Document:

Exhibit 10.2 

 

SECURITY AGREEMENT

 

THIS
SECURITY AGREEMENT (this “Agreement”), is entered into as of September 2, 2021 (the “Effective
Date”), by and between NEXGEL, INC., a Delaware corporation (the “Borrower”), and the persons
and/or entities (each individually a “Secured Party” and collectively the “Secured Parties”) named on the Schedule
of Buyers attached to the Purchase Agreement (as defined below). All capitalized terms not otherwise defined herein shall the meanings
ascribed to them in that certain securities purchase agreement by and between Borrower and the Secured Parties dated as of September 2,
2021 (the “ Purchase Agreement”) and Notes (as defined below), as applicable.

 

RECITALS

 

A.            The
Secured Parties have entered into the Purchase Agreement pursuant to which the Borrower issued that certain subordinated secured promissory
notes in the principal amount of $1,620,000 (the “Notes”) to the Secured Parties on September 2, 2021;

 

B.            The
term “Secured Parties” as used in this Agreement shall mean, collectively, all holders of the Notes, including those persons
who become holders of Note subsequent to the date hereof and the term Requisite Secured Parties means the holders of a majority-in-interest
of the aggregate principal amount of the outstanding Notes; and

 

		C.	This Agreement is being executed and delivered by Borrower to secure the Note.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties
hereto hereby agrees as follows:

 

1.             Obligations
Secured. This Agreement secures, in part, the prompt payment and performance of all obligations of Borrower under the Notes, and all
renewals, extensions, modifications, amendments, and/or supplements thereto (collectively, the “Secured Obligations”).
If (i) an Event of Default (as defined in this Agreement) has not occurred and (ii) the Borrower has complied in all material
respects with the terms of the Registration Rights Agreement (as defined in the Purchase Agreement), this Agreement shall terminate with
no further action required by the Company and/or the Secured Parties the business day immediately preceding the Company’s Common
Stock being quoted or listed for trading on the OTCQB Marketplace, OTCQX, any tier of the NASDAQ Stock Market, the New York Stock Exchange,
or the NYSE American, then the security interest created in favor of the Secured Parties pursuant to this Agreement shall terminate.

 

		2.	Grant of Security.

 

a.             Collateral.
Borrower hereby grants, pledges, and assigns for the benefit of the Secured Parties, and there is hereby created in favor of the Secured
Parties, a security interest in and to all of Borrower' s right, title, and interest in, to, and under all of the collateral set forth
on Exhibit A hereto (collectively, “Collateral”).

 

		b.	Effective Date. This grant of security shall be effective as of the Effective Date.

 

c.             Subordination.
The Notes and the Secured Obligations shall not be subordinated, or junior in interest, to any other obligations of Borrower except to
Auctus Fund, LLC (“Auctus Fund”) pursuant to the terms and conditions of that certain Subordination Agreement in substantially
the form attached hereto as Exhibit B (the “Subordination Agreement”).

 

d.             Filings
to Perfect Security. The Borrower shall (and is hereby authorized to) file with the applicable filing office(s) such
financing statements, amendments, addenda, continuations, terminations, assignments and other records (whether or not executed by
Borrower) to perfect and to maintain perfected security interests in the Collateral by the Secured Parties, including but not
limited to (a) promptly upon the execution of this Agreement, a Financing Statement on Form UCC-1 (the “Financing
Statement'') shall be filed with the Delaware Secretary of State and in all other applicable jurisdictions on behalf of the
Secured Parties with respect to the Collateral. The Financing Statement shall designate the Secured Parties as secured parties and
Borrower as the debtor, shall identify the security interest in the Collateral, and contain any other items required by law. The
Secured Parties shall have the right (and are hereby authorized to) to file with the applicable filing office(s) such financing
statements, amendments, addenda, continuations, terminations, assignments and other records (whether or not executed by Borrower) to
perfect and to maintain perfected security interests in the Collateral by the Secured Parties, including but not limited to a
Financing Statement on Form UCC-1 with the Delaware Secretary of State and in all other applicable jurisdictions with respect
to the Collateral promptly upon the execution of this Agreement.

 

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e.             The Financing Statement shall contain a description of
collateral consistent with the description set forth herein.

 

3.             Transfers
and Other Liens. Except as set forth herein or in the Notes, Borrower shall not, without the prior written consent of the Requisite
Secured Parties, at their sole and absolute discretion:

 

a.             Sell,
transfer, assign, or dispose of (by operation of law or otherwise), any of the Collateral outside of the ordinary course of business;

 

b.             Create
or suffer to exist any lien, security interest, or other charge or encumbrance upon or with respect to any of the Collateral, except the
security interests created hereby; or

 

		c.	Permit any of the Collateral to be levied upon under any legal process.

 

4.             Representations
and Warranties. Borrower hereby represents and warrants to the Secured Parties as follows: (a) to Borrower' s knowledge,
Borrower is the owner of the Collateral (or, in the case of after-acquired Collateral, at the time Borrower acquires rights in the
Collateral, will be the owner thereat) and that, except as expressly provided herein, no other person has (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights therein, will have) any right, title, claim or interest (by way of
Lien or otherwise) in, against or to the Collateral; (b) to Borrower's knowledge, except as expressly provided herein, upon the
filing of a Financing Statement with the Delaware Secretary of State, the Secured Parties (or in the case of after-acquired
Collateral, at the time Borrower acquires rights therein, will have) will have a perfected security interest in the Collateral to
the extent that a security interest in the Collateral can be perfected by such filing; (c) all Accounts Receivable (as defined
in Exhibit A) are genuine and enforceable against the party obligated to pay the same; (d) Borrower has full
power and authority to enter into the transactions provided for in this Agreement and the Notes; (e) this Agreement and the
Notes, when executed and delivered by Borrower, will constitute the legal, valid and binding obligations of Borrower enforceable in
accordance with their terms; (t) the execution and delivery by Borrower of this Agreement and the Notes and the performance and
consummation of the transactions contemplated hereby and thereby do not and will not violate Borrower's Certificate of Incorporation
or Bylaws or any material judgment, order, writ, decree, statute, rule or regulation applicable to Borrower (g) there does
not exist any default or violation by Borrower of or under any of the terms, conditions or obligations of (i) any indenture,
mortgage, deed of trust, franchise, permit, contract, agreement, or other instrument to which Borrower is a party or by which
Borrower is bound, or (ii) any law, ordinance, regulation, ruling, order, injunction, decree, condition or other requirement
applicable to or imposed upon Borrower by any law, the action of any court or any governmental authority or agency; and the
execution, delivery and performance of this Agreement will not result in any such default or violation; (h) there is no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand pending or, to the knowledge of Borrower, threatened
which adversely affects Borrower' s business or financial condition and there is no basis known to Borrower for any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand which could result in the same; and (i) this Agreement
and the Notes do not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the
statements contained in this Agreement and the Notes not misleading.

 

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5.             Events
of Default. For purposes of this Agreement, the term “Event of Default” shall mean and refer to any of the following:

 

a.             Failure
of Borrower to perform or observe any covenant set forth in this Agreement, or to perform or observe any other term, condition, covenant,
warranty, agreement or other provision contained in this Agreement;

 

b.            Any
representation or warranty made or furnished by Borrower in writing in connection with this Agreement and the Notes or any statement or
representation made in any certificate, report or opinion delivered pursuant to this Agreement or in connection with this Agreement is
false, incorrect or incomplete in any material respect at the time it is furnished; or

 

		c.	Occurrence of any other Event of Default as defined in the Notes.

 

6.             Remedies.
Upon the occurrence and during the continuance of an Event of Default (subject to the notice and cure provisions provided for herein,
if any), the Secured Parties, shall have the rights of a secured creditor under the Uniform Commercial Code of the applicable jurisdiction,
all rights granted by the Notes, this Agreement and by law, including the right to require Borrower to assemble the Collateral and make
it available to the Secured Parties at a place to be designated by Borrower. The rights and remedies provided in this Agreement and the
Notes are cumulative and may be exercised independently or concurrently, and are not exclusive of any other right or remedy provided at
law or in equity. No failure to exercise or delay by the Secured Parties in exercising any right or remedy under this Agreement or the
Notes shall impair or prohibit the exercise of any such rights or remedies in the future or be deemed to constitute a waiver or limitation
of any such right or remedy or acquiescence therein. Every right and remedy granted to the Secured Parties under this Agreement and the
Notes or by law or in equity may be exercised by the Requisite Secured Parties at any time and from time to time.

 

		7.	Further Assurances. Borrower agrees that, from time to time, at its own expense, it will:

 

a.             Protect
and defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein, and preserve
and protect Secured Parties’ security interest in the Collateral.

 

b.             Promptly
execute and deliver to the Secured Parties all instruments and documents, and take all further action necessary or desirable, as the Secured
Parties may reasonably request to (i) continue, perfect, or protect any security interest granted or purported to be granted hereby,
and (ii) enable the Requisite Secured Parties to exercise and enforce any of Secured Parties’ rights and remedies hereunder
with respect to any Collateral.

 

c.             Permit
the Secured Parties to inspect and make copies of all books and records relating to the Collateral, wherever such books and records are
located, and to conduct an audit relating tothe Collateral at any reasonable time ortimes.

 

8.             Notices.
All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed telex, e-mail or facsimile if sent during normal business hours of the recipient,
if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be sent as follows:

 

If to the Borrower,
to:

 

NEXGEL, INC.

2150 Cabot Blvd West, Suite B

Langhorne, PA 19047

E-mail: alevy@nexgel.com

 

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If to a Secured Party:

 

The address set forth on

the Schedule of Buyers to

the
Purchase Agreement

 

or to such other address or telecopy number as the party to whom notice is to be given may have furnished to the
other party in writing in accordance herewith.

 

10.            Amendments
and Waivers. No modification, amendment or waiver of any provision of, or consent required by, this Agreement, nor any consent to
any departure herefrom, shall be effective unless it is in writing and signed by the Borrower and the Requisite Secured Parties. Such
modification, amendment, waiver or consent shall be effective only in the specific instance and for the purpose for which given.

 

11.            Exclusivity
and Waiver of Rights. No failure to exercise and no delay in exercising on the part of any party, any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other right,
power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any other rights or remedies provided
by law.

 

12.            Invalidity.
Any term or provision of this Agreement shall be ineffective to the extent it is declared invalid or unenforceable, without rendering
invalid or enforceable the remaining terms and provisions of this Agreement.

 

13.            Headings.
Headings used in this Agreement are inserted for convenience only and shall not affect the meaning of any term or provision of this Agreement.

 

14.            Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which collectively
shall constitute one and the same agreement.

 

15.            Assignment.
This Agreement and the rights and obligations hereunder shall not be assignable or transferable by the any of the parties without the
prior written consent of the Requisite Secured Parties, at its sole and absolute discretion.

 

16.            Survival.
Unless otherwise expressly provided herein, all representations warranties, agreements and covenants contained in this Agreement shall
survive the execution hereof and shall remain in full force and effect until the Notes is fully repaid and extinguished in its entirety.

 

17.            Miscellaneous.
This Agreement shall inure to the benefit of each of the parties hereto and all their respective successors and permitted assigns. Nothing
in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein contained.

 

18.            GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT
TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).

 

19.            CONSENT
TO JURISDICTION. ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL BE
COMMENCED ONLY IN THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK, EXCEPT THAT ALL SUCH DISPUTES BETWEEN THE PARTIES SHALL
BE SUBJECT TO ALTERNATIVE DISPUTE RESOLUTION THROUGH BINDING ARBITRATION AT THE HOLDER’S SOLE DISCRETION AND ELECTION (REGARDLESS
OF WHICH PARTY INITIATES THE LEGAL PROCEEDINGS).

 

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20.          Attorneys'
Fees. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party
under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of appeals.

 

21.          Entire
Agreement. This Agreement contains the entire agreement among the parties with respect to the transactions contemplated by this Agreement
and supersedes all prior agreements or understandings among the parties with respect to the subject matter hereof.

 

[SIGNATURE PAGE(S) FOLLOW]

 

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IN
WITNESS WHEREOF, this Agreement has been executed as of the date first set written above.

 

	NEXGEL, INC.	 
	 	 
	By:	 	 
	Name: Adam Levy	 
	Title: Chief Executive Officer	 
	 	 
	SECURED PARTY:	 
	 	 
	If an individual:	 
	 	 
	 	 
	Name:	 
	 	 
	If an entity:	 
	 	 
	[PARTY NAME]	 
	 	 
	By	 	 
	Name:	 
	Title:	 

 

    

     

    

 

EXHIBIT A

 

Collateral

 

Borrower hereby grants, pledges, and assigns for
the benefit of the Secured Parties, and there is hereby created in favor of the Secured Parties, a security interest in and to all of
Borrower's right, title, and interest in, to, and under all assets and all personal property of Borrower and the Borrower’s subsidiaries,
whether now or hereafter existing, or now owned or hereafteracquired,includingbutnotlimitedtothefollowing(collectively,“Collateral”):

 

1.            All
accounts, chattel paper, contracts, contract rights, accounts receivable, tax refunds, note receivable, documents, other choses in action
and general intangibles, including, but not limited to, proceeds of inventory and returned goods and proceeds from the sale of goods and
services, and all rights, liens, securities, guaranties, remedies and privileges related thereto, including the right of stoppage in
transit and rights and property of any kind forming the subject matter of any of the foregoing (“Accounts Receivable”);

 

2.            All
time, savings, demand, certificate of deposit or other accounts in the name of Borrower and/or any subsidiary of the Borrower or in which
Borrower and/or any subsidiary of the Borrower has any right, title or interest, including but not limited to all sums now or at any time
hereafter on deposit, and any renewals, extensions or replacements of and all other property which may from time to time be acquired directly
or indirectly using the proceeds of any of the foregoing;

 

3.            All
inventory and equipment of every type or description wherever located, including, but not limited to all raw materials, parts, containers,
work in process, finished goods, goods in transit, wares, merchandise furniture, fixtures, hardware, machinery, tools, parts, supplies,
automobiles, trucks, other intangible property of whatever kind and wherever located associated with the Borrower's and/or any subsidiary
of the Borrower’s business, tools and goods returned for credit, repossessed, reclaimed or otherwise reacquired by Borrower and/or
any subsidiary of the Borrower;

 

4.            All
documents of title and other property from time to time received, receivable or otherwise distributed in respect of, exchange or substitution
for or addition to any of the foregoing including, but not limited to, any documents of title;

 

5.            All
know-how, information, permits, patents, copyrights, goodwill, trademarks, trade names, licenses and approvals held by Borrower and/or
any subsidiary of the Borrower, including all other intangible property of Borrower and/or any subsidiary of the Borrower;

 

6.            All
assets of any type or description that may at any time be assigned or delivered to or come into possession of Borrower and/or any subsidiary
of the Borrower for any purpose for the account of Borrower and/or any subsidiary of the Borrower or as to which Borrower and/or any subsidiary
of the Borrower may have any right, title, interest or power, and property in the possession or custody of or in transit to anyone for
the account of Borrower and/or any subsidiary of the Borrower, as well as all proceeds and products thereof and accessions and annexations
thereto; and

 

7.            All
proceeds (including but not limited to insurance proceeds) and products of and accessions and annexations to any of the foregoing.

 

    

     

    

 

EXHIBIT B

 

Form of Subordination AgreementExhibit 10.3 

 

SUBORDINATION AGREEMENT 

 

THIS
SUBORDINATION AGREEMENT (this “Agreement”), is entered into as of September 2, 2021 (the “Effective
Date”), by and between NEXGEL, INC., a Delaware corporation (the “Borrower”), the persons and/or entities
(each individually a “Subordinated Secured Party” and collectively the “Subordinated Secured Parties”) named on
the Schedule of Buyers attached to the Purchase Agreement (as defined below) and Auctus Fund, LLC, a Delaware limited liability company
(“Auctus Fund”). All capitalized terms not otherwise defined herein shall the meanings ascribed to them in that certain securities
purchase agreement by and between Borrower and the Subordinated Secured Parties dated as of September 2, 2021 (the “ Purchase
Agreement”) and Subordinated Notes (as defined below), as applicable.

 

RECITALS

 

A.     
On March 11, 2021, the Borrower and Auctus Fund entered into that certain Security Agreement whereby the Borrower granted Auctus
Fund a senior security interest in all of Borrower’s assets to secure Auctus Fund’s interest under that certain Senior Secured
Promissory Note in the principal amount of $1,500,000 of an even date therewith (the “Senior Note”) and the related
documents thereto (collectively, the “Senior Loan Documents”);

 

B.      The
Subordinated Secured Parties have entered into the Purchase Agreement pursuant to which the Borrower issued that certain
subordinated secured promissory notes in the aggregated principal amount of $1,620,000 (the “Subordinated Notes”)
to the Subordinated Secured Parties on September 2, 2021 and entered into that certain Security Agreement on an even date therewith
(the “Subordinated Security Agreement”) related to the Subordinated Notes (collectively, the
 “Subordinated Loan Documents”); and

 

C.     
Auctus Fund has agreed to allow a subordinated security interest to the Borrower’s assets to the Subordinated Secured Parties
pursuant to the terms and conditions of this Agreement.

 

NOW,
THEREFORE, in consideration of the above recitations, it is hereby declared, understood and agreed as follows:

 

1.            Subordination. The Subordinate Loan Documents and any renewals or extensions thereof and all indebtedness owed thereunder
(“Subordinate Indebtedness”) shall be and are hereby subordinated, inferior and subject to the Senior Loan Documents,
as the Senior Loan Documents may be revised, modified, extended or amended from time to time, and all indebtedness owed thereunder (“Senior
Indebtedness”). The Subordinated Secured Parties and any subsequent holder of the Subordinate Indebtedness, agrees that the
Subordinate Indebtedness is subordinate and junior in right of payment to the prior payment in full in cash of all the Senior Indebtedness.
No renewal, modification, extension or amendment of the Senior Loan Documents shall require the consent of the Subordinated Secured Parties
to the continued subordination of the Subordinate Loan Documents and the Subordinate Indebtedness to the Senior Loan Documents and the
Senior Indebtedness. The Subordinated Secured Parties further agree that, until the entire Senior Indebtedness has been paid in full,
no Subordinated Secured Party will seek for any Subordinated Secured Parties account, any payment from Borrower on account of such Subordinated
Indebtedness.

 

2.            Waiver. Each Subordinated Secured Party hereby waives and agrees not to assert or take advantage of, to the fullest extent
permitted by law:

 

(a)            Any right to require the Auctus Fund to proceed against the Borrower or any other person or to proceed against or exhaust any security
held by it at any time, or to proceed with any other remedy in the Auctus Fund's power before exercising any right, or remedy under the
Senior Loan Documents; or

 

(b)            Until the Senior Indebtedness has been paid in full, any defense that may arise by reason of the incapacity, lack of authority,
death or disability of, or revocation hereof by any other or others, or the failure of the Auctus Fund to file or enforce a claim against
the estate (either in administration, bankruptcy or any other proceedings), or any other or others.

 

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3.            Consent by Auctus Fund Required. Without the prior written consent from the Auctus Fund, at least thirty (30) days prior
to action by any Subordinated Secured Party until such time as the Senior Indebtedness is repaid in full in accordance with the Senior
Loan Documents, a Subordinated Secured Party shall not do any of the following:

 

(a)            Independently, or jointly with any other creditor, unless the Auctus Fund shall also join, bring any suit, action or other proceeding
against the Borrower or the Collateral including, but not limited to, any proceeding under any bankruptcy, reorganization, readjustment
of debt, arrangement of debt, receivership, liquidation or insolvency law or statute of the federal or any state government;

 

(b)            Commence any action or proceeding against the Collateral provided as security for the Senior Loan Documents, which Collateral is
also provided as security for the Subordinate Loan Documents, including but not by way of limitation, foreclosure, taking of possession,
appointment of a receiver or exercise of any rights or any other action which may interfere with the Borrower's possession, use or management
of the Collateral; and

 

(c)            Commence or join in any action or proceeding against the Borrower seeking to establish or collect a monetary liability.

 

4.             Bankruptcy; Insolvency. In the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith relating to the Borrower or the Collateral, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or any assignment for the benefit of creditors or any other marshalling
of assets and liabilities of the Borrower, all of the Senior Indebtedness (which term as used throughout this Agreement shall include,
without any limitation, any interest accruing after the occurrence of an Event of Default under the Senior Loan Documents whether or not
such interest is allowed as a claim in any bankruptcy or insolvency proceedings) due or to become due shall first be paid in cash in full
before any payment on account of principal, interest or otherwise is made upon the Subordinate Indebtedness, and in any such proceeding,
any payment or distribution of any kind or character which may be payable or deliverable with respect to the Subordinate Indebtedness
shall be paid or delivered directly to the Auctus Fund for application in payment of the Senior Indebtedness, unless and until all such
Senior Indebtedness shall have been paid and satisfied in full in cash. Further, each Subordinated Secured Party specifically agrees as
follows:

 

(a)            A Subordinated Secured Party shall not take any action to contest (i) the validity of the liens or security interests granted to
the Auctus Fund with respect to the Senior Loan Documents and Senior Indebtedness, (ii) the relative rights of the Auctus Fund and the
Subordinated Secured Parties with respect to such liens and security interests or (iii) the enforceability of this Agreement or any of
the Senior Loan Documents;

 

(b)            The subordination provisions contained herein shall continue to be effective or be reinstated, as the case may be, until such time
as the Senior Indebtedness shall be paid in full in cash; provided that if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by the Auctus Fund upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise,
the provisions of this Agreement shall again be operative until all Senior Indebtedness shall again be paid in full in cash, all as though
such payment had not been made. In the event, that following payment of the Senior Indebtedness in full in cash, the Auctus Fund shall
receive any payment or distribution on behalf of the Borrower, the Auctus Fund shall promptly deliver such payment or distribution to
the Subordinated Secured Parties on a pro rata basis; and

 

(c)            Borrower Obligations. The provisions hereof as to subordination are solely for the purpose of defining the relative rights
of the Auctus Fund on the one hand, and the Subordinated Secured Parties, on the other, and none of the provisions of this Agreement shall
excuse the Borrower from its obligations to pay the Subordinate Indebtedness to the Subordinated Secured Parties in accordance with the
terms of the Subordinate Loan Documents, except that the rights of the Subordinated Secured Parties to exercise remedies otherwise permitted
by applicable law or under the terms of the Subordinate Loan Documents shall be limited as set forth in this Agreement.

 

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5.             GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
(WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).

 

6.             CONSENT TO JURISDICTION. ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER ARISING OUT OF OR RELATED TO THIS AGREEMENT
SHALL BE COMMENCED ONLY IN THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK, EXCEPT THAT ALL SUCH DISPUTES BETWEEN THE PARTIES
SHALL BE SUBJECT TO ALTERNATIVE DISPUTE RESOLUTION THROUGH BINDING ARBITRATION AT AUCTUS FUND’S SOLE DISCRETION AND ELECTION (REGARDLESS
OF WHICH PARTY INITIATES THE LEGAL PROCEEDINGS).

 

7.             Giving Notice. Any notice required or permitted to be given by Borrower or Auctus Fund under this Agreement shall be in
writing and will be deemed given (a) upon personal delivery, (b) on the first business day after receipted delivery to a national courier
service which guarantees next-business-day delivery, or (c) on the third business day after mailing, by registered or certified United
States mail, postage prepaid, in any case to the appropriate party at its address set forth below:

 

If to Borrower: 
 

NEXGEL, INC. 

2150 Cabot Blvd West, Suite B 

Langhorne, PA 19047

E-mail:
alevy@nexgel.com

 

If to Auctus Fund:

 

AUCTUS FUND, LLC

545 Boylston Street 

2nd Floor

Boston, MA 02116

 

If to a Subordinated Secured Party:

 

The address set forth on the 

Schedule of Buyers to
the 

Purchase Agreement

 

 

Any person may change such person’s address for notices
or copies of notices by giving notice to the other party in accordance with this section.

 

8.             Counterparts. This Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts,
each of which when so executed shall be deemed an original but all of which together shall constitute one and the same agreement. This
Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto.

 

9.             Headings. The article and section headings in no way define, limit, extend or interpret the scope of this Agreement or of
any particular article or section.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Auctus Fund, the
Subordinated Secured Party and the Borrower have executed this Agreement the day and year first above written.

 

	NEXGEL, INC.	 
	 	 
	
    By:
	 
	 
	Name: Adam Levy	 
	Title: Chief Executive Officer	 

 

	AUCTUS FUND, LLC	 
	 	 
	By:	 	 
	 Name: Lou Posner	 
	Title: Managing Director	 

 

[SUBORDINATED
SECURED PARTY SIGNATURE PAGES TO FOLLOW]

 

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	SUBORDINATED SECURED PARTY:	 
	 	 
	 	 
	If an individual:	 
	 	 
	 	 
	Name:	 
	 	 
	 	 
	If an entity:	 
	 	 
	 	 
	[PARTY NAME]	 
	 	 
	By 	 	 
	Name:	 
	Title:	 

 

[SUBORDINATION AGREEMENT SUBORDINATED SECURED PARTY SIGNATURE
PAGE]

 

    5

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