iii) to deliver any and all certificates or instruments evidencing the same to Agent on or before the close of business on
the fifth business day following the receipt thereof by such Debtor, in the exact form received together with the Necessary Endorsements,
to be held by Agent subject to the terms of this Agreement as Collateral.

 

8.
Rights and Remedies upon Default.

 

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

 

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

 

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

 

    	 	13	 

    	 

    

 

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

 

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

 

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

 

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

 

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

 

    	 	14	 

    	 

    

 

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

 

9.
Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from
payments made on account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes,
fees and other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses
incurred by the Agent in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and
disposing of the Collateral, and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then- outstanding
principal amounts of Debentures at the time of any such determination), and to the payment of any other amounts required by applicable
law, after which the Secured Parties shall pay to the applicable Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally
entitled, the Debtors will be liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser
amount permitted by applicable law (the “Default Rate”), and the reasonable fees of any attorneys employed
by the Secured Parties to collect such deficiency. To the extent permitted by applicable law, each Debtor waives all claims, damages
and demands against the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless
due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject
to further appeal) of a court of competent jurisdiction.

 

10.
Intentionally Omitted.

 

11.
Costs and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection
with any filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements,
partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent.
The Debtors shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice,
imperil or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection,
satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance,
amendment or enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and the
Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the
rights of the Secured Parties under the Debentures. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Debentures and shall bear interest at the Default Rate.

 

    	 	15	 

    	 

    

 

12.
Responsibility for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral,
and the Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the
Collateral or its unavailability for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any
Secured Party (i) has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral
or to preserve any rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral
for sale, and (b) each Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to
be observed or performed by such Debtor thereunder. Neither the Agent nor any Secured Party shall have any obligation or liability
under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured
Party of any payment relating to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to
perform any of the obligations of any Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent or any
Secured Party may be entitled at any time or times.

 

13.
Security Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute
and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Debentures or any agreement
entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of
payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Debentures or any other agreement entered into in connection with the foregoing; (c) any exchange,
release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Parties
to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with
the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to a Debtor,
or a discharge of all or any part of the Security Interests granted hereby. Until the Obligations shall have been paid and performed
in full, the rights of the Secured Parties shall continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy. Each Debtor expressly waives presentment, protest, notice
of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral
or any payment received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall
be deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, each Debtor’s obligations
hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms
and provisions hereof. Each Debtor waives all right to require the Secured Parties to proceed against any other person or entity
or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy.
Each Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.

 

    	 	16	 

    	 

    

 

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

 

15.
Power of Attorney; Further Assurances.

 

(a)
Each Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors
or assigns with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of
the Agent or such Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks,
drafts, money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance)
in respect of the Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant
to the UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv)
to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtors, at any time, or from time to time, to execute and deliver any and all documents and instruments and to
do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests
granted therein in order to effect the intent of this Agreement and the Debentures all as fully and effectually as the Debtors
might or could do; and each Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding. The designation set forth herein shall be deemed to amend and supersede any inconsistent
provision in the Organizational Documents or other documents or agreements to which any Debtor is subject or to which any Debtor
is a party. Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of Default,
each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and assignment
of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office and the
United States Copyright Office.

 

    	 	17	 

    	 

    

 

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

 

(c)
Each Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact, with full authority in the place and
instead of such Debtor and in the name of such Debtor, from time to time in the Agent’s discretion, to take any action and
to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any
of the Collateral without the signature of such Debtor where permitted by law, which financing statements may (but need not) describe
the Collateral as “all assets” or “all personal property” or words of like import, and ratifies all such
actions taken by the Agent. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be outstanding.

 

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

 

17.
Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or
by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the
right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without
in any way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.

 

18.
Appointment of Agent. The Secured Parties hereby appoint Hillair Capital Investments L.P. to act as their agent (“Hillair”
or “Agent”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. Such
appointment shall continue until revoked in writing by a Majority in Interest, at which time a Majority in Interest shall appoint
a new Agent, provided that Hillair may not be removed as Agent unless Hillair shall then hold less than $50,000 in principal amount
of Debentures; provided, further, that such removal may occur only if each of the other Secured Parties shall then
hold not less than an aggregate of $250,000 in principal amount of Debentures. The Agent shall have the rights, responsibilities
and immunities set forth in Annex B hereto.

 

    	 	18	 

    	 

    

 

19.
Miscellaneous.

 

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

 

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

 

(c)
This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment,
by the Debtors and the Secured Parties holding 67% or more of the principal amount of Debentures then outstanding, or, in the
case of a waiver, by the party against whom enforcement of any such waived provision is sought.

 

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

 

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

 

    	 	19	 

    	 

    

 

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

 

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

 

(h)
Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning
the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, each Debtor agrees that all proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and the Debentures
(whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees
or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan.
Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, each Debtor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby.

 

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

 

    	 	20	 

    	 

    

 

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

 

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

 

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

 

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

 

[SIGNATURE
PAGES FOLLOW]

 

    	 	21	 

    	 

    

 

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

 

	TOUGHBUILT
    INDUSTRIES, INC.	 
	 	 	 
	By:		 
	Name:	Michael
    Panosian	 
	Title:	Chief
    Executive Officer	 

 

[SIGNATURE
PAGE OF HOLDERS FOLLOWS]

 

    	 	22	 

    	 

    

 

[SIGNATURE
PAGE OF HOLDERS TO TOUGHBUILT SA]

 

Name
of Investing Entity: __________________

 

Signature
of Authorized Signatory of Investing entity: ______________________________

 

Name
of Authorized Signatory: _____________________________

 

Title
of Authorized Signatory: ______________________________

 

[SIGNATURE
PAGE OF HOLDERS FOLLOWS]

 

    	 	23	 

    	 

    

 

SCHEDULE
A

 

Principal
Place of Business of Debtors:

 

Locations
Where Collateral is Located or Stored:

 

SCHEDULE
B

 

SCHEDULE
C

 

SCHEDULE
D

Legal
Names and Organizational Identification Numbers

 

SCHEDULE
E

Names;
Mergers and Acquisitions

 

SCHEDULE
F

Intellectual
Property

 

SCHEDULE
G

Account
Debtors

 

    	 	24	 

    	 

    

 

ANNEX
A

to

SECURITY

AGREEMENT

 

FORM
OF ADDITIONAL DEBTOR JOINDER

 

Security
Agreement dated as of October 17, 2016 made by ToughBuilt Industries, Inc. and its subsidiaries party thereto from time to time,
as Debtors to and in favor of the Secured Parties identified therein (the “Security Agreement”)

 

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

 

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

 

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

 

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

 

    	 

    	 

    

 

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

 

		
	 	[Name
    of Additional Debtor 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	Address:	 
	 	 	 
	Dated:	 	 

 

    	 

    	 

    

 

ANNEX
B

to

SECURITY

AGREEMENT

THE AGENT

 

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

 

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

 

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

 

    	 

    	 

    

 

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

 

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

 

    	 

    	 

    

 

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

 

7.
Resignation by the Agent.

 

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

 

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

 

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

 

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

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