Document:

Exhibit 10.2

 

 

 

SUBSIDIARY GUARANTEE

 

SUBSIDIARY GUARANTEE,
dated as of October 24, 2017 (this “Guarantee”), made by each of the signatories hereto (together with any other
entity that may become a party hereto as provided herein, the “Guarantors”), in favor of the purchasers signatory
(together with their permitted assigns, the “Purchasers”) to that certain Securities Purchase Agreement, dated
as of the date hereof, among Synthesis Energy Systems, Inc., a Delaware corporation (the “Company”) and the
Purchasers.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to
that certain Securities Purchase Agreement, dated as of the date hereof, by and among the Company and the Purchasers (the “Purchase
Agreement”), the Company has agreed to sell and issue to the Purchasers, and the Purchasers have agreed to purchase from
the Company the Debentures, subject to the terms and conditions set forth therein; and

 

WHEREAS, each Guarantor will directly benefit from the extension of credit to the Company
represented by the issuance of the Debentures; and

 

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

 

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

 

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

 

“Obligations” means, in addition to all other costs and expenses of collection incurred by the Purchasers in
enforcing any of such Obligations and/or this Guarantee, all of the liabilities and obligations (primary, secondary, direct, contingent,
sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, of the Company or any
Guarantor owing to the Purchasers, including, without limitation, all obligations under this Guarantee, the Debentures 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 Purchasers 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 Company
or any Guarantor from time to time under or in connection with this Guarantee, the Debentures and any other instruments, agreements
or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited
to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such
amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving
the Company or any Guarantor.

 

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2.                 
Guarantee.

 

(a)               
Guarantee.

 

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

 

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

 

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

 

(iv)            
The guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations and the obligations
of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by indefeasible payment in full (other
than contingent payment obligations for which no claim has been asserted, which for purposes of clarification shall not include
principal amounts and accrued interest on the Debentures).

 

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(v)              
No payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected
by the Purchasers from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected
from such Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor
hereunder until the Obligations are indefeasibly paid in full (other than contingent payment obligations for which no claim has
been asserted, which for purposes of clarification shall not include principal amounts and accrued interest on the Debentures).

 

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

 

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

 

(c)               
No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds
of any Guarantor by the Purchasers, no Guarantor shall be entitled to be subrogated to any of the rights of the Purchasers against
the Company or any other Guarantor or any collateral security or guarantee or right of offset held by the Purchasers for the payment
of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any
other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Purchasers by the Company
on account of the Obligations are indefeasibly paid in full (other than contingent payment obligations for which no claim has been
asserted, which for purposes of clarification shall not include principal amounts and accrued interest on the Debentures). If any
amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have
been paid in full (other than contingent payment obligations for which no claim has been asserted, which for purposes of clarification
shall not include principal amounts and accrued interest on the Debentures), such amount shall be held by such Guarantor in trust
for the Purchasers, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned
over to the Purchasers in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Purchasers, if required),
to be applied against the Obligations, whether matured or unmatured, in such order as the Purchasers may determine.

 

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

 

(e)               
Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension
or accrual of any of the Obligations and notice of or proof of reliance by the Purchasers upon the guarantee contained in this
Section 2 or acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained
in this Section 2; and all dealings between the Company and any of the Guarantors, on the one hand, and 

 

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the
Purchasers, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives to the extent permitted by law diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Company or any of the Guarantors with respect to the
Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment and performance without regard to (i) the validity or
enforceability of the Purchase Agreement or any other Transaction Document, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the
Purchasers, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance or fraud by Purchasers)
which may at any time be available to or be asserted by the Company or any other Person against the Purchasers, or (iii) any
other circumstance whatsoever (with or without notice to or knowledge of the Company or such Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the Purchasers may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against the Company,
any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of
offset with respect thereto, and any failure by the Purchasers to make any such demand, to pursue such other rights or
remedies or to collect any payments from the Company, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any release of the Company, any other Guarantor
or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Purchasers against any Guarantor. For the purposes hereof, “demand” shall
include the commencement and continuance of any legal proceedings.

 

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

 

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

 

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

 

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

 

(b)              
Authorization; Enforcement. The Guarantor has the requisite corporate or limited liability company power and authority
to enter into and to consummate the transactions contemplated by this Guaranty, and otherwise to carry out its obligations hereunder.
The execution and delivery of this Guaranty by the Guarantor and the consummation by it of the transactions contemplated hereby
have been duly authorized by all requisite corporate or limited liability company action on the part of the Guarantor. This Guaranty
has been duly executed and delivered by the Guarantor and constitutes the valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

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

 

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

 

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

 

4.                 
Covenants.

 

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

 

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

 

ii.                       
other than Permitted Liens, enter
into, create, incur, assume or suffer to exist any liens of any kind, on or with respect to any of its property or assets now owned
or hereafter acquired or any interest therein or any income or profits therefrom;

 

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iii.                       
amend its certificate of incorporation, articles of incorporation, bylaws, limited
liability company agreement or other charter documents so as to adversely affect any rights of any Purchaser;

 

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

 

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

 

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

 

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

 

5.                 
Miscellaneous.

 

(a)               
Amendments in Writing. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or
otherwise modified except in writing by the Purchasers then holding at least 67% of the aggregate principal amount of the then
outstanding Debentures.

 

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

 

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

 

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(d)              
Enforcement Expenses; Indemnification.

 

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

 

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

 

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

 

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

 

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

 

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

 

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(g)              
Counterparts. This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate
counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same
instrument.

 

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

 

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

 

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

 

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

 

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(l)                
Acknowledgements. Each Guarantor hereby acknowledges that:

 

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

 

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

 

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

 

(m)            
Release of Guarantors. Each Guarantor will be released from all liability hereunder concurrently with the indefeasible
payment in full (other than contingent payment obligations for which no claim has been asserted, which for purposes of clarification
shall not include principal amounts and accrued interest on the Debentures) of all amounts owed under the Purchase Agreement, the
Debentures and the other Transaction Documents.

 

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

 

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(o)              
WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

 

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

 

 

 

(Signature
Pages Follow)

 

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

 

 

	 	Synthesis Energy Holdings, Inc.
	 	 	 	 	 
	 	By:	/s/ Delome Fair	 
	 	 	Name: 	Delome Fair	 
	 	 	Title: 	President and Chief Executive Officer	 

 

 

	 	Synthesis Energy Systems Technologies, LLC
	 	 	 	 	 
	 	By:	/s/ Delome Fair	 
	 	 	Name: 	Delome Fair	 
	 	 	Title: 	President and Chief Executive Officer	 

 

 

	 	SES Resources, LLC
	 	 	 	 	 
	 	By:	/s/ Delome Fair	 
	 	 	Name: 	Delome Fair	 
	 	 	Title: 	President and Chief Executive Officer	 

 

 

 

 

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SCHEDULE 1

 

GUARANTORS

 

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

 

	 	Jurisdiction of Incorporation / Organization	Company Owned by Percentage
	Synthesis Energy Holdings, Inc.	Florida	100%
	Synthesis Energy Systems Technologies, LLC	Delaware	100%
	SES Resources, LLC	Delaware	100%

 

 

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Annex 1 to

SUBSIDIARY GUARANTEE

 

ASSUMPTION AGREEMENT, dated as of ____
__, ______ made by ______________________________, a ______________ [corporation][limited liability company] (the “Additional
Guarantor”), in favor of the Purchasers pursuant to the Purchase Agreement referred to below. All capitalized terms not
defined herein shall have the meaning ascribed to them in such Purchase Agreement.

W I T N E S S
E T H :

 

WHEREAS, Synthesis Energy Systems, Inc., a Delaware corporation (the “Company”)
and the Purchasers have entered into a Securities Purchase Agreement, dated as of ________ ___, 2017 (as amended, supplemented
or otherwise modified from time to time, the “Purchase Agreement”);

 

WHEREAS, in connection with the Purchase Agreement, certain U.S. Subsidiaries of the
Company (other than the Additional Guarantor) have entered into the Subsidiary Guarantee, dated as of ______________ ____, 2017
(as amended, supplemented or otherwise modified from time to time, the “Guarantee”) in favor of the Purchasers;

 

WHEREAS, pursuant to
the terms of the Debentures, the Company has agreed that each of its subsidiaries formed or acquired on or subsequent to the date
of the Purchase Agreement shall become a Subsidiary Guarantor for all purposes under the Transaction Documents by executing and
delivering an Assumption Agreement;

 

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

 

WHEREAS, the
Additional Guarantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the
Guarantee;

 

NOW, THEREFORE,
IT IS AGREED:

 

1.                 
Guarantee. By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 8(k)
of the Debentures, hereby becomes a party to the Guarantee as a Guarantor thereunder with the same force and effect as if originally
named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Guarantor thereunder. The information set forth in Annex 1 hereto is hereby added to the information set forth
in Schedule 1 to the Guarantee. The Additional Guarantor hereby represents and warrants that each of the representations and warranties
contained in Section 3 of the Guarantee is true and correct on and as the date hereof as to such Additional Guarantor (after giving
effect to this Assumption Agreement) as if made on and as of such date.

 

    15

     

    

2.                 
Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK, without regard to the principles of conflicts of law thereof.

 

 

 

 

 

 

 

 

 

 

    16

     

    

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

 

 

	 	[ADDITIONALGUARANTOR]
	 	 	 	 	 
	 	By:	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 

 

 

 

 

 

17Exhibit 10.3

 

SECURITY AGREEMENT

 

This SECURITY
AGREEMENT, dated as of October 24, 2017 (this “Agreement”), is among Synthesis Energy Systems, Inc., a
Delaware corporation (the “Company”), all of the Domestic Subsidiaries (as defined below) of the Company
from time to time party hereto (such subsidiaries, the “Guarantors” and together with the Company, the
“Debtors”), and the holders of the Company’s 11% Senior Secured Debentures due five (5) years
following their issuance, in the original aggregate principal amount of $8,000,000 (collectively, the
“Debentures”) signatory hereto, their endorsees, transferees and assigns (collectively, the
“Secured Parties”), and T.R. Winston & Company, LLC, as agent for the Secured Parties (the
“Agent”).

 

W I T N E S S E T H:

 

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;

 

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

 

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 (i) 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 and (ii) that are not defined herein shall have the
respective meanings given such terms in the Debentures.

 

(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, 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 Pledged Interests,
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, 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, including all Pledged Securities not constituting Pledged Interests;

 

(viii)       All
supporting obligations;

 

(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;

 

provided, however,
notwithstanding anything in this Agreement to the contrary, “Collateral” shall not include, and this Agreement shall
not constitute a lien or security interest in, Excluded Property.

 

    2

     

    

(b)              
“Domestic Subsidiary” means, with respect to any Debtor,
any Subsidiary incorporated or organized under the laws of the United States of America, or any state or other political subdivision
thereof or which is considered to be a “disregarded entity” for United States federal income tax purposes and which
is not a “controlled foreign corporation” as defined under Section 957 of the Internal Revenue Code, in each case provided
such Subsidiary is owned by a Debtor or a Domestic Subsidiary of such Debtor, and “Domestic Subsidiaries” means any
or all of them. Notwithstanding the preceding sentence, the term “Domestic Subsidiary” shall not include and Subsidiary
of one or more “controlled foreign corporations” as defined under Section 957 of the Internal Revenue Code.

 

(c)               
 “Equity Interest” means (i) in the case of any corporation, all capital stock and any securities exchangeable
for or convertible into capital stock, (ii) in the case of an association or business entity, any and all shares, interest, participation,
rights or other equivalents of corporate stock (however designated) in or to such association or entity (iii) in the case of a
partnership or limited liability company, partnership or membership interest (whether general or limited) and (iv) any other interest
or participation that confers on a person the right to receive a share of the profits and losses of, or distribution of assets
of, the issuing person, and including, in all of the foregoing cases described in clauses (i), (ii), (iii) or (iv), any warrants,
rights or other options to purchase or otherwise acquire any of the interests described in any of the foregoing cases.

 

(d)              
“Excluded Property” means:

 

(i)            
any personal property or asset the pledge or assignment of which becomes void by operation of law or which is 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), or would require consent, license or approval from a governmental authority that has not been obtained;
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;

 

(ii)          
any lease, license, permit, general intangible, contract, property rights or agreement to which a Debtor is a party or any of its
rights or interests thereunder (or any property subject thereto, including, without limitation, to the extent permitted under the
Transaction Documents, any property subject to a purchase money security interest, capital lease obligation or similar arrangements)
if and for so long as the grant of a security interest therein would (A) require the consent, license or approval of any governmental
authority under any law that has not been obtained (other than any Organizational Document of any Debtor) or (b) constitute or
result in the abandonment, termination pursuant to the terms of, or a breach or default under, any such lease, license, permit,
general intangible, contract, property right or agreement;

 

    3

     

    

(iii)        
any personal property or asset owned by any Debtor on the date hereof or hereafter acquired and any proceeds thereof that are subject
to a lien securing a purchase money obligation or capital lease obligation permitted to be incurred pursuant to the provisions
of the Transaction Documents to the extent and for so long as the contract or other agreement in which such lien is granted (or
the documentation providing for such purchase money obligation or capital lease obligation) validly prohibits the creation of any
other lien on such assets and proceeds in favor of the Secured Parties;

 

(iv)        
all Equity Interests issued by any Foreign Subsidiary, including, for the avoidance of doubt all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Equity Interests;

 

(v)          
any intent-to-use trademark application to the extent and for so long as the grant of a lien therein or creation by a Debtor of
a security interest therein would impair the validity or enforceability of such intent-to-use trademark application and/or result
in the loss by such Debtor of any material rights therein;

 

(vi)        
vehicles, trucks, tanks, boats, ships or any other assets or property subject to any certificate of title, vehicle titling, vehicle
registration or similar law of any jurisdiction to the extent that a lien on such assets or property cannot be perfected by the
filing of a financing statement under the UCC; and

 

(vii)      
any cash distribution on Equity Interests of the Debtors permitted by the Transaction Documents.

 

(e)    
“Foreign Subsidiary” means with respect to any Debtor, any Subsidiary of such Debtor, other than a Domestic
Subsidiary.

 

(f)    
“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.

 

    4

     

    

(g)   
“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.

 

(h)   
“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 may reasonably
request.

 

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

 

(j)     
“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, certificate of formation 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).

 

    5

     

    

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

 

(l)     
“Pledged Securities” means all of the issued and outstanding Equity Interests issued by the Guarantors and held
by the Company and all of the issued and outstanding Equity Interests of any direct Domestic Subsidiary of the Company or any of
the Guarantors and obtained in the future, and all dividends, distributions, cash, warrants, rights, options, instruments, securities
and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Equity Interests; provided, however, notwithstanding anything herein to the contrary, the Pledged
Securities shall not include any Equity Interests issued by any Foreign Subsidiary.

 

(m) 
“Subsidiary(ies)” means any other corporation, association, joint stock company, business trust, limited liability
company, partnership or any other business entity of which more than 50% of the Equity Interests, is owned either directly or indirectly
by any Person or one or more of its Subsidiaries, or the management of which is otherwise controlled, directly or indirectly, by
any Person and/or its Subsidiaries.

 

(n)   
“Transaction Documents” shall have the meaning set forth in the Purchase Agreement.

 

(o)   
“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”).

 

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

 

    6

     

    

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 and the Agent 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 Agent and 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 herein have been duly authorized by all necessary action on the part of such Debtor and no further
action is required by such Debtor. This Agreement has been duly executed by each Debtor. This Agreement constitutes the legal,
valid and binding obligation of each Debtor, enforceable against each Debtor in accordance with its terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting
the rights and remedies of creditors and by general principles of equity.

 

(b)        The
Debtors have no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, each Debtor is the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens
(as defined in the 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 owners 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 or otherwise be filed pursuant to the terms of the Transaction Documents).

 

    7

     

    

(d)        No
written claim has been received by the Debtors that any Collateral or any Debtor's use of any Collateral violates the rights of
any third party. There is no pending proceeding involving Debtor's claim of ownership rights in or exclusive rights to use the
Collateral in any jurisdiction, 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 to any location not set forth on Schedule A unless it delivers to the Agent 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).
Upon the request of the Agent, the Debtors shall take all steps necessary to ensure that appropriate financing statements under
the UCC and other necessary documents have been filed and recorded and all other steps reasonably required by the Agent 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, the 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)) with respect to copyrights and copyright applications in the United States Copyright Office and the
United States Patent and Trademark Office, in each case referred to in Section 4(kk), 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 or perfect 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 and the Secured Parties to file one or more financing statements under the UCC, in a form(s)
delivered by the Agent to the Debtors, with respect to the Security Interests, with the proper filing and recording agencies in
any jurisdiction deemed proper by it. The Agent shall provide the Debtors with a filed copy of each such financing statement.

 

    8

     

    

(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, (ii) any judgment, decree, order or award of any court, governmental authority, regulatory body or arbitrator
or any applicable law, rule or regulation applicable to any Debtor or (iii) 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 material agreement, credit facility, debt
or other instrument (evidencing any Debtor's debt) to which any Debtor is a party or by which any property or asset of any Debtor
is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not reasonably be expected to result
in a Material Adverse Effect.

 

(i)        The
Equity Interests listed on Schedule H hereto represent all of the Equity Interests issued by the Guarantors, and represent
all of the Equity Interests owned directly by the Company. All of the Pledged Securities are validly issued, fully paid and nonassessable,
to the extent such concepts are applicable, and the Company is the legal and beneficial owner of the Pledged Securities, free
and clear of any lien, security interest or other encumbrance except for the Security Interests created by this Agreement, restrictions
on transfer arising under the Guarantor’s respective Organizational Documents and applicable Securities Laws, and other
Permitted Liens (as defined in the Debentures).

 

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

 

(k)
       Except for Permitted Liens (as defined in the 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 use commercially reasonable best efforts
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.

 

    9

     

    

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

 

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

 

(n)       Each
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral
hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established
reputation having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances
by other such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover
the full replacement cost thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide, and
the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional
insured under each such insurance policy; (b) if such insurance 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 is continuing, 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 the Collateral
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.

 

(o)
       Each Debtor shall, within ten (10) days of obtaining knowledge thereof, advise
the Agent 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.

 

    10

     

    

(p)
       Each Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages,
assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such
further action as the Agent may from time to time request and may in its sole discretion deem reasonably 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 (each, an
“Intellectual Property Security Agreement”) in which the Secured Parties have been granted a Security Interest
hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual Property Security Agreement, other than
as stated therein, shall be subject to all of the terms and conditions hereof.

 

(q)
       Each Debtor shall permit the Agent and its representatives and agents to inspect the
Collateral during normal business hours and upon reasonable prior notice, and to make copies of records pertaining to the Collateral
as may be reasonably requested by the Agent from time to time; provided, however, so long as no Event of Default has occurred and
is continuing, the Debtors shall not be required to reimburse the Agent for such inspections more than one time in each fiscal
year.

 

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

 

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

 

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

 

(u)
       The Debtors shall at all times preserve and keep in full force and effect their respective
valid existence and good standing in their respective jurisdiction of incorporation or organization and any rights and franchises
that the Debtors deem material to their respective business.

 

(v)
       No Debtor will change its name, type of organization, jurisdiction of organization, organizational
identification number (if it has one), legal or corporate structure or identity, chief executive office 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. Upon the request of the Agent, the Debtors shall take all steps necessary to ensure that any financing statements
or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement
have been filed and recorded.

 

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

 

(x)
       [Reserved]

 

(y)       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.

 

(z)       
(i) The legal name of each Debtor is the name set forth in Schedule D attached hereto; (ii) no Debtor presently operates
under any trade names except as set forth on Schedule E attached hereto; (iii) no Debtor has used any name other than as
set forth on Schedule E pursuant to clauses (i) and (ii) hereof 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.

 

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

 

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

 

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

 

(dd)       If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, upon the request of the Agent, 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.

 

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

 

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

 

(gg)       If
any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Agent 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.

 

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

 

(ii)       Each
Debtor shall cause each Domestic 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.
Concurrently therewith, the Additional Debtor shall deliver replacement schedules for, or supplements to all other Disclosure Schedules
to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements shall modify,
the Disclosure 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.

 

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(jj)
The Company shall not cast any vote with respect to the Pledged Securities that authorizes or causes any Debtor to breach any
of its covenants and agreements set forth herein and in the Subsidiary Guaranty.

 

(kk)Each
Debtor shall register the pledge of the applicable Pledged Securities on the books of such Debtor. The Company shall notify each
issuer of Pledged Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on
the books of such issuer. 

 

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

 

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

 

(nn)       [Reserved]

 

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

 

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

 

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(qq)Until
the Obligations shall have been paid and performed in full (other than contingent payment obligations for which no claim has been
asserted), the Company covenants that it shall promptly cause any direct or indirect Domestic 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 of Exhibit F
to the Purchase Agreement.

 

5.       Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting Equity Interests (regardless
of class, designation, preference or rights) that may be converted into voting Equity 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 Interests pursuant to this Agreement or the enforcement of any of Secured Parties’ 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
and continuance 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 ten (10) 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 commercially reasonable 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.

 

7.
       Duty To Hold In Trust.

 

(a)       Upon
the occurrence and during the continuance 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).

 

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

 

8.
       Rights and Remedies Upon Default.

 

(a)       Upon
the occurrence and during the continuance of any Event of Default and at any time thereafter, the Secured Parties, acting by Majority
in Interest and through the Agent, shall have the right to exercise all of the remedies conferred hereunder and under the Debentures,
and the Secured Parties, acting by a Majority in Interest and through the Agent, 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 upon the instruction of a Majority in
Interest, shall have the following rights and powers:

 

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

 

(ii)       Upon
notice to the Debtors by the 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, the 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 the 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 Domestic Subsidiaries.

 

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(iii)
The Agent, on behalf of the Secured Parties, shall have the right to operate the business of each Debtor using the Collateral and
shall have the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the Collateral, at public or
private sale or otherwise, either with or without special conditions or stipulations, for cash or on credit or for future delivery,
in such parcel or parcels and at such time or times and at such place or places, and upon such terms and conditions as the Agent
may deem commercially reasonable, all without (except as shall be required by applicable statute and cannot be waived) advertisement
or demand upon or notice to any Debtor or right of redemption of a Debtor, which are hereby expressly waived, but in each case
subject to any non-waivable provisions of applicable law. 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. 

 

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(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 the occurrence and continuance of 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, second, 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, third, 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
fourth, to the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the
applicable Debtor any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof
are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Debtors will be liable for the deficiency,
together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable law (the “Default
Rate”), and the reasonable fees of any attorneys employed by the Secured Parties to collect such deficiency. To the extent
permitted by applicable law, each Debtor waives all claims, damages and demands against the Secured Parties arising out of the
repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of
the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

 

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

 

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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, are 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 (a) 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 (b) 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; provided, however, that
the Debtors shall only be responsible for the payment of the fees and expenses of one (1) counsel for all of the Secured Parties.
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.

 

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.

 

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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, or the other Transaction Documents, 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 Agent or 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 (other than contingent payment obligations for which no claim has been asserted), the rights of the Secured Parties shall
continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations
or bankruptcy. Each Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for
performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder
shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance
under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the
Secured Parties, then, in any such event, each Debtor’s obligations hereunder shall survive cancellation of this Agreement,
and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a
valid and binding obligation enforceable in accordance with the terms and provisions hereof. Each Debtor waives all right to require
the Secured Parties to proceed against any other person or entity or
to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other
remedy. Each Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured
hereby.

 

14.
       Term of Agreement. This Agreement and the Security Interests shall
automatically terminate, without any action on the part of the Secured Parties or the Agent, 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 (other than contingent
payment obligations for which no claim has been asserted); 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) 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) pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) demand, collect, receipt
for, compromise, settle and sue for monies due in respect of the Collateral; (v) 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 reasonably 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.

 

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(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 file, in its sole discretion,
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).

 

    21

     

    

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. Each of the Secured Parties hereby appoints T.R. Winston
& Company, LLC to act as its agent (“TR Winston” or “Agent”) for purposes of exercising
any and all rights and remedies of the Secured Parties hereunder.
The Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.

 

19.
       Miscellaneous.

 

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

 

    22

     

    

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

 

(f)
       This Agreement shall be binding upon and inure to the benefit of the parties
and their successors and permitted assigns. The Company and the Guarantors may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of each Secured Party (other than by merger). Any Secured Party may assign any or all
of its rights under this Agreement to any Person (as defined in the Purchase Agreement) to whom such Secured Party assigns or transfers
any Obligations; provided assignment or transfer is made in accordance with the Purchase Agreement and 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.

 

    23

     

    

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

 

(j)       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 Transaction Documents 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.

 

    24

     

    

[SIGNATURE PAGES FOLLOW]

 

 

 

 

 

 

    25

     

    

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

 

 

	COMPANY: 	 
	 	 	 
	SYNTHESIS ENERGY SYSTEMS, INC.	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

 

	GUARANTORS:	 
	 	 	 
	SYNTHESIS ENERGY
        HOLDINGS, INC.	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

 

	SYNTHESIS ENERGY SYSTEMS TECHNOLOGIES, LLC	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

 

	SES RESOURCES, LLC	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

 

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

    Signature Page to Security Agreement

     

    

[SIGNATURE PAGE OF HOLDERS TO SYMX 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]

 

 

 

    Signature Page to Security Agreement

     

    

	AGENT:	 
	 	 	 
	T.R. WINSTON & COMPANY, LLC	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

 

 

 

 

 

    Signature Page to Security Agreement

     

    

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

 

 

 

SCHEDULE H

Pledged Securities

 

    1

     

    

ANNEX A

to

SECURITY

AGREEMENT

 

FORM OF
ADDITIONAL DEBTOR JOINDER

 

Security Agreement dated as of October 24,
2017 made by

Synthesis Energy Systems, Inc.

and its Domestic Subsidiaries party thereto
from time to time, as Debtors

to and in favor of the Agent and

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 Agent and 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.

 

 

    1

     

    

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:

 

    2

     

    

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 T.R. Winston & Company, LLC (“TR Winston” 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.

 

    1

     

    

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, 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.

 

    2

     

    

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 reasonably acceptable to the Debtors.

 

(c) If a
successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent reasonably
acceptable to the Debtors 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.

 

    3

     

    

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.

 

 

 

 

 

 

4

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