UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
 
FORM 8-K
_________________________
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): August 24, 2017
 
_________________________
 
NEXEON MEDSYSTEMS INC
(Exact Name of Registrant as Specified in Charter)
 
 
Nevada
000-55655
81-0756622
(State or Other Jurisdiction
(Commission File Number)
(IRS Employer
of Incorporation)
 
Identification No.)
 
 
 
1910 Pacific Avenue, Suite 20000
Dallas, Texas
 
75201
 
 
(Address of Principal Executive Offices)
 
(Zip Code)
 
 
 
844-919-9990
(Registrant’s telephone number, including area code)
 

(Former name or former address, if changed since last report)
_________________________
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
     
     
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Item 1.01:
Entry into a Material Definitive Agreement.

Securities Purchase Agreement

On August 21, 2017, Nexeon MedSystems Inc (the “Company” ) entered into a Securities Purchase Agreement (the “SPA” ) with Leonite Capital, LLC, a Delaware limited liability company (“ LC ”) to provide the Company with additional resources to conduct its business. Pursuant to the SPA, LC purchased a unit (the “ Unit ”) consisting of (i) a Note in the principal amount of $1,120,000 at an original issue discount of $120,000, (ii) warrants to purchase 500,000 shares of the Company’s Common Stock, $0.001 par value per share (“ Common Stock ”), and (iii) the Commitment Shares (defined below), subject to the conditions specified in the SPA. The funds from the purchase were received by the Company on August 24, 2017 (the “Closing Date” )

LC is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “ Act ”). The offer, issue, and sale of securities are and will be exempt from the registration and prospectus delivery requirements of the Act, and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit, or qualification requirements of all applicable state securities laws.

Securities Purchase Agreement

For the purpose of securing the Company’s obligations to LC under the Note (described below), (i) Rosellini Scientific LLC, a Texas limited liability company wholly owned by William Rosellini, the Chief Executive Officer and a Director of the Company (“ RS ”), owner of 100% of the issued share capital of Nexeon Medsystems Belgium, SPRL (“ NMB ”), entered into a Security Pledge Agreement with LC (the “Pledge Agreement” ) pursuant to which RS pledged the shares of NMB (the “NMB Shares” ) to LC, (ii) Roselancland Limited Partnership, an affiliate of the Company (“ RLP ”), granted the Deed of Trust to LC conveying in trust certain property of RLP to LC, (iii) Randy M. Rosellini, the father of William Rosellini and a shareholder of the Company, executed a Personal Guaranty (the “Guaranty” ) in favor of LC, and (iv) the Company executed the Security Agreement (the “ Nexeon SA ”) by and among the Company, and certain subsidiaries and affiliates of the Company and LC.  Such security interest includes, but is not limited to, all of the assets of the Company and such subsidiaries and affiliates.

Commitment Shares.

The Company shall issue to LC 100,000 shares of the Company’s Common Stock (the “ Commitment Shares ”) as consideration for entering into the SPA with the Company.

Terms of Units.

For the consideration of $1,000,000, on the Closing Date, LC purchased from the Company a Unit consisting of (a) the Note in the principal amount of $1,120,000; (b) a two-year warrant (the “ Two-Year   Warrant ”) for the purchase of 250,000 shares of the Company’s Common Stock, at an exercise price of $2.50 per share; (c) a five-year warrant (the “ Five-Year   Warrant ” and together with the Two-Year Warrant, the “ Warrants ”) for the purchase of 250,000 shares of the Company’s Common Stock, at an exercise price of $3.00 per share; and (d) the Commitment Shares.

Deed of Trust

The Company has paid RLP $100 in cash as consideration for granting the deed of trust dated as of the Closing Date to LC for securing the Company’s indebtedness to LC under the Note.

Use of Proceeds.

On January 10, 2017, the Company, through its wholly-owned subsidiary Nexeon Medsystems Europe SARL (“Nexeon Europe”), entered into an Irrevocable Option Agreement (the “Option Agreement”) with RS to acquire 100% of the issued and outstanding shares of NMB owned by RS. As part of the consideration associated with the Option Agreement, on the same date, January 10, 2017, Nexeon Europe also entered into a Promissory Note with NMB  to provide it with working capital. (See Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 17, 2017.) The Company shall use the proceeds from the sale and issuance of the Unit to LC to provide additional working capital to NMB. Following the purchase of the Unit by LC, no later than two weeks following the Closing Date, Nexeon Europe shall have exercised its option with RS to acquire NMB from RS and such acquisition shall have been completed.
 
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Piggyback Registration Rights.

Pursuant to the SPA, LC was granted piggyback registration rights.  The Company shall give LC at least 30 days’ prior written notice of each filing by the Company of a registration statement (other than a registration statement on Form S-4 or Form S-8 or on any successor forms thereto) with the Securities and Exchange Commission. If requested by LC in writing within 20 days after receipt of any such notice, the Company shall, at the Company’s sole expense (other than the underwriting discounts, if any, payable in respect of the shares sold by LC), register all or, at LC’s option, any portion of the shares of Common Stock issued to LC pursuant to the SPA or issuable to LC upon the conversion of the Note or the exercise of the Warrants (the “ LC Shares ”) concurrently with the registration of such other securities, all to the extent requisite to permit the public offering and sale of the LC Shares through the securities exchange, if any, on which the Common Stock is being sold or on the over-the-counter market, and will use its reasonable best efforts through its officers, directors, auditors, and counsel to cause such registration statement to become effective as promptly as practicable. If the managing underwriter of any such offering shall determine and advise the Company that, in its opinion, the distribution of all or a portion of the LC Shares requested to be included in the registration concurrently with the securities being registered by the Company would materially adversely affect the distribution of such securities by the Company, then the Company will include in such registration first, the securities that the Company proposes to sell and second, the LC Shares requested to be included in such registration by LC, to the extent permitted by the managing underwriter.

Senior Secured Convertible Promissory Note.

Pursuant to the terms of the SPA, the Company delivered the Senior Secured Convertible Promissory Note (the “ Note ”) to LC on the Closing Date for the principal sum of $1,120,000, together with interest at the rate of 12% per annum (the “ Stated Rate ”). The consideration to LC for the Note is $1,000,000 (the “ Consideration ”). At the closing, the outstanding principal amount under the Note was $1,120,000 (the “Principal Amount” ), consisting of the Consideration plus the OID (as defined below). The maturity date is 24 months (the “ Term ”) from the date of issue (the “ Maturity Date ”). The principal sum, as well as any accrued and unpaid interest and other fees shall be due and payable in accordance with the payment terms set forth in the Note. The Note may not be prepaid in whole or in part except as otherwise explicitly set forth in the Note. Any amount of principal or interest on the Note, which is not paid by the Maturity Date, shall bear interest at the rate of 24% per annum from the due date thereof until the same is paid (“ Default Interest ”). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due under the Note (to the extent not converted into Common Stock by LC as set forth below) shall be made in lawful money of the United States of America.

The Note is a senior secured obligation of the Company, with priority over all future Indebtedness (as defined below) of the Company. The obligations of the Company under the Note are secured pursuant to the terms of the following agreements: (i) the Nexeon SA, (ii) the Deed of Trust granted by RLP, in favor of LC, (iii) the Guaranty of Randy M. Rosellini, and (iv) the Pledge Agreement between RS and LC in respect of the shares of NMB.

The term “ Indebtedness ” means (a) all indebtedness of the Company for borrowed money or for the deferred purchase price of property or services, including any type of letters of credit, but not including deferred purchase price obligations in place as of the Issue Date or obligations to trade creditors incurred in the ordinary course of business, (b) all obligations of the Company evidenced by notes, bonds, debentures or other similar instruments, (c) purchase money indebtedness hereafter incurred by the Company to finance the purchase of fixed or capital assets, including all capital lease obligations of the Company which do not exceed the purchase price of the assets funded, (d) all guarantee obligations of the Company in respect of obligations of the kind referred to in clauses (a) through (c) above that the Company would not be permitted to incur or enter into, and (e) all obligations of the kind referred to in clauses (a) through (d) above that the Company is not permitted to incur or enter into that are secured and/or unsecured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured and/or unsecured by) any lien or encumbrance on property (including accounts and contract rights) owned by the Company, whether or not the Company has assumed or become liable for the payment of such obligation.
 
Note Payments.

Beginning on September 22, 2017 (the “ Initial Monthly Payment Date ”) and on the same day of each and every calendar month thereafter throughout the Term of the Note (the “ Monthly Payment Date ”), the Company shall make monthly payments under the Note to LC in the amounts set forth below (each, a “ Monthly Payment Amount ”).
 
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(1)
Monthly Payments . The Monthly Payment Amount for the payment due on each Monthly Payment Date through and including the 12 th  Monthly Payment Date (the “ Final Interest-Only Payment Date ”) shall be $11,200, consisting of accrued but unpaid interest on the unpaid principal balance of the Note.

(2)
Amortization Period . The Monthly Payment Amount shall be adjusted on the 13 th  Monthly Payment Date to an amount sufficient to fully repay the unpaid principal balance of the Note, together with interest at the Stated Rate, by the end of the Amortization Period (as defined below) in substantially equal monthly installments. The “ Amortization Period ” shall be a period of 12 months beginning on the Final Interest-Only Payment Date and the monthly payments during the Amortization Period are estimated to be $104,533.33, subject to adjustment.

(3)
Payments from Future Funding Sources . The Company shall pay to LC on an accelerated basis any outstanding principal amount of the Note, along with accrued, but unpaid interest, from:

(a)
Future Financing Proceeds - 20% of the gross proceeds of any future financing of the Company that is completed following the closing of the Company’s acquisition of NMB, and

(b)
Other Future Receipts – All net proceeds from any sale of assets of the Company or any of its subsidiaries or receipt by LC or any of its subsidiaries of any tax credits.

(4)
Remaining payments . Any and all remaining unpaid principal of and interest on the Note shall be due and payable in full on the Maturity Date.

Original Issue Discount.

The Note carries an original issue discount of $120,000 (the “OID” ), to cover LC’s legal fees, accounting fees, due diligence fees, monitoring, and/or other transactional costs incurred in connection with the purchase and sale of the Note, which is included in the principal balance of the Note. Thus, the purchase price of the Note was $1,000,000, computed as follows: the Principal Amount minus the OID.

Conversion Right.

LC shall have the right at any time at LC’s option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the Note into fully paid and non-assessable shares of Common Stock or any shares of capital stock or other securities of the Company into which such Common Stock shall hereafter be changed or reclassified (each, a “ Conversion Share ”) at the conversion price described below (the “ Conversion Price ”) determined as provided in the Note (a “ Conversion ”); provided, however, that in no event shall LC be entitled to convert any portion of the Note in excess of that portion of the Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by LC and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Note or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained in the Note, and, if applicable, net of any shares that may be deemed to be owned by any person not affiliated with LC who has purchased a portion of the Note from LC) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of the Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by LC and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived (up to a maximum of 9.99%) by LC upon, at the election of LC, not less than 61 days’ prior notice to the Company, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by LC, as may be specified in such notice of waiver).
 
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The number of shares of Common Stock to be issued upon each conversion of the Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion (the “ Notice of Conversion ”), delivered to the Company by LC; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Company before 6:00 p.m., New York, New York time on such conversion date (the “ Conversion Date ”). The term “ Conversion Amount ” means, with respect to any conversion of the Note, the sum of (1) the principal amount of the Note to be converted in such Conversion, plus (2) at LC’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in the Note to the Conversion Date, plus (3) at LC’s option, Default Interest, if any, plus (4) LC’s expenses relating to a Conversion including, but not limited to, legal fees, brokerage deposit costs, DWAC fees and other expenses and disbursements, plus (5) at LC’s option, any amounts owed to LC.

Conversion Price.

(a)            Calculation of Conversion Price. The Conversion Price shall be, at the option of LC, (i) $1.75 (the “ Fixed Conversion Price ”) (subject to adjustment as further described below) or (ii) 80% (the “ Conversion Price Discount ”) multiplied by the price per share paid by the investors in a subsequent Equity Financing (as described below) of the Company. If LC determines not to convert the Note, or any portion thereof, by the first subsequent Equity Financing resulting in gross proceeds to the Company of at least $2,000,000, the Conversion Price Discount will terminate. An “ Equity Financing ” shall mean the Company’s sale of its Common Stock or any securities conferring the right to purchase the Company’s Common Stock or securities convertible into, or exchangeable for (with or without additional consideration), the Company’s Common Stock.

(b)            Fixed Conversion Price Adjustments.

(1)            Repricing Adjustment . The Fixed Conversion Price shall be subject to a one-time repricing 275 days after the closing (the “ Repricing Date ”). The repricing will be based on the lowest volume weighted average price, or VWAP, of the seven (7) trading days immediately preceding the Repricing Date. In the event the Company’s Common Stock is not trading on a national exchange or quoted on the OTC markets, or if the Note is not eligible to be converted and the underlying Conversion Shares sold under Rule 144 of the Securities Act at the Repricing Date, then the Repricing Date shall be on the next date that the Company’s Common Stock is so listed or quoted and the Note is eligible to be converted and the underlying Conversion Shares sold under Rule 144.

(2)            Stock Dividends and Stock Splits . If the Company, at any time while the Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; or (iii) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.

(3)            Fundamental Transaction . If, at any time while the Note is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another person, (ii) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “ Fundamental Transaction ”), then, upon any subsequent conversion of the Note, LC shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, LC of 1 share of Common Stock (the “ Alternate Consideration ”). For purposes of any such conversion, the determination of the Fixed Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Fixed Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
 
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(4)            Anti-dilution Adjustment . If at any time while the Note is outstanding, the Company sells or grants (or has sold or granted, as the case may be) any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or has sold or issued, as the case may be, or announces any sale, grant or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for or otherwise entitled the any person or entity the right to acquire shares of Common Stock at an effective price per share that is lower than the then Fixed Conversion Price (such lower price, the “ Base Conversion Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (it being agreed that if LC of the Common Stock or other securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Fixed Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Fixed Conversion Price shall be reduced to a price equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or other securities are issued. Notwithstanding the foregoing, no adjustment will be made in respect of an Exempt Issuance. For purposes of an anti-dilution adjustment, an “ Exempt Issuance ” means an issuance of shares (i) reserved as employee shares described under the Company’s option pool now or created in the future, (ii) shares issued for consideration other than cash pursuant to a merger, consolidation, acquisition, or similar business combination approved by the Company’s Board of Directors (the “ Board ”), provided, however, that any such issuance shall only be to a person (or to the equity holders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; (iii) shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board; or (iv) shares with respect to which LC waives its anti-dilution rights granted hereby. In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to an anti-dilution adjustment shall be calculated as if all such securities were issued at the initial closing.

(5)            Notice to LC . Whenever the Conversion Price is adjusted as set forth above, the Company shall within two (2) business days deliver to LC a notice setting forth the Fixed Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment .

Authorized Shares.

The Company covenants that during the period the conversion right exists, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the Note and exercise of the Warrants. The Company is required at all times to have authorized and reserved three (3) times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Note in effect from time to time, which, if cannot be determined shall be estimated in good faith by the Company) (the “ Reserved Amount ”). The Reserved Amount shall be increased from time to time in accordance with the Company’s obligations hereunder. The Company represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Company shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Note shall be convertible at the then current Conversion Price, the Company shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Note. The Company (i) acknowledges that it has irrevocably instructed its transfer agent by letter, a copy of which is attached hereto as Exhibit B to issue certificates for the Common Stock issuable upon conversion of the Note and exercise of the Warrants, and (ii) agrees that its issuance of the Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of the Note. If, at any time the Company does not maintain the Reserved Amount it will be considered an Event of Default under the Note.

Transfer of Conversion Shares.

The shares of Common Stock issuable upon conversion of the Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Company or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“ Rule 144 ”) or (iv) such shares are transferred to an “ affiliate ” (as defined in Rule 144) of the Company who agrees to sell or otherwise transfer the shares only in accordance (i), (ii) or (iii) above, and who is an Accredited Investor.
 
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LC Warrants.

As part of the Unit, LC was granted the Two-Year Warrant for the purchase of 250,000 shares of the Company’s Common Stock, at an exercise price of $2.50 per share and the Five-Year Warrant   for the purchase of 250,000 shares of the Company’s Common Stock, at an exercise price of $3.00 per share (individually, the “Warrant” or collectively, the “Warrants” ). The exercise price of each Warrant may be adjusted from time to time pursuant to the terms and conditions of the Warrant.  The 500,000 shares subject to the Warrants are hereinafter collectively referred to as the “ Warrant Shares .” The Warrants may be exercised commencing on the date of issuance and ending at 5:00 p.m. EST on the two or five year anniversary date of the Warrant, as applicable (the “ Exercise Period ”). Subject to the terms and conditions of each Warrant, the rights represented by each Warrant may be exercised in whole or in part at any time or times during such Warrant’s Exercise Period.

Cashless Exercise.

If the market price of one share of Common Stock is greater than the Exercise Price and the Warrant Shares are not registered under an effective non-stale registration statement of the Company, LC may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of the Warrant and a Notice of Exercise, in which event the Company shall issue to LC a number of shares of Common Stock computed using the following formula:

X = Y (A-B)
A
 
Where    
X =            the number of Shares to be issued to   LC.
 
Y =
         the number of Warrant Shares that LC elects to purchase under the Warrant (at the date of such calculation).
 
A =
           the Market Price (at the date of such calculation).
 
B =
         Exercise Price (as adjusted to the date of such calculation).
  
Exercise Limitations

The Company shall not effect any exercise of a Warrant, and LC shall not have the right to exercise any portion of a Warrant, to the extent that after giving effect to issuance of Warrant Shares upon exercise LC, together with its affiliates, and any other persons acting as a group together with LC or any of its affiliates, would beneficially own in excess of the Beneficial Ownership Limitation, as defined below.

The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  Upon no fewer than 61 days’ prior notice to the Company, a Holder may increase or decrease the Beneficial Ownership Limitation provisions of this paragraph, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this paragraph shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company and shall only apply to such Holder and no other Holder.  The limitations contained in this paragraph shall apply to a successor Holder of this Warrant.

No fractional shares shall be issued upon exercise of a Warrant.

Adjustments.

The Exercise Price and the number of Warrant Shares shall be adjusted from time to time for any distribution of assets by the Company, adjustments for stock splits, combinations and stock dividends, and/or anti-dilution provisions as set forth in the Warrants.
 
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Security Agreement.

In order to secure the Company’s timely payment of the Note and related obligations and the timely performance of each and all of its covenants and obligations under the SPA and related documents, the Company, Nexeon Medsystems Puerto Rico Operating Company Corporation, a Puerto Rick stock corporation, a wholly-owned subsidiary of the Company, Pulsus Medical LLC, a Kentucky limited liability company, a wholly-owned subsidiary of the Company, and RS, each an “ Obligor ,” unconditionally and irrevocably granted, pledged and hypothecated to LC a continuing first-priority security interest in and to, a lien upon, assignment of, and right of set-off against, all presently existing and hereafter acquired or arising Collateral as set forth in the Security Agreement.

Share Pledge Agreement.

As additional security for the Company’s timely payment of the Note and related obligations and the timely performance of each and all of its covenants and obligations under the SPA and related documents, RS pledged 107,154 shares, representing 100% of the issued and outstanding shares of NMB to LC.

Guaranty.

As a condition to making the loan pursuant to the SPA and accepting the Note, LC required Randy M. Rosellini, the father of William Rosellini and a shareholder of the Company (“ Guarantor ”), to execute a Personal Guaranty (the “Guaranty” ) in favor of LC (i) with an absolute and unconditional guarantee to LC and its successors and assigns the payment of the entire principal balance of the loan, all accrued interest thereon and all costs and expenses incurred by LC, including without limitation, the costs and expenses of LC's outside counsel, in connection with the enforcement of the Company's obligations under the Note (the “ Obligations ”), as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise and (ii) the irrevocable and unconditional covenant and agreement that Guarantor is liable for the Obligations as a primary obligor and that he shall fully perform each and every term and provision of the Guaranty. Guarantor acknowledged that he expects to benefit from LC's making of the loan and acceptance of the Note because of Guarantor's relationship with the Company and that he executed the Guaranty in consideration of that anticipated benefit.

In connection with the issuance of the Personal Guaranty by Mr. Rosellini in the amount of $1,120,000 in conjunction with the Note, the Company granted to Mr. Rosellini a two-year warrant for the purchase of 200,000 shares of the Company’s Common Stock, at an exercise price of $1.50 per share (the “RMR Warrant” ). The exercise price of the RMR Warrant may be adjusted from time to time pursuant to the terms and conditions of the RMR Warrant.  The RMR Warrant may be exercised commencing on the date of issuance and ending at 5:00 p.m. EST on the two year anniversary date of the RMR Warrant, as applicable (the “ RMR Exercise Period ”). Subject to the terms and conditions of the RMR Warrant, the rights represented by the RMR Warrant may be exercised in whole or in part at any time or times during the RMR Exercise Period. The RMR Warrant is subject to the same Cashless Exercise, Exercise Limitations and Adjustments as set forth above for the LC Warrants.

The foregoing descriptions of the terms of the Securities Purchase Agreement, Senior Secured Convertible Promissory Note, the Two-Year and Five-Year Warrants, the Security and Pledge Agreement, the Share Pledge Agreement, the Personal Guaranty, the RMR Warrant and the Deed of Trust, do not purport to be complete and are subject to and qualified in their entirety by reference to the agreements and instruments themselves, copies of which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8 and 10.9, respectively, to this report, and the terms of which are incorporated herein by reference. The benefits and representations and warranties set forth in such agreements and instruments are not intended to and do not constitute continuing representations and warranties of the Company or any other party to persons not a party thereto.

Item 3.02
Unregistered Sales of Equity Securities.
 
The information provided in Item 1.01 is incorporated by reference in this Item 3.02.
 
The issuance of the shares pursuant to the Securities Purchase Agreement, the Commitment Shares and the shares issuable upon any conversion of the Senior Secured Convertible Promissory Note, the Two-Year Warrant, the Five-Year Warrant, and/or the RMR Warrant have not been registered under the Securities Act of 1933, as amended (the “ Act ”), and therefore may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. For these issuances, the Company relied on the exemption from federal registration under Section 4(a)(2) of the Act and/or Rule 506 promulgated thereunder, based on the Company’s belief that the offer and sale of such securities did not involve a public offering.
 
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Item 9.01
Financial Statements and Exhibits
 
(d)
Exhibits
 
Exhibit No.
 
Description
 
 
 
10.1
 
10.2
 
10.3
 
10.4
 
10.5
 
10.6
 
10.7
 
10.8
 
10.9
 
 
9
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
NEXEON MEDSYSTEMS INC
 
 
 
 
 
By:
/s/ Ronald Conquest
Date: August 25, 2017
 
Ronald Conquest
 
 
Executive Vice President of Finance
 

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EXHIBIT 10.1
 
NEXEON MEDSYSTEMS INC
 
SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement   (the “ Agreement ”) is made as of August 21, 2017 (the “ Effective Date ”) by and between Nexeon Medsystems Inc , a Nevada corporation (the “ Company ”), and Leonite Capital LLC , a Delaware limited liability company (the “ Purchaser ).
 
Recital
 
To provide the Company with additional resources to conduct its business, the Purchaser is willing to purchase a unit (the “ Unit ”) consisting of (i) a Note (as defined below) in the principal amount of One Million One Hundred Twenty Thousand Dollars ($1,120,000) at an original issue discount of One Hundred Twenty Thousand Dollars ($120,000), (ii) Warrants (as defined below) to purchase 500,000 shares of the Company’s Common Stock, $0.001 par value per share (“ Common Stock ”), and (iii) the Commitment Shares (defined below), subject to the conditions specified herein.
 
Agreement
 
Now, Therefore , in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth below, the Company and the Purchaser, intending to be legally bound, hereby agree as follows:
 
1.
Amount and Terms of the Unit
 
1.1            Purchase of the Unit .  Subject to the terms of this Agreement, for consideration of One Million Dollars ($1,000,000) (the “ Subscription Amount ”), the Purchaser agrees to subscribe for and purchase from the Company at the Closing (as hereinafter defined) a Unit consisting of (a) a senior secured convertible promissory note in substantially the form attached hereto as Exhibit A (the “ Note ”) in the principal amount of One Million One Hundred Twenty Thousand Dollars ($1,120,000) (the “ Principal Amount ”); (b) a two-year warrant in the form of Exhibit B (the “ Two-Year   Warrant ”) for the purchase of Two Hundred Fifty Thousand (250,000) shares of the Company’s Common Stock, at an exercise price of $2.50 per share; (c) a five-year warrant in the form of Exhibit C (the “ Five-Year   Warrant ” and together with the Two-Year Warrant, the “ Warrants ”) for the purchase of Two Hundred Fifty Thousand (250,000) shares of the Company’s Common Stock, at an exercise price of $3.00 per share; and (d) the Commitment Shares.
 
2.
Closing and Delivery
 
2.1            Closing .  The closing of the sale and purchase of the Unit   shall be held on the Effective Date, or at such other time as the Company and Purchaser may mutually agree (which time is designated as the “ Closing” ).
 
2.2            Delivery .  At the Closing (a) the Purchaser shall deliver to the Company a check or wire transfer funds in the amount of the Subscription Amount; and (b) the Company shall issue and deliver to the Purchaser   the Note in favor of the Purchaser payable in the Principal Amount, the Warrants and the Commitment Shares.
 
 
3.
Representations, Warranties the Company
 
Except as set forth in: (i) the SEC Reports (as defined below) or (ii) the corresponding section of the Disclosure Schedules delivered to the Purchaser concurrently herewith, the Company hereby makes the following representations and warranties as of the date hereof and as of the Closing Date to the Purchaser:

3.1            Organization, Good Standing and Qualification .  The Company and each of its Subsidiaries (as defined below) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization.  Each of the Company and its Subsidiaries has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted.  The Company and each of its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Subscription Document, (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair the Company’s ability to perform in any material respect on a timely basis its obligations under any Subscription Document (any of (i), (ii) or (iii), a “ Material Adverse Effect ”).  For purposes of this Agreement, “Subsidiary” means any corporation or other entity or organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any controlling equity or other controlling ownership interest or otherwise controls through contract or otherwise, including, without limitation, any variable interest entity of the Company.
 
3.2            Corporate   Power .  The Company has all requisite corporate power to execute and deliver this Agreement, to issue the Note and the Warrants and enter into the security agreement of even date herewith (the “ Security Agreement ”) in the form of Exhibit D and the other instruments, documents and agreements being entered into at the Closing (collectively, the “ Subscription Documents ”) and to carry out and perform its obligations under the terms of the Subscription Documents.
 
3.3            Subsidiaries and Affiliates .   Attached as Schedule 3.3 is a true and correct organizational chart showing all of the Company’s Subsidiaries and Affiliates, pro forma as of the date hereof reflecting all pending acquisitions.  For purposes of this Agreement, the term “ Subsidiary ” means, with respect to the Company, any corporation or other entity of which at least a majority of the outstanding shares of stock or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors (or persons performing similar functions) of such corporation or entity (regardless of whether or not at the time, in the case of a corporation, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Company or one or more of its Affiliates and the term “ Affiliate ” means, as to any person (the “ Subject Person ”), any other person that directly or indirectly through one or more intermediaries controls or is controlled by, or is under direct or indirect common control with, the Subject Person. For the purposes of this definition, “control” when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, through representation on such person’s board of directors or other management committee or group, by contract or otherwise.
 
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3.4            Authorization .  All corporate action on the part of the Company, its directors and its stockholders necessary for the authorization of the Subscription Documents and the execution, delivery and performance of all obligations of the Company under the Subscription Documents, including the issuance and delivery of the Note, the Commitment Shares and the Warrants and the reservation of the equity securities issuable upon conversion of the Note and the exercise of the Warrants (collectively, the “ Underlying Securities ”) has been taken or will be taken prior to the issuance of such Underlying Securities.  The Subscription Documents, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws.  The Commitment Shares are, and the Underlying Securities, when issued in compliance with the provisions of the Subscription Documents, will be, validly issued, fully paid and non-assessable and free of any liens, encumbrances, security interests or other adverse claim (a “ Lien ”) and issued in compliance with all applicable federal and securities laws.
 
3.5            Governmental Consents .  Neither Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other foreign, federal, state, local or other governmental authority or other person in connection with the execution, delivery and performance by the Company of the Subscription Documents, other than (a) applicable Blue Sky filings, (b) such as have already been obtained or such exemptive filings as are required to be made under applicable securities laws, (c) such other filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods.  Subject to the accuracy of the representations and warranties of the Purchaser set forth in Section 4 hereof, the Company has taken all action necessary to exempt: (i) the issuance and sale of the Units, (ii) the issuance of the Commitment Shares, (iii) the issuance of the Underlying Shares upon due conversion of the Note and due exercise of the Warrants, and (iv) the other transactions contemplated by the Subscription Documents from the provisions of any preemptive rights, stockholder rights plan or other “poison pill” arrangement, any anti-takeover, business combination or control share law or statute binding on the Company or to which the Company or any of its assets and properties may be subject and any provision of the Company’s Articles of Incorporation or Bylaws that is or could reasonably be expected to become applicable to the Purchaser as a result of the transactions contemplated hereby, including without limitation, the issuance of the Units, the Note, the Commitment Shares, the Warrants and the Underlying Securities (collectively, the “ Securitie s”) and the ownership, disposition or voting of the Securities by the Purchaser or the exercise of any right granted to the Purchaser pursuant to this Agreement or the other Subscription Documents.
 
3.6            Compliance with Laws .  To the Company’s knowledge, neither the Company nor any Subsidiary is in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, which violation would materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company and its Subsidiaries.
 
3.7            Compliance with Other Instruments .  Neither the Company nor any of its Subsidiaries is in violation or default of any term of its certificate of incorporation or bylaws, or of any provision of any mortgage, indenture or contract to which it is a party and by which it is bound or of any judgment, decree, order or writ, other than such violations that would not individually or in the aggregate have a Material Adverse Effect on the Company. The execution, delivery and performance of the Subscription Documents, and the consummation of the transactions contemplated by the Subscription Documents will not result in any such violation or be in conflict with, or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, decree, order or writ or an event that results in the creation of any Lien upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company or any of its Subsidiaries, its business or operations or any of its assets or properties.  The sale of the Unit, the issuance of the Commitment Shares and the subsequent issuance of the Underlying Securities are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.
 
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3.8            Offering .  Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 4 hereof, the offer, issue, and sale of Securities are and will be exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “ Act ”), and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit, or qualification requirements of all applicable state securities laws.  No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “ Disqualification Event ”) is applicable to the Company or, to the Company’s knowledge, any person listed in the first paragraph of Rule 506(d)(1) of the Securities Act, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.
 
3.9            Use of Proceeds .   The Company shall use the proceeds of sale and issuance of the Unit to fund the acquisition of Medi-Line SPRL (“ Medi-Line ”) by Nexeon Medsystems Belgium, SPRL (“ NMB ”).
 
3.10            Acquisition of Medi-Line .  The Company has delivered to the Purchaser a true and correct copy of the Stock Purchase Agreement, dated April 10, 2017, among the Company, Medi-Line and NMB (the “ Medi-Line Agreement ”).  The Medi-Line Agreement is legal, valid, binding, enforceable, and in full force and effect.  No party to the Medi-Line Agreement is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the Medi-Line Agreement.  The Company has not and, to the Company's Knowledge, no other party has, repudiated any provision of the Medi-Line Agreement.  The Acquisition of Medi-Line by NMB will not trigger any change of control clauses in any agreement between Medi-Line and any other party which could result in a Material Adverse Effect.
 
3.11            Acquisition of NMB .  Following the closing of the Medi-Line Acquisition no later than two weeks following the Closing, Nexeon Medsystems Europe, SARL, a wholly owned subsidiary of the Company, shall have exercised its option with Rosellini Scientific LLC, a Texas limited liability company wholly owned by William Rosellini (“ RS ”), to acquire NMB from RS and such acquisition shall have been completed.
 
3.12            Consideration for Deed of Trust . The Company has paid Roselancland Limited Partnership (“ RLP ”) $100 in cash as consideration for granting that certain deed of trust of even date herewith (the “ Deed of Trust ”) to the Purchaser for securing the Company’s indebtedness to the Purchaser under the Note.
 
3.13            Capitalization .  The Company has authorized 75,000,000 shares of Common Stock $0.001 par value per share, of which 26,378,928 shares are issued and outstanding and no authorized shares of preferred stock.  The Company has warrants outstanding to purchase 636,761 shares of Common Stock and options outstanding to purchase 3,177,000 shares of Common Stock under its stock option and equity plans.  All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance with all applicable securities laws.  Except for the options and warrants referenced above, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire, any shares of common stock, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or may become bound to issue additional shares of common stock, or securities or rights convertible or exchangeable into shares of common stock. There are no price based anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) and the issue and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. The Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.
 
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3.14            SEC Reports; Financial Statements .  The Company has filed all reports and registration statements required to be filed by it under the Securities Act of 1933, as amended (the “ Securities Act ”) and the Exchange Act of 1934, as amended (the “ Exchange Act ”), including pursuant to Section 13(a) or 15(d) of the Exchange Act, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the “ SEC Reports ” and, together with the Disclosure Schedules to this Agreement, the “ Disclosure Materials ”).  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
 
3.15            Material Changes.   Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that could result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or the identity of its auditors, except as disclosed in its SEC Reports, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or affiliate, except pursuant to existing Company stock-based plans or agreements.
 
3.16            Litigation .  Except as set forth on Schedule 3.16 hereto, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) which: (i) adversely affects or challenges the legality, validity or enforceability of any of the Subscription Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
 
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3.17            Labor Relations .  Neither the Company nor any Subsidiary is a party to or bound by any collective bargaining agreements or other agreements with labor organizations.  Neither the Company nor any Subsidiary has violated in any material respect any laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees, labor organizations or any laws, regulations or orders affecting employment discrimination, equal opportunity employment, or employees’ health, safety, welfare, wages and hours.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect.
 
3.18            Regulatory Permits .  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits would not have or reasonably be expected to result in a Material Adverse Effect (“ Material Permits ”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
 
3.19            Title to Assets.   The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance.
 
3.20            Taxes.
 
(a)            The Company and its Subsidiaries have timely and properly filed all tax returns required to be filed by them for all years and periods (and portions thereof) for which any such tax returns were due, except where the failure to so file would not have a Material Adverse Effect .  All such filed tax returns are accurate in all material respects.  The Company has timely paid all taxes due and payable (whether or not shown on filed tax returns), except where the failure to so pay would not have a Material Adverse Effect .  There are no pending assessments, asserted deficiencies or claims for additional taxes that have not been paid.  The reserves for taxes, if any, reflected in the SEC Reports or the in the Memorandum are adequate, and there are no Liens for taxes on any property or assets of the Company and any of its Subsidiaries (other than Liens for taxes not yet due and payable).  There have been no audits or examinations of any tax returns by any (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority of any nature (including any governmental or administrative division, department, agency, commission, instrumentality, official, organization, unit, body or entity) and any court or other tribunal (a “ Governmental Body ”), and the Company or its Subsidiaries have not received any notice that such audit or examination is pending or contemplated.  No claim has been made by any Governmental Body in a jurisdiction where the Company or any of its Subsidiaries does not file tax returns that it is or may be subject to taxation by that jurisdiction.  To the knowledge of the Company, no state of facts exists or has existed which would constitute grounds for the assessment of any penalty or any further tax liability beyond that shown on the respective tax returns.  There are no outstanding agreements or waivers extending the statutory period of limitation for the assessment or collection of any tax.
 
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(b)            Neither the Company nor any of its Subsidiaries is a party to any tax-sharing agreement or similar arrangement with any other Person.

(c)            The Company has made all necessary disclosures required by Treasury Regulation Section 1.6011-4.  The Company has not been a participant in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b).

(d)            No payment or benefit paid or provided, or to be paid or provided, to current or former employees, directors or other service providers of the Company will fail to be deductible for federal income tax purposes under Section 280G of the Internal Revenue Code of 1986, as amended (the “ Code ”).

3.21            Patents and Trademarks.   To the knowledge of the Company and each Subsidiary, the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and the Memorandum and which the failure to so have could have or reasonably be expected to result in a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”).  Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable.  The Company and its Subsidiaries have taken reasonable steps to protect the Company’s and its Subsidiaries’ rights in their Intellectual Property Rights and confidential information (the “Confidential Information”).  Each employee, consultant and contractor who has had access to Confidential Information which is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted has executed an agreement to maintain the confidentiality of such Confidential Information and has executed appropriate agreements that are substantially consistent with the Company’s standard forms thereof.  Except under confidentiality obligations, there has been no material disclosure of any of the Company’s or its Subsidiaries’ Confidential Information to any third party.
 
3.22            Environmental Matters.   Neither the Company nor any Subsidiary is in violation of any statute, rule, regulation, decision or order of any Governmental Body relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “ Environmental Laws ”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s knowledge, threatened investigation that might lead to such a claim.
 
3.23            Insurance.   The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged as described in the SEC Reports.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.
 
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3.24            Transactions with Affiliates and Employees.   Except as disclosed in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than (a) for payment of salary or consulting fees for services rendered, (b) reimbursement for expenses incurred on behalf of the Company and (c) for other employee benefits, including stock option agreements under any stock option plan of the Company.
 
3.25            Brokers and Finders .  Except for warrants issued by the Company to Dr. Michael Rosellini for guaranteeing this Agreement, no person will have, as a result of the transactions contemplated by the Subscription Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or the Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company.
 
3.26            Questionable Payments .   Neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any of their respective current or former stockholders, directors, officers, employees, agents or other persons acting on behalf of the Company or any Subsidiary, has on behalf of the Company or any Subsidiary or in connection with their respective businesses: (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company or any Subsidiary; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.
 
3.27            Solvency.   The Company has not (a) made a general assignment for the benefit of creditors; (b) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by its creditors; (c) suffered the appointment of a receiver to take possession of all, or substantially all, of its assets; (d) suffered the attachment or other judicial seizure of all, or substantially all, of its assets; (e) admitted in writing its inability to pay its debts as they come due; or (f) made an offer of settlement, extension or composition to its creditors generally.
 
3.28            Foreign Corrupt Practices Act.   None of the Company or any of its Subsidiaries, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company or any of its Subsidiaries, has, directly or indirectly: (a) used any funds, or will use any proceeds from the sale of the Securities, for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (b) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (c) failed to disclose fully any contribution made by the Company or any of its Subsidiaries (or made by any person acting on their behalf of which the Company is aware) or any members of their respective management which is in violation of any legal requirement, or (d) has violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder which was applicable to the Company or any of its Subsidiaries.
 
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3.29            Disclosures.   Neither the Company nor any person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or might constitute material, non-public information, other than the terms of the transactions contemplated hereby.  The written materials delivered to the Purchaser in connection with the transactions contemplated by the Subscription Documents do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
 
4.
Representations and Warranties of the Purchaser
 
4.1            Purchase for Own Account .  The Purchaser represents that it is acquiring the Unit solely for its own account and beneficial interest for investment and not for sale or with a view to distribution of the Unit or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.
 
4.2            Information and Sophistication .  Without lessening or obviating the representations and warranties of the Company set forth in Section 3, the Purchaser hereby: (a) acknowledges that it has received all the information it has requested from the Company and it considers necessary or appropriate for deciding whether to acquire the Unit, (b) represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Unit and to obtain any additional information necessary to verify the accuracy of the information given the Purchaser and (c) further represents that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risk of this investment .
 
4.3            Ability to Bear Economic Risk .  The Purchaser acknowledges that investment in the Unit involves a high degree of risk, and represents that it is able, without materially impairing its financial condition, to hold the Unit for an indefinite period of time and to suffer a complete loss of its investment.
 
4.4            Accredited Investor Status .  The Purchaser is an “accredited investor” as such term is defined in Rule 501 under the Act.
 
4.5            Information Provided by Purchaser .  The information that the Purchaser has furnished herein, including without limitation the information furnished by the Purchaser on the accredited investor questionnaire that Purchaser will complete in connection with this offering (the “ Accredited Investor Questionnaire ”), is correct and complete as of the date of this Agreement and will be correct and complete on the date, if any, that the Company accepts this Subscription. Further, the Purchaser shall immediately notify the Company of any change in any statement made herein prior to the Purchaser’s receipt of the Company’s acceptance of this Subscription. The representations and warranties made by the Purchaser may be fully relied upon by the Company and by any other investigating party.
 
4.6            Existence; Authorization . The Purchaser is duly organized, validly existing and in good standing under the laws of the state of its incorporation or organization, having full power and authority to own its properties and to carry on its business as conducted. The principal place of business of the Purchaser is as shown on the Accredited Investor Questionnaire. The Purchaser has the requisite power and authority to deliver this Agreement, perform its obligations set forth herein, and consummate the transactions contemplated hereby. The Purchaser has duly executed and delivered this Agreement and has obtained the necessary authorization to execute and deliver this Agreement and to perform his, her or its obligations herein and to consummate the transactions contemplated hereby. This Agreement, assuming the due execution and delivery hereof by the Company, is a legal, valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms.
 
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4.7            No Regulatory Approval .  The Purchaser understands that no state or federal authority has scrutinized this Agreement or the Unit offered pursuant hereto, has made any finding or determination relating to the fairness for investment of Unit, or has recommended or endorsed the Unit, and that the Unit has not been registered or qualified under the Act or any state securities laws, in reliance upon exemptions from registration thereunder. The Unit may not, in whole or in part, be resold, transferred, assigned or otherwise disposed of unless it is registered under the Act or an exemption from registration is available, and unless the proposed disposition is in compliance with the restrictions on transferability under federal and state securities laws.
 
4.8            Purchaser Received Independent Advice .  The Purchaser confirms that the Purchaser has been advised to consult with the Purchaser’s independent attorney regarding legal matters concerning the Company and to consult with independent tax advisers regarding the tax consequences of investing in the Company. The Purchaser acknowledges that Purchaser understands that any anticipated United States federal or state income tax benefits may not be available and, further, may be adversely affected through adoption of new laws or regulations or amendments to existing laws or regulations. The Purchaser acknowledges and agrees that the Company is providing no warranty or assurance regarding the ultimate availability of any tax benefits to the Purchaser by reason of the subscription.
 
5.
Further Agreements
 
5.1            Conditions Precedent .  As a conditions precedent to the Closing, and for the purpose of securing the Company’s obligations to the Holder under the Note, (i) RS, owner of 100% of the issued share capital of NMB (the “ NMB Shares ”), shall have entered into a Share Pledge Agreement with the Purchaser pursuant to which it shall have pledged the NMB Shares to the Purchaser, (ii) RLP shall have granted the Deed of Trust to the Holder, (iii) Randy M. Rosellini shall have executed a personal guarantee in favor of the Holder, and (iv) the Company shal have executed the Security Agreement.
 
5.2            Post-Closing Covenant .  No later than two weeks following the Closing, NMB shall have completed the acquisition of Medi-Line and the Company shall have completed the acquisition of NMB.
 
5.3            Commitment Shares.  The Company shall issue to the Purchaser 100,000 shares of the Company’s Common Stock (the “ Commitment Shares ”) as consideration for entering into this Agreement with the Company.
 
5.4            Most Favored Nations. If, while the Note is outstanding, the Company issues other securities of the Company with material terms that are more favorable, from the perspective of the Purchaser (“ Other Securities ”) than the terms arising under the Subscription Documents, then the Company will provide the Purchaser with written notice thereof, together with a copy of all documentation relating to such Other Securities and, upon request of the Purchaser, any additional information related to such Other Securities as may be reasonably requested by the Purchaser.  The Company will provide such notice to the Purchaser within three (3) business days following the issuance of such Other Securities.  In the event the Purchaser determines that the terms of the Other Securities are preferable to the terms of the Note, the Purchaser will notify the Company in writing within 5 days following Purchaser’s receipt of such notice from the Company.  Within three (3) business days after receipt of such written notice from the Purchaser, but in any event within 10 days, the Company will amend and restate the Subscription Documents to be substantially identical to Subscription Documents for the Other Securities and thereby grant to the Purchaser such preferential rights of the holders of such Other Securities.
 
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5.5            Piggyback Registration Rights.
 
(a)            The Company shall give the Purchaser at least 30 days’ prior written notice of each filing by the Company of a registration statement (other than a registration statement on Form S-4 or Form S-8 or on any successor forms thereto) with the Securities and Exchange Commission (the “ Commission ”).  If requested by the Purchaser in writing within 20 days after receipt of any such notice, the Company shall, at the Company’s sole expense (other than the underwriting discounts, if any, payable in respect of the shares sold by the Purchaser), register all or, at Purchaser’s option, any portion of the shares of Common Stock issued to the Purchaser pursuant to this Agreement or issuable to the Purchaser upon the conversion of the Note or the exercise of the Warrants (the “ Shares ”) concurrently with the registration of such other securities, all to the extent requisite to permit the public offering and sale of the Shares through the securities exchange, if any, on which the Common Stock is being sold or on the over-the-counter market, and will use its reasonable best efforts through its officers, directors, auditors, and counsel to cause such registration statement to become effective as promptly as practicable.  If the managing underwriter of any such offering shall determine and advise the Company that, in its opinion, the distribution of all or a portion of the Shares requested to be included in the registration concurrently with the securities being registered by the Company would materially adversely affect the distribution of such securities by the Company then the Company will include in such registration first, the securities that the Company proposes to sell and second, the Shares requested to be included in such registration, to the extent permitted by the managing underwriter.
 
(b)            In the event of a registration pursuant to these provisions, the Company shall use its reasonable best efforts to cause the Shares so registered to be registered or qualified for sale under the securities or blue sky laws of such jurisdictions as the Purchaser may reasonably request; provided, however, that the Company shall not be required to qualify to do business in any state by reason of this section in which it is not otherwise required to qualify to do business.
 
(c)            The Company shall keep effective any registration or qualification contemplated by this section and shall from time to time amend or supplement each applicable registration statement, preliminary prospectus, final prospectus, application, document and communication for such period of time as shall be required to permit the Purchaser to complete the offer and sale of the Shares covered thereby.
 
(d)            In the event of a registration pursuant to the provisions of this section, the Company shall furnish to the Purchaser such reasonable number of copies of the registration statement and of each amendment and supplement thereto (in each case, including all exhibits), of each prospectus contained in such registration statement and each supplement or amendment thereto (including each preliminary prospectus), all of which shall conform to the requirements of the Act and the rules and regulations thereunder, and such other documents, as the Purchaser may reasonably request to facilitate the disposition of the Shares included in such registration.
 
(e)            The Company shall notify the Purchaser within three (3) business days after such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed.
 
(f)            The Company shall advise the Purchaser within three (3) business days after it shall receive notice or obtain knowledge of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement, or the initiation or threatening of any proceeding for that purpose and within three (3) business days take action using its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued.
 
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(g)            The Company shall within three (3) business days notify the Purchaser at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the reasonable request of the Purchaser prepare and furnish to it such number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Shares or securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made.  The Purchaser shall suspend all sales of the Shares upon receipt of such notice from the Company and shall not re-commence sales until they receive copies of any necessary amendment or supplement to such prospectus, which shall be delivered to the Purchaser within 30 days of the date of such notice from the Company.
 
(h)            If requested by the underwriter for any underwritten offering of Shares, the Company and the Purchaser will enter into an underwriting agreement with such underwriter for such offering, which shall be reasonably satisfactory in substance and form to the Company, the Company’s counsel and the Purchaser’ counsel, and the underwriter, and such agreement shall contain such representations and warranties by the Company and the Purchaser and such other terms and provisions as are customarily contained in an underwriting agreement with respect to secondary distributions solely by selling stockholders, including, without limitation, indemnities substantially to the effect and to the extent provided below.
 
(i)            The rights of the Purchaser under this Section 5.5 shall apply equally to the filing by the Company of an offering statement on Form 1-A under Regulation A promulgated under the Act and, if the Company files such an offering statement instead of a registration statement, all references to (A) registration statement shall be deemed to be references to offering statement, (B) prospectus shall be deemed to be references to offering circular, and (C) effective date of a registration statement shall be deemed to be references to qualification date of an offering statement.  The Purchaser’s rights under this Section 5.5 shall automatically terminate once the Purchaser has sold all of the Shares or all of the Shares may be resold by the Purchaser under Rule 144 of the Act without limitation as to the volume of Shares to be sold.
 
5.6            Information and Observer Rights
 
(a)            As long as the Purchaser owns any Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.  As long as the Purchaser owns any Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Purchaser and simultaneously make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell the Securities under Rule 144.  The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable the Purchaser to sell the Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.  If the Company fails to remain current in its reporting obligations or to provide currently publicly available information in accordance with Rule 144(c) and such failure extends for a period of more than five Trading Days (the date which such five Trading Day-period is exceeded, being referred to as “ Event Date ”), then in addition to any other rights the Purchaser may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the information failure is cured, the Company shall pay to the Purchaser an amount in cash, as partial liquidated damages and not as a penalty, equal to one percent (1.0%) of purchase price paid for the Securities held by the Purchaser at the Event Date; provided, however, that in no case will the aggregate amount of liquidated damages payable to a Purchaser pursuant to this Section 5.6 exceed ten percent (10%) of such Purchaser’s original investment pursuant to this Agreement.  The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an information failure (except in the case of the first Event Date).
 
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(b)            As long as the Purchaser owns any Securities, if the Purchaser notifies the Company that it wishes to attend meetings of the Company’s Board of Directors, the Company shall invite a designated representative of the Purchaser to attend all meetings of the Company’s Board of Directors in a nonvoting observer capacity and, in this respect, and subject to the Purchaser’s having informed the Company that it wishes to attend, the Company shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided , however , that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and provided   further , that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest.
 
5.7            Confidentiality.   The Purchaser agrees that the it will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 5.7 by the Purchaser), (b) is or has been independently developed or conceived by the Purchaser without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Purchaser by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that the Purchaser may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from the Purchaser, if such prospective purchaser agrees to be bound by the provisions of this Section 5.7; (iii) to any existing or prospective affiliate, partner, member, stockholder, or wholly owned subsidiary of the Purchaser in the ordinary course of business, provided that the Purchaser informs such person that such information is confidential and directs such person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Purchaser notifies the Company within three (3) business days of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.
 
5.8            Participation Rights .  In the event the Company proposes to offer and sell its securities in an Equity Financing (defined below), the Purchaser shall have the right, but not the obligation, to participate in the purchase of the securities being offered in such Equity Financing up to an amount equal to fifty percent (50%) of the aggregate offering amount of such Equity Financing, until the earliest of (i) the Maturity Date, (ii) the date that the Note and all accrued but unpaid interest shall have been repaid in full, and (iii) the closing date of an Equity Financing in which all, or any remaining portion, of the outstanding principal amount of the Note along with accrued but unpaid interest thereon shall have been converted, in full, into, and on the same terms as, the securities being offered in such Equity Financing (the “ Participation Right ”).  For the avoidance of doubt, an Equity Financing shall mean the Company’s sale of its Common Stock or any securities conferring the right to purchase the Company’s Common Stock or securities convertible into, or exchangeable for (with or without additional consideration), the Company’s Common Stock.  In connection with each Participation Right, the Company shall provide written notice to the Purchaser of the terms and conditions of the Equity Financing at least ten business days prior to the anticipated first closing of such Equity Financing (the “ EF Notice ”). If the Purchaser shall elect to exercise its Participation Right, it shall notify the Company, in writing, of such election at least two business days prior to the anticipated closing date set forth in the EF Notice (the “ Participation Notice ”). In the event the Purchaser does not return a Participation Notice to the Company within such two-business day period, the Participation Right granted hereunder shall terminate and be of no further force and effect; provided, however, that such Participation Right shall be reinstated if the anticipated closing referenced in the EF Notice does not occur prior to ten business days following the anticipated first closing date specified in such EF notice.
 
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5.9            Further Assurances .  The Purchaser agrees and covenants that at any time and from time to time it will execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require within three (3) business days of any such request in order to carry out the full intent and purpose of this Agreement and to comply with state or federal securities laws or other regulatory approvals.
 
6.
Miscellaneous
 
6.1            Binding   Agreement .  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Nothing in this Agreement, expressed or implied, is intended to confer upon any third party any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
 
6.2            Governing Law; Consent to Jurisdiction .  This Agreement shall be governed by and construed under the laws of the State of New York, without giving effect to conflicts of laws principles.  Each party to this Agreement hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in New York for the adjudication of any dispute hereunder or in connection with any transaction contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof (certified or registered mail, return receipt requested) 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.
 
6.3            Counterparts .  This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
 
6.4            Titles and Subtitles .  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
 
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6.5            Notices .  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Company at 1910 Pacific Avenue, Suite 20000, Dallas, TX 7520 to the attention of William Rosellini, Chief Executive Officer (email: will@nexeonmed.com), and to Purchaser at the addresses set forth on the signature page to this Agreement or at such other addresses as the Company or Purchaser may designate by 10 days’ advance written notice to the other parties hereto.
 
6.6            Modification; Waiver .  No modification or waiver of any provision of this Agreement or consent to departure therefrom shall be effective only upon the written consent of the Company and the Purchaser.  Any provision of the Note may be amended or waived by the written consent of the Company and the Purchaser.
 
6.7            Expenses .  The Company and the Purchaser shall each bear its respective expenses and legal fees incurred with respect to this Agreement and the transactions contemplated herein; provided, however, that the Purchaser may retain $20,000 of the Subscription Amount to cover its expenses incurred in connection with this Agreement and the transactions contemplated hereby, and provided further, however, that the Company shall reimburse the Purchaser for 50% of its documented expenses that exceed $20,000 and for 100% of its title and Sdeed of trust expenses related to the transactions.
 
6.8            Delays or Omissions .  It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Purchaser, upon any breach or default of the Company under the Subscription Documents shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  It is further agreed that any waiver, permit, consent or approval of any kind or character by Purchaser of any breach or default under this Agreement, or any waiver by any Purchaser of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Agreement, or by law or otherwise afforded to the Purchaser, shall be cumulative and not alternative.
 
6.9            Entire Agreement .  This Agreement and the Exhibits hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein.
 
 [Signature page follows]
 

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In Witness Whereof, the parties have executed this Securities Purchase Agreement   as of the date first written above.

COMPANY:
 
     
Nexeon Medsystems Inc
 
     
By:
/s/ Will Rosellini
 
Name:
Will Rosellini
 
Title:
Chief Executive Officer
 
     
Address:
 
1910 Pacific Avenue, Suite 20000
 
Dallas, Texas 75201
 


PURCHASER:
 
     
     
Leonite Capital LLC
 
     
By:
/s/ Avrohom Geller
 
Name:
Avrohom Geller
 
Title:
CIO
 
     
Address:
1 Hillcrest Center Dr, Suite 232 
Spring Valley, NY 10977
 
 
 
Exhibit A
 
Form of Convertible Promissory Note

(See Attached)
 
Exhibit B
 
Form of Two-Year Warrant

(See Attached)
 
 
Exhibit C
 
Form of Five-Year Warrant

(See Attached)

Exhibit D
 
Form of Security Agreement

(See Attached)


 
EXHIBIT 10.2

THIS NOTE HAS BEEN ISSUED WITH “ORIGINAL ISSUE DISCOUNT” FOR U.S. FEDERAL INCOME TAX PURPOSES. THE ISSUER WILL MAKE AVAILABLE TO ANY HOLDER OF THIS NOTE: (1) THE ISSUE PRICE AND ISSUE DATE OF THE NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTE, (3) THE YIELD TO MATURITY OF THE NOTE, AND (4) ANY OTHER INFORMATION REQUIRED TO BE MADE AVAILABLE BY U.S. TREASURY REGULATIONS UPON RECEIVING A WRITTEN REQUEST FOR SUCH INFORMATION AT THE FOLLOWING ADDRESS: 1910 PACIFIC AVENUE, SUITE 20000, DALLAS, TEXAS 75201.

NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.


Principal Amount: $1,120,000.00
Issue Date: August 21, 2017
Purchase Price: $1,000,000.00
 
Original Issue Discount: $120,000.00
 


SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
 
FOR VALUE RECEIVED , NEXEON MEDSYSTEMS INC , a Nevada corporation (hereinafter called the “ Borrower ”), hereby promises to pay to the order of LEONITE CAPITAL, LLC , a Delaware limited liability company, or registered assigns (the “ Holder ”) the principal sum of $1,120,000.00 (the “ Principal Amount ”), together with interest at the rate of twelve percent (12%) per annum (the “ Stated Rate ”), on the dates set forth below or upon acceleration or otherwise, as set forth herein (the “ Note ”). The consideration to the Borrower for this Note is $1,000,000.00 (the “ Consideration ”).  At the closing, the outstanding principal amount under this Note shall be $1,120,000.00, consisting of the Consideration plus the OID (as defined herein). The maturity date shall be twenty-four (24) months (the “ Term ”) from the Issue Date (the “ Maturity Date ”). The principal sum, as well as any accrued and unpaid interest and other fees shall be due and payable in accordance with the payment terms set forth in Article I herein. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note, which is not paid by the Maturity Date, shall bear interest at the rate of twenty-four percent (24%) per annum from the due date thereof until the same is paid (“ Default Interest ”). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into the Borrower’s common stock (the “ Common Stock ”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “ business day ” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.
 
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This Note carries an original issue discount of $120,000.00 (the “OID”), to cover the Holder’s legal fees, accounting fees, due diligence fees, monitoring, and/or other transactional costs incurred in connection with the purchase and sale of the Note, which is included in the principal balance of this Note. Thus, the purchase price of this Note shall be $1,000,000.00, computed as follows: the Principal Amount minus the OID.

This Note shall be a senior secured obligation of the Borrower, with priority over all future Indebtedness (as defined below) of the Borrower as provided for herein.  The obligations of the Borrower under this Note are secured pursuant to the terms of the following agreements of even date herewith: (i) the security agreement (the “ Security Agreement ”) by and among the Borrower, and certain subsidiaries and affiliates of the Borrower, and the Holder, and such security interest includes but is not limited to all of the assets of the Borrower and such subsidiaries and affiliates, (ii) the deed of trust (the “ Deed of Trust ”) granted by Roselancland Limited Partnership, an affiliate of the Borrower (“ RLP ”), in favor of the Holder conveying in trust certain property of RLP to the Holder, (iii) the personal guarantee (the “ Personal Guarantee ”) of Randy M. Rosellini, and (iv)  the share pledge agreement (the “ Share Pledge Agreement ”) between Rosellini Scientific LLC, wholly owned by William Rosellini, and the Holder in respect of the shares of Nexeon Medsystems Belgium SPRL.

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

The following additional terms shall also apply to this Note:
 
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ARTICLE I. PAYMENTS

1.1
Payments .

(a)
Monthly Payments .

(1)      Beginning on September 22, 2017 (the “ Initial Monthly Payment Date ”) and on the same day of each and every calendar month thereafter throughout the term of this Note (the “ Monthly Payment Dates ”), Borrower shall make monthly payments under this Note to the Holder in the amounts provided in this Article I (each, a “ Monthly Payment Amount ”).

(2)     The Monthly Payment Amount for the payment due on each Monthly Payment Date through and including the 12 th  Monthly Payment Date (the “ Final Interest-Only Payment Date ”) shall be $11,200, consisting of accrued but unpaid interest on the unpaid principal balance of this Note.

(3)     The Monthly Payment Amount shall be adjusted on the 13 th  Monthly Payment Date to an amount sufficient to fully repay the unpaid principal balance of this Note, together with interest at the Stated Rate, by the end of the Amortization Period (as defined below) in substantially equal monthly installments. The “ Amortization Period ” shall be a period of 12 months beginning on the Final Interest-Only Payment Date.  An amortization schedule is attached hereto as Schedule A .  The Borrower shall make payments under this Article I in accordance with Schedule A .

(b)  Payments from Future Funding Sources .  The Borrower shall pay to the Holder on an accelerated basis any outstanding principal amount of the Note, along with accrued, but unpaid interest, from:
 
(1)    Future Financing Proceeds - twenty percent (20%) of the gross proceeds of any future financing of the Borrower that is completed following the closing of the Borrower’s proposed acquisition of Medi-Line SSPRL (” Medi-Line ”), and

(2)    Other Future Receipts - all net proceeds from any sale of assets of the Borrower or any of its subsidiaries or receipt by Borrower or any of its subsidiaries of any tax credits.
    
(c)  Remaining payments .  Any and all remaining unpaid principal of and interest on this Note shall be due and payable in full on the Maturity Date.
 
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ARTICLE II. CONVERSION RIGHTS

2.1          Conversion Right .  The Holder shall have the right at any time at the Holder’s option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of this Note into fully paid and non-assessable shares of Common Stock or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified (each, a “ Conversion Share ”) at the conversion price (the “ Conversion Price ”) determined as provided herein (a “ Conversion ”); provided , however , that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number  of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Note or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein, and, if applicable, net of any shares that may be deemed to be owned by any person not affiliated with the Holder who has purchased a portion of the Note from the Holder) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and Regulations 13D-G thereunder,  except  as  otherwise  provided  in  clause  (1)  of  such  proviso,  provided , further , however , that the limitations on conversion may be waived (up to a maximum of 9.99%) by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as  determined by the Holder, as may be specified in such notice of waiver). The number of shares  of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “ Notice of Conversion ”), delivered to the Borrower by the Holder in accordance with Section 2.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “ Conversion Date ”). The term “ Conversion Amount ” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) the Holder’s expenses relating to a Conversion including, but not limited to, legal fees, brokerage deposit costs, DWAC fees and other expenses and disbursements plus (5) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 2.3 and 2.4(g) hereof.

2.2
Conversion Price .

(a)      Calculation of Conversion Price . The Conversion Price shall be, at the option of the Holder, (i) $1.75 (the “ Fixed Conversion Price ”) (subject to adjustment as further described herein) or (ii) 80% (the “ Conversion Price Discount ”) multiplied by the price per share paid by the investors in a subsequent Equity Financing (as defined herein) of the Borrower.  If the Holder determines not to convert the Note, or any portion thereof, by the first subsequent Equity Financing resulting in gross proceeds to the Borrower of at least $2,000,000, the Conversion Price Discount will terminate.  For the avoidance of doubt, an “ Equity Financing ” shall mean the Borrower’s sale of its Common Stock or any securities conferring the right to purchase the Borrower’s Common Stock or securities convertible into, or exchangeable for (with or without additional consideration), the Borrower’s Common Stock.
 
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(b)      Fixed Conversion Price Adjustments .

(1)   Repricing Adjustment .  The Fixed Conversion Price shall be subject to a one-time repricing 275 days after the closing (the “ Repricing Date ”). The repricing will be based on the lowest volume weighted average price, or VWAP, of the seven (7) trading days immediately preceding the Repricing Date. In the event the Borrower’s Common Stock is not trading on a national exchange or quoted on the OTC markets, or if the Note is not eligible to be converted and the underlying Conversion Shares sold under Rule 144 of the Securities Act at the Repricing Date, then the Repricing Date shall be on the next date that the Borrower’s Common Stock is so listed or quoted and the Note is eligible to be converted and the underlying Conversion Shares sold under Rule 144.

(2)  Stock Dividends and Stock Splits .  If the Borrower, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; or (iii) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Borrower, then the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Borrower) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.

(3)  Fundamental Transaction .  If, at any time while this Note is outstanding, (i) the Borrower effects any merger or consolidation of the Borrower with or into another person, (ii) the Borrower effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Borrower or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Borrower effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “ Fundamental Transaction ”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of 1 share of Common Stock (the “ Alternate Consideration ”). For purposes of any such conversion, the determination of the Fixed Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of 1 share of Common Stock in such Fundamental Transaction, and the Borrower shall apportion the Fixed Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
 
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(4)  Anti-dilution Adjustment .  If at any time while this Note is outstanding, the Borrower sells or grants (or has sold or granted, as the case may be) any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or has sold or issued, as the case may be, or announces any sale, grant or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for or otherwise entitled the any person or entity the right to acquire shares of Common Stock at an effective price per share that is lower than the then Fixed Conversion Price (such lower price, the “ Base Conversion Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (it being agreed that if the holder of the Common Stock or other securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Fixed Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Fixed Conversion Price shall be reduced to a price equal the Base Conversion Price.  Such adjustment shall be made whenever such Common Stock or other securities are issued.  Notwithstanding the foregoing, no adjustment will be made under this Section 2.2 ( b ) (4) in respect of an Exempt Issuance.   For purposes of this Section 2.2(b)(4) an “ Exempt Issuance ” means an issuance of shares (i) reserved as employee shares described under the Borrower’s option pool now or created in the future, (ii) shares issued for consideration other than cash pursuant to a merger, consolidation, acquisition, or similar business combination approved by the Borrower’s Board of Directors (the “ Board ”), provided, however, that any such issuance shall only be to a person (or to the equity holders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Borrower and shall provide to the Borrower additional benefits in addition to the investment of funds, but shall not include a transaction in which the Borrower is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities ; (iii) shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board; or (iv) shares with respect to which the Holder waives its anti-dilution rights granted hereby .   In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 2.2 ( b ) (4) shall be calculated as if all such securities were issued at the initial closing.
 
(5)  Notice to the Holder .  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 2.2(b), the Borrower shall within two (2) business days deliver to the Holder a notice setting forth the Fixed Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment .

2.3        Authorized Shares . The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note and exercise of the Warrants.  The Borrower is required at all times to have authorized and reserved three (3) times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Note in effect from time to time, which, if cannot be determined shall be estimated in good faith by the Borrower) (the “ Reserved Amount ”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Note shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Note. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent by letter, a copy of which is attached hereto as Exhibit B to issue certificates for the Common Stock issuable upon conversion of this Note and exercise of the Warrants, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.
 
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If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

2.4
Method of Conversion .
 
(a)     Mechanics of Conversion . Subject to Section 2.1, this Note may be converted by the Holder in whole or in part, at any time on or after the Maturity Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 2.4(b), surrendering this Note at the principal office of the Borrower.

(b)    Surrender of Note Upon Conversion . Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

(c)    Payment of Taxes . The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

(d)    Delivery of Common Stock Upon Conversion . Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 2.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “ Deadline ”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof.
 
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(e)    Obligation of Borrower to Deliver Common Stock . Upon receipt by  the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article II, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment  against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.

(f)    Delivery of Common Stock by Electronic Transfer . In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“ DTC ”) Fast Automated Securities Transfer (“ FAST ”) program, upon request of the Holder and its compliance with the provisions contained in Section 2.1 and in this Section 2.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“ DWAC ”) system.
 
(g)    Failure to Deliver Common Stock Prior to Deadline . Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 2.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $1,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note.  The Borrower agrees that the right to convert is a valuable right to the Holder, and as such, the Borrower will not take any actions to hamper, delay or prevent any Holder conversion of the Note. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 2.4(g) are justified.
 
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2.5       Concerning the Shares . The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“ Rule 144 ”) or (iv) such shares are transferred to an “ affiliate ” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 2.5 and who is an Accredited Investor. Except as otherwise provided (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:
 
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES  REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED  FOR  SALE,  SOLD,  TRANSFERRED  OR  ASSIGNED  (I)  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Borrower so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule  144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Borrower does not accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 4.2 of the Note.
 
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2.6        Status as Shareholder . Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 2.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 2.3) for the Borrower’s failure to convert this Note.

ARTICLE III.  RANKING AND CERTAIN COVENANTS
 
3.1       Distributions on Capital Stock . So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions that comply with Section 3.4 below.

3.2       Medi-Line Earnings Set Aside .  Following the closing of the Borrower’s acquisition of Medi-Line, ten percent (10%) of the Medi-Line Earnings (as that term is defined in Exhibit C hereto, shall be set aside by the Borrower on a quarterly basis and used specifically to repay the outstanding balance of the Note, along with accrued but unpaid interest, in accordance with the payment terms set forth herein above.

3.3       Restrictions on Further Debt .  Following the closing of the Borrower’s acquisition of Medi-Line, neither the Borrower, nor Medi-Line shall issue any additional debt or otherwise incur any Indebtedness (as defined below) or pledge any of its assets as collateral for any obligation without the prior written consent of the Holder.  With respect to the EUR 275,000 accounts receivable line of credit from CBC Banque SA to Nexeon Medsystems Belgium SPRL, the Borrower agrees that the first EUR 275,000 in drawdowns may be used for working capital purposes and any additional drawdowns over and above the initial EUR 275,000 shall be used to repay the Note.
 
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3.4       Restriction on Stock Repurchases . So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any  such shares; except for the repurchase of shares at a nominal price in connection with rights under an agreement with an employee or consultant of the Borrower whose shares have been forefeited as a result of such employee or consultant’s ceasing to provide services to the Borrower.

3.5       Ranking and Security .  The obligations of the Borrower under this Note shall rank senior with respect to any and all Indebtedness incurred as of or following the Issue Date.  The obligations of the Borrower under this Note are secured pursuant to the Security Agreement, the Deed of Trust, the Personal Guarantee and the Share Pledge Agreement.  So long as the Borrower shall have any obligation under this Note, the Borrower shall not (directly or indirectly through any subsidiary or affiliate) incur or suffer to exist or guarantee any Indebtedness that is senior to or pari passu with (in priority of payment and performance) the Borrower’s obligations hereunder.  As used herein, the term “ Indebtedness ” means (a) all indebtedness of the Borrower for borrowed money or for the deferred purchase price of property or services, including any type of letters of credit, but not including deferred purchase price obligations in place as of the Issue Date or obligations to trade creditors incurred in the ordinary course of business, (b) all obligations of the Borrower evidenced by notes, bonds, debentures or other similar instruments, (c) purchase money indebtedness hereafter incurred by the Borrower to finance the purchase of fixed or capital assets, including all capital lease obligations of the Borrower which do not exceed the purchase price of the assets funded, (d) all guarantee obligations of the Borrower in respect of obligations of the kind referred to in clauses (a) through (c) above that the Borrower would not be permitted to incur or enter into, and (e) all obligations of the kind referred to in clauses (a) through (d) above that the Borrower is not permitted to incur or enter into that are secured and/or unsecured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured and/or unsecured by) any lien or encumbrance on property (including accounts and contract rights) owned by the Borrower, whether or not the Borrower has assumed or become liable for the payment of such obligation.
 
ARTICLE IV. EVENTS OF DEFAULT

It shall be considered an event of default if any of the following events listed in this Article IV (each, an “ Event of Default ”) shall occur; provided, however, that, except in the case of the Events of Default listed in Sections 4.1, 4.2, 4.7, 4.9, 4.10, 4.16, 4.18, 4.19 or 4.20 below, the Borrower shall be have five (5) business days to cure such Event of Default unless a lesser number of days is required pursuant to the provisions of this Article IV:
 
4.1        Failure to Pay Principal or Interest . The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.
 
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4.2       Conversion and the Shares . The Borrower fails to reserve a sufficient amount of shares of common stock as required under the terms of this Note (including Section 1.3 of this Note)(and such breach continues for a period of five (5) days), fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it  will  not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion.  It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within five (5) business days of a demand from the Holder, either in cash or as an addition to the balance of the Note, and such choice of payment method is at the discretion of the Borrower.

4.3       Breach of Covenants . The Borrower, or the relevant related party, as the case may be, breaches any material covenant or other material term or condition contained in this Note, or in the related Securities Purchase Agreement, Security and Pledge Agreement, Affidavit of Confession of Judgment, Share Pledge Agreement, Deed of Trust, Personal Guarantee or any other collateral documents (together, the “ Transaction Documents ”) and such breach continues for a period of ten (10) days.

4.4       Breach of Representations and  Warranties .  Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given pursuant hereto or in connection herewith, shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note and the other Transaction Documents.
 
4.5       Receiver or Trustee . The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

4.6       Judgments . Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
 
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4.7       Bankruptcy . Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

4.8       Delisting of Common Stock . If at any time on or after the date in which the Borrower’s Common Stock is listed or quoted on the OTCQB or an equivalent U.S. replacement exchange, the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange, or the NYSE MKT, the Borrower shall fail to maintain the listing or quotation of the Common Stock on the OTCQB or an U.S. equivalent replacement exchange, the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange, or the NYSE MKT.

4.9       Failure to Comply with the Exchange Act . The Borrower shall fail to comply with the reporting requirements of the Exchange Act (including but not limited to becoming delinquent in its filings), and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

4.10     Liquidation .  Any dissolution, liquidation, or winding up   of Borrower or any substantial portion of its business.

4.11      Cessation of Operations . Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

4.12      Maintenance of Assets .  The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

4.13      Financial Statement Restatement . The Borrower restates any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
 
4.14      Reverse Splits .  The Borrower effectuates a reverse split of its Common Stock.
 
4.15      Replacement of Transfer Agent . In the event that the Borrower appoints a transfer agent and thereafter replaces its transfer agent, and the Borrower fails to provide prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

4.16      DTC “Chill.”   The DTC places a “chill” (i.e. a restriction placed by DTC on one or more of DTC’s services, such as limiting a DTC participant’s ability to make a deposit or withdrawal of the security at DTC) on any of the Borrower’s securities.
 
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4.17      Illegality . Any court of competent jurisdiction issues an order declaring this Note, any of the other Transaction Documents or any provision hereunder or thereunder to be illegal.

4.18      DWAC Eligibility .  In addition to the Event of Default in Section 3.16, the Common Stock is otherwise not eligible for trading through the DTC’s Fast Automated Securities Transfer or Deposit/Withdrawal at Custodian programs.

4.19      Cross-Default . Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the other financial instrument, including but not limited to all promissory notes, currently issued, or  hereafter issued, by the Borrower, to the Holder or any other 3 rd party (the “ Other Agreements ”), after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note, in which event the Holder shall be entitled to apply all rights and remedies of the Holder under the terms of this Note by reason of a default under said Other Agreement or hereunder.

4.20      Variable Rate Transactions . The Borrower (i) issues shares of Common Stock (or convertible securities or purchase rights) pursuant to an equity line of credit of the Borrower or otherwise in connection with a variable rate transaction (whether now existing or entered into in the future) or (ii) adjusts downward the “floor price” at which shares of Common Stock (or convertible securities or purchase rights) may be issued under an equity line of credit or otherwise in connection with a variable rate transaction (whether now existing or entered into in the future).

4.21      Post-Closing Covenant .  The Borrower or the relevant party, as the case may be, fails to comply with the post-closing covenant set forth in Section 5.2 of the securities purchase agreement of even date relating to the Note, between the Holder and the Borrower (the “ SPA ”).

Subject to applicable cure periods specifically provided for herein, upon the occurrence and during the continuation of any Event of Default specified in this Article IV, exercisable through the delivery of written notice to the Borrower by the Holder (the “Default Notice”) (provided, however, that no Default Notice need be provided by the Holder and no notice and no cure period shall apply in the case of the Events of Default specified in Sections 4.1, 4.2, 4.7, 4.9, 4.10, 4.16, 4.18, 4.19, 4.20 or 4.21 above), this Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount (the “Default Amount”) equal to the Principal Amount then outstanding plus accrued interest (including any Default Interest) through the date of full repayment.  Holder may, in its sole discretion, determine to accept payment part in Common Stock and part in cash. For purposes of payments in Common Stock, the conversion formula set forth in Section 2.2 shall apply.  Upon an uncured Event of Default, all amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived by the Borrower, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity, including, without limitation, those set forth in Section 4.22 below.
 
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Upon the occurrence and during the continuation of any Event of Default, and in addition to any other right or remedy of the Holder hereunder, under the SPA or otherwise at law or in equity, the Borrower hereby irrevocably authorizes and empowers Holder or its legal counsel, each as the Borrower’s attorney-in-fact, to appear ex parte and without notice to the Borrower to confess judgment against the Borrower for the unpaid amount of this Note as evidenced by the Affidavit of Confession of Judgment signed by the Borrower as of the Issue Date and to be completed by the Holder or its counsel pursuant to the foregoing power of attorney (which power is coupled with an interest), a copy of which is attached as Exhibit D hereto (the “ Affidavit ”).  The Affidavit shall set forth the amount then due hereunder, plus attorney’s fees and cost of suit, and to release all errors, and waive all rights of appeal.  The Borrower waives the right to contest Holder’s rights under this Article IV, including without limitation the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect.  No single exercise of the foregoing right and power to confess judgment will be deemed to exhaust such power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void, and such power shall continue undiminished and may be exercised from time to time as the Holder may elect until all amounts owing on this Note have been paid in full.

ARTICLE V. MISCELLANEOUS

5.1       Failure or Indulgence Not Waiver . No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

5.2      Notices . All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, facsimile, or electronic mail addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery, upon electronic mail delivery, or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be:
 
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If to the Borrower, to:
NEXEON MEDSYSTEMS INC
1910 Pacific Avenue, Suite 20000
Dallas, Texas 75201
Attn: William Rosellini, CEO
e-mail: will@nexeonmed.com
 
If to the Holder:

LEONITE CAPITAL, LLC
1 Hillcrest Center Dr., Suite 232
Spring Valley, NY 10977
ATTN: Avi Geller
e-mail: avi@leonitecap.com
 
5.3       Amendments . This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “ Note ” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

5.4       Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending  arrangement.

5.5       Cost of Collection . If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
 
5.6       Governing Law . This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state and/or federal courts located in New York. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens . THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED HEREBY . The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Documents 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 other manner permitted by law.
 
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5.6       Certain Amounts . Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the  Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

5.7       Remedies . The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.
 
5.8       Prepayment . Notwithstanding anything to the contrary contained in this Note, the Borrower may prepay any amount outstanding under this Note, prior to the Maturity Date, by making a payment to the Holder of an amount in cash equal to the outstanding principal amount owed under the Note plus all unpaid interest through the remainder of the Term (at the rate of $11,200 per month), subject to the Holder’s written acceptance in Holder’s sole discretion.
 
17
 
5.9       Usury . To the extent it may lawfully do so, the Borrower hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce any right or remedy under this Note.  Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed and provided that the total liability of the Borrower under this Note for payments which under New York law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “ Maximum Rate ”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under New York law in the nature of interest that the Borrower may be obligated to pay under this Note exceed such Maximum Rate.  It is agreed that if the maximum contract rate of interest allowed by New York law and applicable to this Note is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this Note from the effective date thereof forward, unless such application is precluded by applicable law.  If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Borrower to the Holder with respect to indebtedness evidenced by this Note, such excess shall be applied by the Holder to the unpaid principal balance of any such indebtedness or be refunded to the Borrower, the manner of handling such excess to be at the Holder’s election.
 
5.10      Section 3(a)(10) Transactions . If at any time while  this Note is outstanding, the Borrower enters into a transaction structured in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act, then a liquidated damages charge of 25% of the outstanding principal balance of this Note at that time, will be assessed and will become immediately due and payable to the Holder, either in the form of cash payment or as an addition to the balance of the Note, as determined by mutual agreement of the Borrower and Holder.
 
5.11     Terms of Future Financings .  So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more favorable term and such term, at Holder’s option, shall become a part of the Transaction Documents with the Holder.  The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage.
 
5.12     Piggyback Registration Rights .  The Borrower shall include on the next registration statement the Borrower files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note.  Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than Fifteen Thousand and No/100 United States Dollars ($15,000), being immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.
 
5.13    Participation Rights .  In the event the Borrower proposes to offer and sell its securities in an Equity Financing, the Lender shall have the right, but not the obligation, to participate in the purchase of the securities being offered in such Equity Financing up to an amount equal to fifty percent (50%) of the aggregate offering amount of such Equity Financing, until the earliest of (i) the Maturity Date, (ii) the date that the Note and all accrued but unpaid interest shall have been repaid in full, and (iii) the closing date of an Equity Financing in which all, or any remaining portion, of the outstanding principal amount of the Note along with accrued but unpaid interest shall have been converted, in full, into, and on the same terms as, the securities being offered in such Equity Financing.
 
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5.14     Reverse Split Penalty . If at any time while this Note is outstanding, the Borrower effectuates a reverse split with respect to the Common Stock, then a liquidated damages charge of 25% of the outstanding principal balance of this Note at that time, will be assessed and will become immediately due and payable to the Holder, either in the form of cash payment or as an addition to the balance of the Note, as determined by mutual agreement of the Borrower and Holder.
 
5.15     Right of First Refusal . If at any time while this Note is outstanding, the Borrower has a bona fide offer of capital or financing from any 3 rd party that the Borrower intends to act upon, then the Borrower must first offer such opportunity to the Holder to provide such capital or financing to the Borrower on the same terms as each respective 3 rd party’s terms. Should the Holder be unwilling or unable to provide such capital or financing to the Borrower within 10 trading days from Holder’s receipt of written notice of the offer (the “ Offer Notice ”) from the Borrower, then the Borrower may obtain such capital or financing from that respective 3 rd party upon the exact same terms and conditions offered by the Borrower to the Holder, which transaction must be completed within 30 days after the date of the Offer Notice.  If the Borrower does not receive the capital or financing from the respective 3 rd party within 30 days after the date of the respective Offer Notice, then the Borrower must again offer the capital or financing opportunity to the Holder as described above, and the process detailed above shall be repeated.  The Offer Notice must be sent via electronic mail to avi@leonitecap.com.
 
[signature page to follow]
 
19
 
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this August 21, 2017 .
 
NEXEON MEDSYSTEMS INC
 
By:
/s/ William Rosellini  
Name: William Rosellini
 
Title: Chief Executive Officer
 
 
20
 
Schedule A

Amortization Schedule

 
21
 
EXHIBIT A -- NOTICE OF CONVERSION
 
The undersigned hereby elects to convert $            principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the  conversion of the Note (“Common Stock”) as set forth below, of NEXEON MEDSYSTEMS INC, a Nevada corporation (the “Borrower”) according to the conditions of the senior secured convertible note of the Borrower dated as of ______________, 2017 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.
 
Box Checked as to applicable instructions:

[ ]  The Borrower shall electronically transmit the Common Stock issuable pursuant to this  Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

Name of DTC Prime
Broker: Account Number:

[  ]    The undersigned hereby requests that the Borrower issue a certificate or certificates for     the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:
 
LEONITE CAPITAL, LLC
____________________
____________________
e-mail: ______________

Date of Conversion:
     
Applicable Conversion Price:                       
 
$
                                  
Number of Shares of Common Stock to be Issued  
Pursuant to Conversion of the Note:
     
Amount of Principal Balance Due remaining  
 
Under the Note after this conversion:
     

LEONITE CAPITAL, LLC
 
By:
 
Name:
 
Title:
 
Date:
 
 
 
22
 
EXHIBIT B – TRANSFER AGENT IRREVOCABLE RESERVE LETTER

 
 
 
 
August 23, 2017

Action Stock Transfer Corporation
2469 E. Fort Union Blvd , Suite 214
Salt Lake City, UT 84121

Re: Irrevocable Transfer Agent Instructions

Ladies and Gentlemen:

Nexeon Medsystems Inc, a Nevada corporation (the " Company ") issued that certain 12% senior secured convertible promissory note in the principal amount of $1,120,000 (the “ Note ”), to Leonite Capital LLC, a Delaware limited liability company (the " Investor "), on August 21, 2017, pursuant to the terms of that certain securities purchase agreement of even date (the “ Agreement ”).  Further, on August 21, 2017, the Company issued to the Investor that certain two-year warrant to purchase 250,000 shares of the Company’s common stock (the “ Two-Year Warrant ”) and that certain five-year warrant to purchase 250,000 shares of the Company’s common stock (the “ Five-Year Warrant ” and together with the Two-Year Warrant, the “ Warrants ”), and agreed to issue to the Investor 100,000 shares of the Company’s Common Stock (the “ Commitment Shares ”) as consideration for entering into the Agreement.

A copy of the Agreement and the Note are attached hereto.  The shares to be issued pursuant to the Note and/or Warrants are to be registered in the names of the registered holder of the securities submitted for conversion or exercise, or its assignees as requested by the Investor, and the Commitment Shares are to be issued in the name of the Investor.

You are hereby irrevocably authorized and instructed to reserve a sufficient number of shares of common stock, Par value $0.001 per share (the “ Common Stock ”), of the Company (initially, 2,420,000   shares of Common Stock which should be held in reserve for the Investor pursuant to the Note and Warrants) for issuance upon conversion of the Note and/or exercise of the Warrants, in accordance with the terms thereof.  The amount of Common Stock so reserved may be increased, from time to time, by written instructions of the Company or the Investor.

Any shares reserved in connection with the Note may be utilized by the Investor to satisfy any conversion of any convertible note and/or exercise of any warrant, currently issued or issued in the future, by the Company to the Investor.  Any shares reserved hereunder may be utilized by the Investor to satisfy the Company’s obligations under the Agreement, the Note, and/or the Warrants.
 
The 100,000 Commitment Shares should be issued to the Investor immediately.
 
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The shares to be issued upon conversion of the Note or exercise of the Warrants shall be issued within one (1) business day of receipt of a notice of conversion with respect to the Note and/or notice of exercise with respect to the Warrants (each a “ Issuance Notice ”).  The ability to convert the Note and exercise the Warrants in a timely manner is a material obligation of the Company pursuant to the Note.  The ability to exercise the Warrants in a timely manner is a material obligation of the Company pursuant to the Warrants.  Your firm is hereby irrevocably authorized and instructed to issue shares of Common Stock of the Company upon conversion of the Note and/or exercise of the Warrants (without any restrictive legend) to the Investor at the request of the Investor without any further action or confirmation by the Company, in which the issuance shall be deducted against the reserve or, if there are not enough shares held in reserve, from available authorized shares of the Company, by either (i) electronically by crediting the account of a Prime Broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission system, provided that the Company has been made FAST/DRS eligible by DTCC (DWAC), or (ii) in certificated form (if electronic delivery is not possible at that time) without any legend which would restrict the transfer of the shares, and you should remove all stop-transfer instructions relating to such shares: (A) upon your receipt from the Investor dated within 90 days from the date of the issuance or transfer request, of: (i) an Issuance Notice executed by the Investor; and (ii) an opinion of counsel of the Investor, in form, substance and scope customary for opinions of counsel in comparable transactions (and satisfactory to the transfer agent), to the effect that the shares of Common Stock of the Company issued to the Investor pursuant to the Issuance Notice are not "restricted securities" as a result of an effective registration statement or pursuant to an applicable exemption (including but not limited to Section 4(a)(1) or Rule 144) and should be issued to the Investor without any restrictive legend; and (B) the number of shares to be issued is less than 9.99% of the total issued Common Stock of the Company.  If an opinion from counsel is not provided, you are instructed and authorized to issue shares to the Investor as restricted and the associated certificate(s) should include the customary 144 restrictive legend.

The Company affirms that it has appropriately resolved to issue all required Common Stock to the Investor and hereby requests that your firm act immediately, without delay and without the need for any action or confirmation by the Company with respect to the issuance of (i) the 100,000 Commitment Shares, and (ii) the Common Stock pursuant to any Issuance Notice received from the Investor.

The Investor and the Company understand that Action Stock Transfer Corporation (the “ Transfer Agent ”) shall be required to perform any issuances or transfers of shares pursuant to this letter unless the respective issuance or transfer of shares is prohibited by a valid court order. If the Company informs you that there is a court order prohibiting such issuances, then the Company must provide you with a certified copy of such court order prior to the issuance deadline for the respective conversion.

The Company shall indemnify you and your officers, directors, principals, partners, agents and representatives, and hold each of them harmless from and against any and all loss, liability, damage, claim or expense (including the reasonable fees and disbursements of its attorneys) incurred by or asserted against you or any of them arising out of or in connection the instructions set forth herein, the performance of your duties hereunder and otherwise in respect hereof, including the costs and expenses of defending yourself or themselves against any claim or liability hereunder, except that the Company shall not be liable hereunder as to matters in respect of which it is determined that you have acted with gross negligence or in bad faith.  You shall have no liability to the Company in respect to any action taken or any failure to act in respect of this if such action was taken or omitted to be taken in good faith, and you shall be entitled to rely in this regard on the advice of counsel.

The Board of Directors of the Company has approved the foregoing (irrevocable instructions) and does hereby extend the Company’s irrevocable agreement to indemnify your firm for all loss, liability or expense in carrying out the authority and direction herein contained on the terms herein set forth.   The Transfer Agent is hereby authorized and directed to promptly disclose to the Investor without any additional confirmation from the Company, after Investor’s request from time to time, the total number of shares of common stock issued and outstanding, the total number of shares of common stock in the float, and the total number of shares of common stock that are authorized but unissued and unreserved.  The Transfer Agent is also authorized to, without any additional confirmation from the Company, release any information you deem necessary towards the processing, clearing and settlement of the shares arising from this reservation, as well as effectuate a transfer of all or a portion of the shares of common stock reserved hereunder to any third party if directed to do so by Investor.
 
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You are directed to not delay in processing any Conversion Notices owing to the fact that the Company is in arrears of its fees and other monies owed to your firm, and you acknowledge that you will not so delay any Conversion Notice processing.  If at the time a Conversion Notice is delivered to your firm the Company is then in arrears to your firm, or has been placed on credit hold, Investor shall have the right as a condition to such processing to pre-pay the full cost of processing the Conversion Notice

The Company agrees that in the event that the Transfer Agent resigns as the Company’s transfer agent, the Company shall engage a suitable replacement transfer agent that will agree to serve as transfer agent for the Company and be bound by the terms and conditions of these Irrevocable Instructions within five (5) business days. The Company shall not terminate the Transfer Agent as the Company’s transfer agent without a signed consent from the Investor.

The Investor is intended to be and is a third party beneficiary hereof, and no amendment or modification to the instructions set forth herein may be made without the consent of the Investor.

[signature page to follow]
 
25
 
Very truly yours,

NEXEON MEDISYSTEMS INC
     
     
By:
/s/ Will Rosellini 
 
Name:
Will Rosellini  
 
Title:
Chief Executive Officer 
 
     
     
Acknowledged and Agreed:  
     
ACTION STOCK TRANSFER CORPORATION
     
     
By:
/s/ Justeene Blankenship                 
Name:
Justeene Blankenship    
 
Title:   
President     
     
     
Leonite Capital LLC
     
     
By:
/s/ Avrohom Geller   
Name:
Avrohom Geller     
Title:  
CIO     
 
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EXHIBIT C -- DEFINITION OF MEDI-LINE EARNINGS

In reference to Medi-Line Earnings, of which 10% earnings shall be set aside on a quarterly basis to repay the outstanding balance on the Note, the following definitions are applicable:


Accounting
All applicable items in the calculation of Medi-Line Earnings are calculated on a cash accounting basis, but for items where explicitly stated otherwise.

Revenue
Applicable revenue shall include (1) Revenue derived from existing revenue-generating contracts of Medi-Line and extensions thereof (2) Revenue derived from existing Medi-Line products and alterations thereof including follow-up generations and follow up research contracts (Note for Avi: Our dd has to include looking at the existing Medi-line contracts and products) (3) Revenue derived from new products whose development and commercialization can be reasonably attributed to Medi-Line (4) Revenue derived from new contracts whose fulfillment can be reasonably attributed to Medi-Line

Costs
Applicable costs shall include (1) Salary expenses related to employees under direct employment contract with Medi-Line, but no owner management fee or the alike (2) Expenses relating to maintenance of the Medi-Line facilities, including real estate and equipment (3) Administrative expenses directly attributable to maintaining Medi-Line operations (4) Other cash operating expenses directly attributable to Medi-Line operations (5) Raw material expenses on a per-unit of output basis (6) A tax rate equal to the effective tax rate of combined Nexeon and Medi-Line for the quarter. The tax rate is applicable to the amount resulting from deducting all other expense items from all revenue items.

Process
The calculation of Medi-Line Earnings shall occur on a quarterly basis and serve as the minimum threshold for cash deposits exclusively reserved to repay the loan.
 
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EXHIBIT D -- AFFIDAVIT OF CONFESSION OF JUDGMENT


SUPREME COURT OF THE STATE OF NEW YORK
                             
COUNTY OF NEW YORK
   
----------------------------------------------------------------------- X
   
LEONITE CAPITAL, LLC,
   
   
Index No.
Plaintiff,     
   
   
AFFIDAVIT OF CONFESSION OF
- against -
JUDGMENT
     
NEXEON MEDSYSTEMS INC,
   
NEXEON MEDSYSTEMS EUROPE, SARL,
   
NEXEON MEDSYSTEMS BELGIUM, SPRL
   
NEXEON MEDSYSTEMS PUERTO RICO,
   
    OPERATING COMPANY CORPORATION,
   
PULSUS MEDICAL LLC,
   
 and WILLIAM ROSELLINI,
-  
Defendants.
   
----------------------------------------------------------------------- X
   

 
 
STATE OF NEW YORK
)            
 
 
)
 ss.:
COUNTY OF NEW YORK                         
)
 
 

William Rosellini and the Subsidiaries (defined below), being duly sworn, hereby depose and say:
 
1.            I (“Rosellini”) am the Chief Executive Officer of defendant NEXEON MEDSYSTEMS INC (“NMI”),  Nexeon Medsystems Europe, SARL (“NME”), Nexeon Medsystems Belgium, SPRL (“NMB”), Nexeon Medsystems Puerto Rico, Operating Company Corporation (“NMPR”), Pulsus Medical LLC (“PULSUS” and together with NME, NMB and NMPR, the “Subsidiaries”) are wholly owned subsidiaries of NMI.  As such, I, NMI and the Subsidiaries (together, the “Affiliates”) are fully familiar with all the facts and circumstances recited herein on personal knowledge. NMI has its principal place of business at 1910 Pacific Avenue, Suite 20000, Dallas, TX 75201. On behalf of myself and the other Affiliates, I hereby confess judgment in favor of Leonite Capital, LLC (“Leonite”), having a principal place of business at at 1 Hillcrest Center Drive suite 232 Spring Valley, NY 10977, in the amount of One Million, One Hundred Twenty Thousand Dollars ($1,120,000), less any payments made on or after the date of this affidavit of confession of judgment (the “Confession of Judgment”), plus interest pursuant to the terms of the Note (as defined herein) and all applicable penalties under the Note, as further provided herein. In no event shall interest payable hereunder exceed the maximum permissible under applicable law.
 
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2.            This Confession of Judgment is for a debt justly due to Leonite from Rosellini and the other Affiliates, and Rosellini and the other Affiliates hereby authorize the Supreme Court of the State of New York to enter judgment against Rosellini and the other Affiliates, jointly and severally, in the amount of One Million, One Hundred Twenty Thousand Dollars ($1,120,000), less any payments made on, prior to or after the date of this Confession of Judgment, plus interest pursuant to the terms of the Note, including a default interest rate of twenty-four percent (24%) per annum on said amount from the date of any default, all applicable penalties under the Note, plus the costs and attorneys’ fees that are set forth below, upon the occurrence of an event of default under Section 4.1 (Failure to Pay Principal or Interest) of that certain senior secured convertible promissory note, in the original principal amount of One Million, One Hundred Twenty Thousand Dollars ($1,120,000) issued by NMI on August __ , 2017 (the “Note”).
 
3.            In order to secure these obligations, Rosellini and the other Affiliates agreed to simultaneously deliver with the execution of the Note this Confession of Judgment.  Rosellini and the other Affiliates hereby authorize entry of a monetary judgment obtained pursuant to the Confession of Judgment in the New York State Supreme Court, New York County under the circumstances specified in paragraph 2 of this Confession of Judgment.
 
4.            The sums confessed pursuant to this Confession of Judgment are justly due and owing to Leonite under the following circumstances: NMI entered into the securities purchase agreement dated __________, 2017 (the “Agreement”) and the Note and Rosellini and the other Affiliates entered into related agreements.  The Agreement provides for the issuance of the Note, and contains customary representations, warranties, and covenants.
 
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5.            Rosellini and the other Affiliates agree to pay any and all costs and expenses incurred by Leonite in enforcing the terms of this Confession of Judgment, including reasonable attorneys’ fees and expenses at the rate of $750.00 per hour that Leonite incurs or is billed for in connection with enforcing the terms of the Confession of Judgment, entering any Judgment, collecting upon said Judgment, and defending or prosecuting any appeals.
 
 
By:
   
 
William Rosellini, individually
 
       
       
       
       
       
 
Nexeon Medsystems Inc 
       
       
 
By:
   
 
Name:
William Rosellini
 
 
Title:
Chief Executive Officer
 
       
 
Nexeon Medsystems Europe, SARL 
       
 
By:
   
 
Name:
   
 
Title:
   
       
       
 
Nexeon Medsystems Belgium, SPRL 
       
 
By:
   
 
Name:
   
 
Title:
   
       
       
 
Nexeon Medsystems Puerto Rico Operating Company Corporation 
       
 
By:
   
 
Name:
   
 
Title:
   
       
       
 
Pulsus Medical LLC  
       
 
By:
   
 
Name:
   
 
Title:
   
 
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STATE OF __________)         
   
 
ss.: 
 
COUNTY OF ________)
   
 
 
ACKNOWLEDGMENT
 
 
On _______ _____, 2017 before me personally came Willliam Rosellini, to me known, who, by me duly sworn,  did depose and say that deponent is the Chief Executive Officer of NEXEON MEDSYSTEMS INC and the authorized representative of NEXEON MEDSYSTEMS EUROPE, SARL, NEXEON MEDSYSTEMS BELGIUM, SPRL, NEXEON MEDSYSTEMS PUERTO RICO, OPERATING COMPANY CORPORATION, and PULSUS MEDICAL LLC the Affiliates described in, and which executed the foregoing affidavit of confession of judgment, that deponent knows the seal of the Affiliates, that the seal affixed to the affidavit of confession of judgment is the Affiliates’ respective seals, that it was affixed by order of the board of directors of the Affiliates and that deponent signed deponent’s name by like order.

Deponent acknowledged to me that he also executed the forgoing Affidavit of Confession of Judgment in his individual capacity as is set forth above.

 
 
 
 
Notary Public
 

 
SEALS:

 
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EXHIBIT 10.3

NEITHER THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


COMMON STOCK PURCHASE WARRANT

NEXEON MEDSYSTEMS INC

Warrant Shares: 250,000
Date of Issuance: August 24, 2017 (“ Issuance Date ”)

This COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received (in connection with the issuance of the $1,120,000.00 senior secured convertible promissory note to the Holder (as defined below) of even date) (the “ Note ”), Leonite Capital, LLC, a Delaware limited liability company (including any permitted and registered assigns, the “ Holder ”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from Nexeon Medsystems Inc, a Nevada corporation (the “ Company ”), up to 250,000 shares of Common Stock (as defined below) (the “ Warrant Shares ”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant)   at the Exercise Price per share then in effect.  This Warrant is issued by the Company as of the date hereof in connection with that certain securities purchase agreement, dated August 21, 2017, by and between the Company and the Holder (the “ Purchase Agreement ”).

Capitalized terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this Warrant or in Section 13 below.  For purposes of this Warrant, the term “ Exercise Price ” shall mean $2.50, subject to adjustment as provided herein (including but not limited to cashless exercise), and the term “ Exercise Period ” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the two-year anniversary thereof.
 
 
1.
EXERCISE OF WARRANT .

(a)            Mechanics of Exercise .  Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit A (the “ Exercise Notice ”), of the Holder’s election to exercise this Warrant.  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  On or before the third Trading Day (the “ Warrant Share Delivery Date ”) following the date on which the Company shall have received the Exercise Notice, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “ Aggregate Exercise Price ” and together with the Exercise Notice, the “ Exercise Delivery Documents ”) in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares.  If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 6) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.

If the Company fails to cause its transfer agent to transmit to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion, and such failure shall be deemed an event of default under the Note.

If the Market Price of one share of Common Stock is greater than the Exercise Price and the Warrant Shares are not registered under an effective non-stale registration statement of the Company, the Holder may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and a Notice of Exercise, in which event the Company shall issue to Holder a number of Common Stock computed using the following formula:

X = Y (A-B)
 
A
 
Where X =
the number of Shares to be issued to Holder.
 
Y =
the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
 
A =
the Market Price (at the date of such calculation).
 
B =
Exercise Price (as adjusted to the date of such calculation).
 

(b)            No Fractional Shares .  No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto.  All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share.  If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
 
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(c)            Holder’s Exercise Limitations .  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, to the extent that after giving effect to issuance of Warrant Shares upon exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation, as defined below.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including without limitation any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this paragraph (d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this paragraph applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.

For purposes of this paragraph, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the request of a Holder, the Company shall within two Trading Days confirm to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  Upon no fewer than 61 days’ prior notice to the Company, a Holder may increase or decrease the Beneficial Ownership Limitation provisions of this paragraph, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this paragraph shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company and shall only apply to such Holder and no other Holder.  The limitations contained in this paragraph shall apply to a successor Holder of this Warrant.
 
2.
ADJUSTMENTS .  The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:
 
(a)            Distribution of Assets .  If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “ Distribution ”), at any time after the issuance of this Warrant, then, in each such case:
 
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(i)            any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction (i) the numerator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (ii) the denominator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date; and

(ii)            the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i); provided, however, that in the event that the Distribution is of shares of common stock of a company (other than the Company) whose common stock is traded on a national securities exchange or a national automated quotation system (“ Other Shares of Common Stock ”), then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i) and the number of Warrant Shares calculated in accordance with the first part of this clause (ii).

(b)            Adjustments for Stock Splits and Combinations and Stock Dividends .  If the Company shall at any time or from time to time after the date hereof, effect a stock split of the outstanding Common Stock or pay a stock dividend in shares of Common Stock, then the Exercise Price shall be proportionately adjusted.  Any adjustments under this Section 2(b)0 shall be effective at the close of business on the date the stock split or combination becomes effective or the date of payment of the stock dividend, as applicable.

(c)            Anti-dilution Adjustment .  If at any time while this Warrant is outstanding, the Company sells or grants (or has sold or granted, as the case may be) any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or has sold or issued, as the case may be, or announces any sale, grant or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for or otherwise entitled the any person or entity the right to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Exercise Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (it being agreed that if the holder of the Common Stock or other securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to a price equal the Base Exercise Price.  Such adjustment shall be made whenever such Common Stock or other securities are issued.  Notwithstanding the foregoing, no adjustment will be made under this Section 2(c) in respect of an Exempt Issuance.  For purposes of this Section 2(c), an “ Exempt Issuance ” means an issuance of shares (i) reserved as employee shares described under the Company’s option pool now or created in the future, (ii) shares issued for consideration other than cash pursuant to a merger, consolidation, acquisition, or similar business combination approved by the Company’s Board of Directors (the “ Board ”), provided, however, that any such issuance shall only be to a person (or to the equity holders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; (iii) shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board; or (iv) shares with respect to which the Holder waives its anti-dilution rights granted hereby.  In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 2(c) shall be calculated as if all such securities were issued at the initial closing.
 
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3.              FUNDAMENTAL TRANSACTIONS .  If, at any time while this Warrant is outstanding, (i) the Company effects any merger of the Company with or into another entity and the Company is not the surviving entity (such surviving entity, the “ Successor Entity ”), (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or by another individual or entity, and approved by the Company) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities, cash or property and the holders of at least 50% of the Common Stock accept such offer, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock) (in any such case, a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive the number of shares of Common Stock of the Successor Entity or of the Company and any additional consideration (the “ Alternate Consideration ”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event (disregarding any limitation on exercise contained herein solely for the purpose of such determination).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any Successor Entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration.

4.              NON-CIRCUMVENTION .  The Company covenants and agrees that it will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise).
 
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5.              WARRANT HOLDER NOT DEEMED A STOCKHOLDER .  Except as otherwise specifically provided herein, this Warrant, in and of itself, shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
 
6.
REISSUANCE .

(a)            Lost, Stolen or Mutilated Warrant .  If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

(b)            Issuance of New Warrants .  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.
 
7.
TRANSFER .
 
(a)            Notice of Transfer .  The Holder agrees that, if practicable, it will give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer.  Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel.  If the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder thereof, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided, however, that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute the Assignment of Warrant attached hereto as Exhibit B and such other documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.

(b)            If the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Holder will limit its activities in respect to such transfer or disposition as are permitted by law.

(c)            Any transferee of all or a portion of this Warrant shall succeed to the rights and benefits of the initial Holder of this Warrant under Sections 4.1 and 4.3 (subject, however, to the limitations set forth in Section 4.2), 4.4 and 4.5 of the Purchase Agreement (registration rights, expenses, and indemnity).

8.             NOTICES .  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions contained in the Purchase Agreement.  The Company shall provide the Holder with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.
 
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9.              AMENDMENT AND WAIVER .  The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

10.             GOVERNING LAW .  This Warrant shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts or federal courts located in New York.  The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens .  THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY .  The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Warrant or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.   Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document 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 other manner permitted by law.

11.            ACCEPTANCE .  Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

12.            CERTAIN DEFINITIONS .  For purposes of this Warrant, the following terms shall have the following meanings:

(a)            “ Nasdaq ” means The Nasdaq Stock Market (www.Nasdaq.com).

(b)            “ Closing Sale Price ” means, for any security as of any date, (i) the last closing trade price for such security on the Principal Market, as reported by Nasdaq, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Nasdaq, or (ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Nasdaq, or (iii) if no last trade price is reported for such security by Nasdaq, the average of the bid and ask prices of any market makers for such security as reported by the OTC Markets.  If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
 
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(c)            “ Common Stock ” means the Company’s common stock, and any other class of securities into which such securities may hereafter be reclassified or changed.

(d)            “ Common Stock Equivalents ” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

(e)            “ Principal Market ” means the primary national securities exchange on which the Common Stock is then traded.

(f)            “ Market Price ” means the highest traded price of the Common Stock during the thirty (30) Trading Days prior to the date of the respective Exercise Notice.

(g)            “ Trading Day ” means (i) any day on which the Common Stock is listed or quoted and traded on its Principal Market, (ii) if the Common Stock is not then listed or quoted and traded on any national securities exchange, then a day on which trading occurs on any over-the-counter markets, or (iii) if trading does not occur on the over-the-counter markets, any Business Day.




*  *  *  *  *  *  *
 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.

 
 
NEXEON MEDSYSTEMS INC
   
   
   
 
/s/ William Rosellini
 
Name: William Rosellini
 
Title: Chief Executive Officer
 
 
EXHIBIT A

EXERCISE NOTICE

(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)


The Undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Nexeon Medsystems Inc, a Nevada corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1.
Form of Exercise Price .  The Holder intends that payment of the Exercise Price shall be made as (check one):

☐
a cash exercise with respect to _________________ Warrant Shares; or
☐   by cashless exercise pursuant to the Warrant.


2.
Payment of Exercise Price .  If cash exercise is selected above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

3.
Delivery of Warrant Shares .  The Company shall deliver to the holder __________________ Warrant Shares in accordance with the terms of the Warrant.


 
Date:
     
       
       
       
     
 (Print Name of Registered Holder)
       
       
     
By:
 
     
Name:
 
     
Title:
 
 
 
EXHIBIT B

ASSIGNMENT OF WARRANT

(To be signed only upon authorized transfer of the Warrant)


For Value Received , the undersigned hereby sells, assigns, and transfers unto ____________________ the right to purchase _______________ shares of common stock of Nexeon MedSystems Inc, to which the within Common Stock Purchase Warrant relates and appoints ____________________, as attorney-in-fact, to transfer said right on the books of Nexeon MedSystems Inc with full power of substitution and re-substitution in the premises.  By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.


 
Dated:
     
       
       
       
     
 (Signature) *
       
       
     
(Name)
       
       
     
 (Address)
       
       
     
 (Social Security or Tax Identification No.)
 


* The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever.  When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

 

EXHIBIT 10.4

NEITHER THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


COMMON STOCK PURCHASE WARRANT

NEXEON MEDSYSTEMS INC

Warrant Shares: 250,000
Date of Issuance: August 24, 2017 (“ Issuance Date ”)

This COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received (in connection with the issuance of the $1,120,000.00 senior secured convertible promissory note to the Holder (as defined below) of even date) (the “ Note ”), Leonite Capital, LLC, a Delaware limited liability company (including any permitted and registered assigns, the “ Holder ”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from Nexeon Medsystems Inc, a Nevada corporation (the “ Company ”), up to 250,000 shares of Common Stock (as defined below) (the “ Warrant Shares ”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant)   at the Exercise Price per share then in effect.  This Warrant is issued by the Company as of the date hereof in connection with that certain securities purchase agreement, dated August 21, 2017, by and between the Company and the Holder (the “ Purchase Agreement ”).

Capitalized terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this Warrant or in Section 13 below.  For purposes of this Warrant, the term “ Exercise Price ” shall mean $3.00, subject to adjustment as provided herein (including but not limited to cashless exercise), and the term “ Exercise Period ” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary thereof.

1.               EXERCISE OF WARRANT .

(a)            Mechanics of Exercise .  Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit A (the “ Exercise Notice ”), of the Holder’s election to exercise this Warrant.  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  On or before the third Trading Day (the “ Warrant Share Delivery Date ”) following the date on which the Company shall have received the Exercise Notice, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “ Aggregate Exercise Price ” and together with the Exercise Notice, the “ Exercise Delivery Documents ”) in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares.  If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 6) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
 
 
If the Company fails to cause its transfer agent to transmit to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion, and such failure shall be deemed an event of default under the Note.

If the Market Price of one share of Common Stock is greater than the Exercise Price and the Warrant Shares are not registered under an effective non-stale registration statement of the Company, the Holder may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and a Notice of Exercise, in which event the Company shall issue to Holder a number of Common Stock computed using the following formula:

X = Y (A-B)
 
A
            
Where    X =
the number of Shares to be issued to Holder.
 
Y =
the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
 
A = 
the Market Price (at the date of such calculation).
 
B =
Exercise Price (as adjusted to the date of such calculation).
 
(b)            No Fractional Shares .  No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto.  All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share.  If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
 
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(c)            Holder’s Exercise Limitations .  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, to the extent that after giving effect to issuance of Warrant Shares upon exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation, as defined below.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including without limitation any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this paragraph (d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this paragraph applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.

For purposes of this paragraph, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the request of a Holder, the Company shall within two Trading Days confirm to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  Upon no fewer than 61 days’ prior notice to the Company, a Holder may increase or decrease the Beneficial Ownership Limitation provisions of this paragraph, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this paragraph shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company and shall only apply to such Holder and no other Holder.  The limitations contained in this paragraph shall apply to a successor Holder of this Warrant.

2.               ADJUSTMENTS .  The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

(a)            Distribution of Assets .  If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “ Distribution ”), at any time after the issuance of this Warrant, then, in each such case:
 
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(i)             any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction (i) the numerator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (ii) the denominator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date; and

(ii)            the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i); provided, however, that in the event that the Distribution is of shares of common stock of a company (other than the Company) whose common stock is traded on a national securities exchange or a national automated quotation system (“ Other Shares of Common Stock ”), then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i) and the number of Warrant Shares calculated in accordance with the first part of this clause (ii).

(b)            Adjustments for Stock Splits and Combinations and Stock Dividends .  If the Company shall at any time or from time to time after the date hereof, effect a stock split of the outstanding Common Stock or pay a stock dividend in shares of Common Stock, then the Exercise Price shall be proportionately adjusted.  Any adjustments under this Section 2(b) shall be effective at the close of business on the date the stock split or combination becomes effective or the date of payment of the stock dividend, as applicable.

(c)            Anti-dilution Adjustment .  If at any time while this Warrant is outstanding, the Company sells or grants (or has sold or granted, as the case may be) any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or has sold or issued, as the case may be, or announces any sale, grant or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for or otherwise entitled the any person or entity the right to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Exercise Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (it being agreed that if the holder of the Common Stock or other securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to a price equal the Base Exercise Price.  Such adjustment shall be made whenever such Common Stock or other securities are issued.  Notwithstanding the foregoing, no adjustment will be made under this Section 2(c) in respect of an Exempt Issuance.  For purposes of this Section 2(c), an “ Exempt Issuance ” means an issuance of shares (i) reserved as employee shares described under the Company’s option pool now or created in the future, (ii) shares issued for consideration other than cash pursuant to a merger, consolidation, acquisition, or similar business combination approved by the Company’s Board of Directors (the “ Board ”), provided, however, that any such issuance shall only be to a person (or to the equity holders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; (iii) shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board; or (iv) shares with respect to which the Holder waives its anti-dilution rights granted hereby.  In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 2(c) shall be calculated as if all such securities were issued at the initial closing.
 
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3.               FUNDAMENTAL TRANSACTIONS .  If, at any time while this Warrant is outstanding, (i) the Company effects any merger of the Company with or into another entity and the Company is not the surviving entity (such surviving entity, the “ Successor Entity ”), (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or by another individual or entity, and approved by the Company) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities, cash or property and the holders of at least 50% of the Common Stock accept such offer, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock) (in any such case, a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive the number of shares of Common Stock of the Successor Entity or of the Company and any additional consideration (the “ Alternate Consideration ”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event (disregarding any limitation on exercise contained herein solely for the purpose of such determination).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any Successor Entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration.

4.               NON-CIRCUMVENTION .  The Company covenants and agrees that it will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise).
 
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5.               WARRANT HOLDER NOT DEEMED A STOCKHOLDER .  Except as otherwise specifically provided herein, this Warrant, in and of itself, shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

6.               REISSUANCE .

(a)            Lost, Stolen or Mutilated Warrant .  If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

(b)            Issuance of New Warrants .  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.

7.               TRANSFER .

(a)            Notice of Transfer .  The Holder agrees that, if practicable, it will give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer.  Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel.  If the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder thereof, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided, however, that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute the Assignment of Warrant attached hereto as Exhibit B and such other documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.

(b)            If the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Holder will limit its activities in respect to such transfer or disposition as are permitted by law.

(c)            Any transferee of all or a portion of this Warrant shall succeed to the rights and benefits of the initial Holder of this Warrant under Sections 4.1 and 4.3 (subject, however, to the limitations set forth in Section 4.2), 4.4 and 4.5 of the Purchase Agreement (registration rights, expenses, and indemnity).

8.               NOTICES .  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions contained in the Purchase Agreement.  The Company shall provide the Holder with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.
 
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9.               AMENDMENT AND WAIVER .  The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

10.             GOVERNING LAW .  This Warrant shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts or federal courts located in New York.  The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens .  THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY .  The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Warrant or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.   Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document 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 other manner permitted by law.

11.             ACCEPTANCE .  Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

12.             CERTAIN DEFINITIONS .  For purposes of this Warrant, the following terms shall have the following meanings:

(a)            “ Nasdaq ” means The Nasdaq Stock Market (www.Nasdaq.com).

(b)            “ Closing Sale Price ” means, for any security as of any date, (i) the last closing trade price for such security on the Principal Market, as reported by Nasdaq, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Nasdaq, or (ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Nasdaq, or (iii) if no last trade price is reported for such security by Nasdaq, the average of the bid and ask prices of any market makers for such security as reported by the OTC Markets.  If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
 
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(c)            “ Common Stock ” means the Company’s common stock, and any other class of securities into which such securities may hereafter be reclassified or changed.

(d)            “ Common Stock Equivalents ” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

(e)            “ Principal Market ” means the primary national securities exchange on which the Common Stock is then traded.

(f)             “ Market Price ” means the highest traded price of the Common Stock during the thirty (30) Trading Days prior to the date of the respective Exercise Notice.

(g)            “ Trading Day ” means (i) any day on which the Common Stock is listed or quoted and traded on its Principal Market, (ii) if the Common Stock is not then listed or quoted and traded on any national securities exchange, then a day on which trading occurs on any over-the-counter markets, or (iii) if trading does not occur on the over-the-counter markets, any Business Day.
 

 
 
*  *  *  *  *  *  *
 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.


 
NEXEON MEDSYSTEMS INC
     
     
     
  /s/ William Rosellini  
 
Name: William Rosellini
 
 
Title: Chief Executive Officer
 
 
 
EXHIBIT A

EXERCISE NOTICE

(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)


The Undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Nexeon Medsystems Inc, a Nevada corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1.
Form of Exercise Price .  The Holder intends that payment of the Exercise Price shall be made as (check one):

☐
a cash exercise with respect to _________________ Warrant Shares; or
☐
by cashless exercise pursuant to the Warrant.


2.
Payment of Exercise Price .  If cash exercise is selected above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

3.
Delivery of Warrant Shares .  The Company shall deliver to the holder __________________ Warrant Shares in accordance with the terms of the Warrant.



Date:
       
         
         
         
     
(Print Name of Registered Holder)
 
         
         
     
By:
   
     
Name:
   
     
Title:
   
 

EXHIBIT B

ASSIGNMENT OF WARRANT

(To be signed only upon authorized transfer of the Warrant)


For Value Received , the undersigned hereby sells, assigns, and transfers unto ____________________ the right to purchase _______________ shares of common stock of Nexeon MedSystems Inc, to which the within Common Stock Purchase Warrant relates and appoints ____________________, as attorney-in-fact, to transfer said right on the books of Nexeon MedSystems Inc with full power of substitution and re-substitution in the premises.  By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.



Dated:
       
         
         
         
     
(Signature) *
 
         
         
     
(Name)
 
         
         
     
(Address)
 
         
         
     
(Social Security or Tax Identification No.)
 



* The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever.  When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.



EXHIBIT 10.5

SECURITY AND PLEDGE AGREEMENT

This SECURITY AND PLEDGE AGREEMENT (the “ Agreement ”) is made and entered into on August 21, 2017, by and among NEXEON MEDSYSTEMS INC, a Nevada corporation (the “ Debtor ”), the other parties identified as “ Obligors ” on the signature pages hereto and such other parties that may become Obligors hereunder after the date hereof (together with the Debtor, individually an “ Obligor , ” and collectively the “ Obligors ”) and Leonite Capital LLC , a Delaware limited liability company, and its permitted endorsees, transferees and assigns (collectively, the “ Secured Party ”).

RECITALS

A.            Concurrently herewith, Debtor and the Secured Party have entered into a Securities Purchase Agreement (the “ Securities Purchase Agreement ”) and certain other agreements, pursuant to which the Debtor issued that certain senior secured convertible promissory note in the principal amount of $1,120,000.00 (the “ Note ”) to the Secured Party.

B.            Debtor and the other Obligors now enters into this Agreement with the Secured Party as security for Debtor’s Obligations (as defined below).

AGREEMENT

NOW, THEREFORE, in consideration of their respective promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.            Definitions .  Terms used but not otherwise defined in this Agreement that are defined in Division 9 of the Uniform Commercial Code as adopted in the state of Delaware (the “ UCC ”) (such as “ account ,” “ adverse claim ,” “ chattel paper ,” “ deposit account ,” “ document ,” “ equipment ,” “ fixtures ,” “ general intangibles ,” “ goods ,” “ instruments ,” “ inventory ,” “ investment property ,” “ proceeds ,” and “ supporting obligations ”) shall have the respective meanings given such terms in Division 9 of the UCC.  Capitalized terms used in this Agreement and not defined elsewhere herein or in the Securities Purchase Agreement shall have the meanings set forth below:
 
“ Collateral ” means all of the collateral identified on Exhibit A hereto, as well as all of Oblogors’ tangible and intangible personal property assets, including, but not limited to, all of the following: (i) all accounts, cash and currency, chattel paper, deposit accounts, documents, equipment, fixtures, general intangibles, instruments, intellectual property, inventory, investment property, Negotiable Collateral, loans receivable, motor vehicles, Pledged Equity, goods, supporting obligations, Obligors’ Books, and such other assets of Obligors as may hereafter arise or Obligors may hereafter acquire or as to which the Secured Party may from time-to-time be granted a security interest, and (ii) the proceeds of any of the foregoing, including, but not limited to, proceeds of insurance covering the foregoing or any portion thereof; provided , however , that notwithstanding anything to the contrary contained in this Agreement, the Collateral does not include any “hazardous waste” as that term is defined under 42 U.S.C. section 6903(5), as such section may be from time to time amended, or under any regulations thereunder.

“ Obligors’ Books ” means and includes all of Obligors’ books and records, including, but not limited to, all records, ledgers and computer programs, disk or tape files, printouts and other computer-prepared information indicating, summarizing or evidencing the Collateral.
 
 
“ Equity Interests ” means, with respect to any person, all of the shares of capital stock of (or other ownership or profit interests in) such person, all of the warrants, options or other rights for the purchase or acquisition from such person of shares of capital stock of (or other ownership or profit interests in) such person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such person or warrants, rights or options for the purchase or acquisition from such person of such shares (or such other interests), and all of the other ownership or profit interests in such person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
 
“ Event of Default ” has the meaning specified in Section 6 of this Agreement.

“ Negotiable Collateral ” means and includes all of Obligors’ presently existing and hereafter acquired or arising letters of credit, advices of credit, promissory notes, drafts, instruments, documents, equity interests in any entity, leases of personal property and chattel paper, as well as Obligors’ Books relating to any of the foregoing.

“ Obligations ” means and includes any and all present or future indebtedness or obligations of Debtor owing to the Secured Party under the Note and the other Subscription Documents, including, without limitation, (i) any amendments to any of the foregoing and (ii) all interest and other payments required thereunder that are not paid when due, and (iii) all of the Secured Party Expenses which Debtor is required to pay or reimburse by this Agreement, by law, or otherwise.

“ Permitted Liens ” means (i) statutory liens of landlords and liens of carriers, warehousemen, bailees, mechanics, materialmen and other like liens imposed by law, created in the ordinary course of business and securing amounts not yet due (or which are being contested in good faith, by appropriate proceedings or other appropriate actions which are sufficient to prevent imminent foreclosure of such liens), and with respect to which adequate reserves or other appropriate provisions are being maintained by Debtor in accordance with generally accepted accounting principles (“ GAAP ”) , (ii) deposits made (and the liens thereon) in the ordinary course of business of Debtor (including, without limitation, security deposits for leases, indemnity bonds, surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, contracts (other than for the repayment or guarantee of borrowed money or purchase money obligations), statutory obligations and other similar obligations arising as a result of progress payments under government contracts, (iii) liens for taxes not yet due and payable or which are being contested in good faith and with respect to which adequate reserves are being maintained by Debtor in accordance with GAAP, (iv) purchase money liens relating to the acquisition of equipment, machinery or other goods of Debtor approved in writing by the Secured Party (which approval shall not be unreasonably withheld, conditioned or delayed) and (v) liens in favor of the Secured Party under the Subscription Documents.

“ Pledged Equity ” means, with respect to each Obligor, 100% of the issued and outstanding Equity Interests of each Subsidiary that is directly owned, or will be owned, by such Obligor, excluding, however, the to-be-owned shares of Ingest, SPRL, including the Equity Interests of the Subsidiaries currently owned by such Obligor as set forth on Schedule 1 hereto, in each case together with the certificates (or other agreements or instruments), if any, representing such shares, and all options and other rights, contractual or otherwise, with respect thereto, including, but not limited to, the following:
 
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(1) all Equity Interests representing a dividend thereon, or representing a distribution or return of capital upon or in respect thereof, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder thereof, or otherwise in respect thereof; and

(2) in the event of any consolidation or merger involving the issuer thereof and in which such issuer is not the surviving person, all shares of each class of the Equity Interests of the successor person formed by or resulting from such consolidation or merger, to the extent that such successor person is a direct subsidiary of an Obligor.
 
“ Secured Party Expenses ” means and includes (i) all costs or expenses required to be paid by Debtor under this Agreement that are instead paid or advanced by the Secured Party, including without limitation, all taxes, liens, securities interests, encumbrances or other claims at any time levied or placed on the Collateral, (ii) all reasonable costs and expenses incurred to correct any default or enforce any provision of this Agreement, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale or advertising to sell all or any part of the Collateral, irrespective of whether a sale is consummated, and (iii) all reasonable costs and expenses (including reasonable attorney’s fees) incurred by the Secured Party in enforcing or defending this Agreement, irrespective of whether suit is brought.

“ Subsidiaries ” means those subsidiaries of the Debtor listed as subsidiaries on Schedule 1 hereto.

2.            Construction .  Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and vice versa, to the part include the whole, “including” is not limiting, and “or” has the inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.  Section references are to this Agreement, unless otherwise specified.
 
3.            Creation of Security Interest . In order to secure Debtor’s timely payment of the Obligations and timely performance of each and all of its covenants and obligations under this Agreement and any other document, instrument or agreement executed by Debtor or delivered by Debtor to the Secured Party in connection with the Obligations, each Obligor hereby unconditionally and irrevocably grants, pledges and hypothecates to the Secured Party a continuing first-priority security interest in and to, a lien upon, assignment of, and right of set-off against, all presently existing and hereafter acquired or arising Collateral.  Such security interest shall attach to all Collateral without further act on the part of the Secured Party or Obligors.
 
 
4.
Filings; Further Assurances .
 
(a)            General .  The Secured Party is authorized to file a UCC-1 Financing Statement with the Secretary of State of the State of Nevada, with respect to the Debtor, and, with respect to the other Obligors, with the Secretaries of State or other applicable offices in the jurisdictions where the other Obligors, as indicated on Schedule 1, are organized, evidencing its security interest in the Collateral.  Obligors also authorize the filing by the Secured Party of such other UCC financing statements, continuation financing statements, fixture filings, security agreements, mortgages, deeds of trust, chattel mortgages, assignments, motor vehicle lien acknowledgments and other documents as the Secured Party may reasonably require in order to perfect, maintain, protect or enforce its security interest in the Collateral or any portion thereof and in order to fully consummate all of the transactions contemplated under this Agreement.  Subject to the foregoing, if so requested by the Secured Party at any time hereafter, each Obligor shall promptly execute and deliver to the Secured Party such fixture filings, security agreements, mortgages, deeds of trust, chattel mortgages, assignments, motor vehicle lien acknowledgments and other documents as the Secured Party may reasonably require from such Obligor in order to perfect, maintain, protect or enforce its rights under this Agreement.  Obligors shall promptly deliver to the Secured Party all certificates and instruments constituting the Pledged Equity in suitable form for transfer by delivery and accompanied by duly executed instruments of transfer or assignment in blank.  Each Obligor hereby irrevocably makes, constitutes and appoints the Secured Party as such Obligor’s true and lawful attorney with power, upon Obligor’s failure or refusal to promptly comply with its obligations in this Section 4(a), to sign the name of Obligor on any of the above-described documents or on any other similar documents which need to be executed, recorded or filed in order to perfect, maintain, protect or enforce the Secured Party’s security interest in the Collateral.
 
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(b)            Additional Matters .  Without limiting the generality of Section 4(a), each Obligor will at the reasonable written request of the Secured Party, appear in and defend any action or proceeding which is reasonably expected to have a material and adverse effect with respect to such Obligor’s title to, or the security interest of the Secured Party in, the Collateral.
 
5.               Representations, Warranties and Agreements . Each Obligor represents, warrants and agrees as follows:
 
(a)            No Other Encumbrances .  Debtor and each other Obligor has good and marketable title to its Collateral, free and clear of any liens, claims, encumbrances and rights of any kind, except the Permitted Liens or as otherwise approved in writing by the Secured Party, and has the right to pledge, sell, assign or transfer the same.  There exists no adverse claim with respect to the Pledged Equity of such Obligor.
 
(b)            Authorization of Pledged Equity . All Pledged Equity is duly authorized and validly issued, is fully paid and, to the extent applicable, nonassessable and is not subject to the preemptive rights of any person.
 
(c)            Security Interest/Priority . This Agreement creates a valid security interest in favor of the Secured party in the Collateral of such Obligor and, when properly perfected by filing, shall constitute a valid and perfected, first priority security interest in such Collateral (including all uncertificated Pledged Equity consisting of partnership or limited liability company interests that do not constitute securities), to the extent such security interest can be perfected by filing under the UCC, free and clear of all liens except for liens permitted by the Securities Purchase Agreement. The taking possession by the Secured Party of the certificated securities (if any) evidencing the Pledged Equity and all other Instruments constituting Collateral will perfect and establish the first priority of the Secured Party’s security interest in all the Pledged Equity evidenced by such certificated securities and such instruments. With respect to any Collateral consisting of a deposit account, securities entitlement or held in a securities account, upon execution and delivery by the applicable Obligor, the applicable depository bank or securities intermediary and the Secured Party of an agreement granting control to the Secured Party over such Collateral, the Secured Party shall have a valid and perfected, first priority security interest in such Collateral.
 
(d)            Consents; Etc. There are no restrictions in any organizational document governing any Pledged Equity or any other document related thereto which would limit or restrict (i) the grant of a lien pursuant to this Agreement on such Pledged Equity, (ii) the perfection of such lien or (iii) the exercise of remedies in respect of such perfected lien in the Pledged Equity as contemplated by this Agreement. Except for (i) the filing or recording of UCC financing statements, (ii) the filing of appropriate notices with the United States Patent and Trademark Office and the United States Copyright Office, (iii) obtaining control to perfect the liens created by this Agreement (to the extent required under Section 4(a) hereof), (iv) such actions as may be required by laws affecting the offering and sale of securities, (v) such actions as may be required by applicable foreign laws affecting the pledge of the Pledged Equity of foreign Subsidiaries and (vi) consents, authorizations, filings or other actions which have been obtained or made, no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder, member or creditor of such Obligor), is required for (A) the grant by such Obligor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by such Obligor, (B) the perfection of such security interest (to the extent such security interest can be perfected by filing under the UCC, the granting of control (to the extent required by Section 4(a) hereof) or by filing an appropriate notice with the United States Patent and Trademark Office or the United States Copyright Office) or (C) the exercise by the Secured party of the rights and remedies provided for in this Agreement.
 
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(e)            Right to Inspect the Collateral .  The Secured Party shall have the right, during Debtor’s usual business hours and upon reasonable advance notice, to inspect and examine the Collateral.  Debtor agrees that any reasonable expenses incurred by the Secured Party in connection with this Section 5(b) during the continuance of an Event of Default shall constitute Secured Party Expenses.
 
(f)            Negative Covenants .   Obligors shall not (i) sell, lease or otherwise dispose of, relocate or transfer, any of the Collateral, except dispositions of Collateral that is worn out, obsolete or no longer necessary in the business of Obligors, (ii) allow any liens on the Collateral except the Permitted Liens or (iii) change their names or add any new fictitious name without the written consent of the Secured Party.
 
(g)            Relocation of Principal Place of Business .  The principal place of business of Debtor, and the addresses at which the Collateral is located 1708 Jaggie Fix Way, Lexington, Kentucky 40511, and suvh other address as indicated on Schedule 5(e) hereto.  Debtor shall not, without at least thirty (30) days prior written notice to the Secured Party, relocate such principal place of business or the Collateral, with no relocation being permitted outside the United States in any event.
 
(h)            Further Information .  Obligors shall promptly supply the Secured Party with such information concerning Obligors’ business as the Secured Party may reasonably request from time-to-time hereafter, and shall within five (5) business days of obtaining knowledge thereof, notify the Secured Party of any event which constitutes an Event of Default.
 
(i)            Solvency .  Each Obligor is now and shall be at all times hereafter able to pay its debts (including trade debts) as they mature.
 
(j)            Secured Party Expenses .  Debtor shall, within fifteen (15) business days of written demand from the Secured Party accompanied by adequate documentation of such expenses, reimburse the Secured Party for all sums expended by it which constitute Secured Party Expenses and, in the event that Debtor does not pay any Secured Party Expenses payable to a third party within fifteen (15) business days after notice thereof, then the Secured Party may immediately and without further notice pay such Secured Party Expenses on Debtor’s behalf.  All such expenses shall become a part of the Obligations and, at the Secured Party’s option, will (i) be payable on demand or (ii) be added to the balance of the Note and be payable proportionately with any installment payments that become due during the remaining term of the Note or otherwise be treated as a balloon payment which will be due and payable at the maturity of the Note.  This Agreement shall also secure payment of those amounts.
 
(k)              Commercial Tort Claims .   Obligors have no pending commercial tort claim (as a plaintiff) against any individual or entity (a “ Commercial Claim ”).  Obligors shall promptly deliver to the Secured Party notice of any Commercial Claim that an Obligor may bring against any individual or entity, together with such information with respect thereto as the Secured Party may reasonably request.  Within ten (10) days after a written request by the Secured Party, Obligors shall grant the Secured Party a security interest in any pending Commercial Claim to the extent such security interest is permitted by applicable law.
 
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(l)            Reliance by the Secured Party; Representations Cumulative .  Each representation, warranty and agreement contained in this Agreement shall be conclusively presumed to have been relied on by the Secured Party regardless of any investigation made or information possessed by the Secured Party.  The representations, warranties and agreements set forth herein shall be cumulative and in addition to any and all other representations, warranties and agreements set forth in the Subscription Documents or any other documents created after the Closing Date and signed by Obligors.
 
6.             Events of Default .  The occurrence of any Event of Default under the Note, after the expiration of any applicable grace or cure period, shall constitute an “ Event of Default ” by Obligors under this Agreement.
 
7.
Rights and Remedies .
 
(a)
Rights and Remedies of the Secured Party .
 
(i)            Upon the occurrence and during the continuance of an Event of Default, without notice of election and without demand, the Secured Party may cause any one or more of the following to occur, all of which are authorized by Obligors:
 
(A)            The Secured Party may make such payments and do such acts as it reasonably considers necessary to protect its security interest in the Collateral.  Obligors agree to promptly assemble and make available the Collateral if the Secured Party so requires.  Obligors authorize the Secured Party to enter the premises where the Collateral is located, take and maintain possession of the Collateral, or any part thereof, and pay, purchase, contest or compromise any encumbrance, claim, right or lien which, in the reasonable opinion of the Secured Party, appears to be prior or superior to its security interest in violation of this Agreement, and to pay all reasonable expenses incurred in connection therewith.
 
(B)            The Secured Party shall be automatically deemed to be granted a license or other appropriate right to use, without charge or representation or warranty, Obligors’ labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, and any other property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale and selling any Collateral.
 
(C)            The Secured Party may ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale and sell (in the manner provided for herein) the Collateral.
 
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(D)            The Secured Party may sell the Collateral at either a public or private sale, or both (which in the case of a private sale of Pledged Equity, shall be to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof), by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Obligors’ premises) as is commercially reasonable (it not being necessary that the Collateral be present at any such sale).  In the case of a sale of Pledged Equity, the Secured party shall have no obligation to delay sale of any such securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act of 1933. Each Obligor further acknowledges and agrees that any offer to sell any Pledged Equity which has been (i) publicly advertised on a bona fide basis in a newspaper or other publication of general circulation in the financial community of New York, New York (to the extent that such offer may be advertised without prior registration under the Securities Act of 1933), or (ii) made privately in the manner described above shall be deemed to involve a “public sale” under the UCC, notwithstanding that such sale may not constitute a “public offering” under the Securities Act of 1933, and the Secured Party may, in such event, bid for the purchase of such securities
 
(E)            The Secured Party shall be entitled to give notice of the disposition of the Collateral as follows:  (1) the Secured Party shall give Obligors a notice in writing of the time and place of public sale, or, if the sale is a private sale or some other disposition other than a public sale is to be made of the Collateral, the time on or after which the private sale or other disposition is to be made, (2) the notice shall be personally delivered or mailed, postage prepaid, to Obligors at least ten (10) days before the date fixed for the sale, or at least ten (10) days before the date on or after which the private sale or other disposition is to be made, unless the Collateral is perishable or threatens to decline speedily in value in which case the Secured Party shall use commercially reasonable efforts to provide such notice to Obligors as far in advance of such disposition as is practicable, and (3) if the sale is to be a public sale, the Secured Party shall also give notice of the time and place by publishing a notice at least twice, the first at least twenty (20) days before the date of the sale, in a newspaper of general circulation, if one exists, in the county in which the sale is to be held.
 
(F)            The Secured Party may purchase all or any portion of the Collateral at any public sale by credit bid or other appropriate payment therefor.
 
(G)            To the extent permitted by applicable law, the Secured Party shall have the following rights and remedies regarding the appointment of a receiver:  (1) the Secured Party may have a receiver appointed as a matter of right, (2) the receiver may be an employee of  the Secured Party and may serve without bond, and (3) all fees of the receiver and his or her attorney shall be Secured Party Expenses and become part of the Obligations and shall be payable on demand, with interest at the Rate specified in the Note from the date of expenditure until repaid.
 
(H)            The Secured Party, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral.  The Secured Party may at any time, in its reasonable discretion, transfer any Collateral into its own name or that of its nominee(s) and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Obligations or apply it to payment of the Obligations in such order of preference as the Secured Party may determine.  Insofar as the Collateral consists of accounts, general intangibles, loans receivable, insurance policies, instruments, chattel paper, choses in action, or similar property, the Secured Party may demand, collect, issue receipts for, settle, compromise, adjust, sue for, foreclose, or otherwise realize on the Collateral as the Secured Party may determine (in its reasonable discretion), whether or not the Obligations are then due.  For these purposes, the Secured Party may, on behalf of and in the name of Obligors, (1) receive, open and dispose of mail addressed to Obligors, (2) change any address to which mail and payments are to be sent, and (3) endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to the payment, shipment, or storage of any Collateral.  To facilitate collection, the Secured Party may notify account debtors and obligors on any Collateral to make payments directly to the Secured Party.
 
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(ii)            The Secured Party may deduct from the proceeds of any sale of the Collateral all Secured Party Expenses incurred in connection with the enforcement and exercise of any of the rights and remedies of the Secured Party provided for herein, irrespective of whether suit is commenced.  If such deduction does not occur (in the Secured Party’s reasonable discretion), upon demand, Obligors shall pay all of such Secured Party Expenses.  Any deficiency which exists after disposition of the Collateral as provided herein will be paid immediately by Obligors, and any excess that exists will be returned, without interest and subject to the rights of third parties, to Obligors by the Secured Party; provided , however , that if any excess exists at a time when any of the Obligations remain outstanding, such excess shall instead remain as part of the Collateral and continue to be subject to the security interest in Section 3(a) above until such time as all of the Obligations have been fully satisfied or otherwise terminated.
 
(iii)            Voting and payment Rights in Respect of the Pledged Equity .
 
(A)            So long as no Event of Default shall exist, each Obligor may (1) exercise any and all voting and other consensual rights pertaining to the Pledged Equity of such Obligor or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Securities Purchase Agreement and (2) receive and retain any and all dividends (other than stock dividends and other dividends constituting Collateral which are addressed hereinabove), principal or interest paid in respect of the Pledged Equity to the extent they are allowed under the Securities Purchase Agreement; and

(B)            During the continuance of an Event of Default, (1) all rights of an Obligor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to clause (A)(1) above shall cease and all such rights shall thereupon become vested in the Secured Party which shall then have the sole right to exercise such voting and other consensual rights, (2) all rights of an Obligor to receive the dividends, principal and interest payments which it would otherwise be authorized to receive and retain pursuant to clause (A)(2) above shall cease and all such rights shall thereupon be vested in the Secured Party which shall then have the sole right to receive and hold as Collateral such dividends, principal and interest payments, and (3) all dividends, principal and interest payments which are received by an Obligor contrary to the provisions of clause (B)(2) above shall be received in trust for the benefit of the Secured Party, shall be segregated from other property or funds of such Obligor, and shall be forthwith paid over to the Secured Party as Collateral in the exact form received, to be held by the Secured Party as Collateral and as further collateral security for the Secured Obligations.

(b)            Rights and Remedies Cumulative .  The rights and remedies of the Secured Party under this Agreement and any other agreements and documents delivered or executed in connection with the Obligations shall be cumulative.  The Secured Party shall also have all other rights and remedies not inconsistent herewith as are provided under applicable law, or in equity.  No exercise by the Secured Party of any one right or remedy shall be deemed an election.
 
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8.            Additional Waivers .  The Secured Party shall not in any way or manner be liable or responsible for (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency or other person whomsoever, except to the extent that such loss, damage, liability, cost or expense has resulted from the gross negligence or willful misconduct of the Secured Party or its affiliates.  If the Secured Party at any time has possession of any Collateral, whether before or after an Event of Default, the Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if the Secured Party takes such action for that purpose as Obligors shall request or as the Secured Party, in its reasonable discretion, shall deem appropriate under the circumstances, but failure to honor any request by Obligors shall not of itself be deemed to be a failure to exercise reasonable care.  The Secured Party shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve, or maintain any security interest given to secure the Obligations.
 
9.            Notices .  All notices or demands by any party relating to this Agreement shall be made in writing as provided in the Note, and with respect to the Obligors other than the Debtor, such notices shall be delivered to the addresses indicated herein.  Each party shall provide written notice to the other party of any change in address.
 
10.         Choice of Law .  The validity of this Agreement, its construction, interpretation and enforcement, and the rights of the parties hereunder and concerning the Collateral, shall be determined under, governed by, and construed in accordance with the laws of the state of New York as applied to contracts made and to be fully performed in such state, without regard to the conflicts of laws provisions thereof, except to the extent that the validity, perfection or enforcement of a security interest hereunder in respect of any Collateral is governed by the laws of the state of New York or some other state, in which case such laws shall govern.
 
 
11.            Waiver of Jury Trial .  THE OBLIGORS EACH WAIVE, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT.
 
12.            General Provisions .
 
(a)            Effectiveness .  This Agreement shall be binding and deemed effective when executed by Obligors and the Secured Party.
 
(b)            Successors and Assigns .  This Agreement shall bind and inure to the benefit of the successors and permitted endorsees, transferees and assigns of the Secured Party.  Obligors shall not assign this Agreement or any rights or obligations hereunder, and any such assignment shall be absolutely void.
 
(c)            Section Headings .  Section headings are for convenience only.
 
(d)            Interpretation .  No uncertainty or ambiguity herein shall be construed or resolved against the Secured Party or Obligors, whether under any rule of construction or otherwise.  This Agreement shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties.
 
(e)            Severability of Provisions .  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
 
9
 
(f)            Entire Agreement; Amendments .  This Agreement and the documents referenced herein contain the entire understanding of the parties with respect to the subject matter covered herein and supersede all prior agreements, negotiations and understandings, written or oral, with respect to such subject matter.  No provision of this Agreement shall be waived or amended other than by an instrument in writing signed by Obligors and the Secured Party.
 
(g)            Good Faith .  The parties intend and agree that their respective rights, duties, powers, liabilities and obligations shall be performed, carried out, discharged and exercised reasonably and in good faith.
 
(h)            Waiver and Consent .  No delay or omission on the part of the Secured Party in exercising any right shall operate as a waiver of such right or any other right.  A waiver by the Secured Party of a provision of this Agreement shall not prejudice or constitute a waiver of the Secured Party’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement.  No prior waiver by the Secured Party, nor any course of dealing between the Secured Party and Obligors, shall constitute a waiver of any of the Secured Party’s rights or of any of Obligors’ obligations as to any future transactions.  Whenever the consent of the Secured Party is required under this Agreement, the granting of such consent by the Secured Party in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the reasonable discretion of the Secured Party.
 
(i)            Counterparts .  This Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same agreement.
 
(j)            Termination .            Upon full satisfaction or other termination of the Obligations (i) the Secured Party shall release and return to Obligors all of the Collateral and any and all certificates and other documentation representing or relating to the Collateral and (ii) the security interests provided for under this Agreement shall be terminated and of no further force and effect.  At Debtor’s expense, the Secured Party shall take all actions reasonably requested by Debtor in connection with the foregoing.
 
(k)            Consent of Obligors as Issuers of Pledged Equity . Each Obligor/issuer of Pledged Equity party to this Agreement hereby acknowledges, consents and agrees to the grant of the security interests in such Pledged Equity pursuant to this Agreement, together with all rights accompanying such security interest as provided by this Agreement and applicable law, notwithstanding any anti-assignment provisions in any operating agreement, limited partnership agreement or similar organizational or governance documents of such issuer.
 

[remainder of page intentionally left blank]
 
10
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized persons on the date first written above.

 
   
Obligors
     
   
The Debtor:
     
   
Nexeon Medsystems Inc
     
 
By:
Will Rosellini
 
Name:
Will Rosellini
 
Title:
CEO

The Other Obligors
 
 
Nexeon Medsystems Puerto Rico
Pulsus Medical LLC,
Operating Company Corporation,
a Kentucky limited liability company
a Puerto Rico stock corporation
 
 
By:
/s/ Will Rosellini
 
By:
/s/ Will Rosellini
 
Name:
Will Rosellini
 
Name:
Will Rosellini
 
Title:
  CEO
 
Title:
  CEO
     
   
 
Rosellini Scientific LLC,
 
a Texas limited liability company
   
 
By:
/s/ Will Rosellini
 
 
Name:
Will Rosellini
 
 
Title:
  CEO
 
   

 
   
The Secured Party:
     
   
Leonite Capital LLC
     
 
By:
/s/Avrohom Geller
 
Name:
Avrohom Geller
 
Title:
CIO
 
11
 
SCHEDULE 1

PLEDGED EQUITY
 
 
 
Name of
Subsidiary
Jurisdiction
of
Organization
Number of
Shares
Certificate
Number
Percentage
Ownership
Percentage
Pledged
Nexeon
Medsystems
Europe, SARL
 
Luxembourg
25,000
1
100%
100%
Nexeon
Medsystems
Belgium, SPRL
 
Belgium
107,154
N/A
ownership
reflected
on share
register
100%
100%
Nexeon
Medsystems
Puerto Rico
Operating
Company
Corporation
 
 
 
Puerto Rico
N/A – wholly owned subsidiary formed by Nexeon MedSystems Inc.
N/A
100%
100%
Pulsus Medical
LLC
 
Kentucky
N/A – wholly owned subsidiary formed by Nexeon MedSystems Inc.
N/A
100%
100%
Nuviant Medical
Inc
Nevada
1,735,000
Certificate not issued
10%
100%
MicroTransponder,
Inc.
Delaware
267
Certificate not issued
Less than 1%
100%
 
12
 
Schedule 5(e)
 
Locations of Collateral/Addresses of Obligors

Nexeon Medsystems, Inc.
1910 Pacific Avenue, Suite 20000
Dallas, TX 75201

Nexeon Medsystems Belgium, SPRL
Headquarters: Nexeon MedSystems Belgium SPRL,
Rue Bois Saint-Jean 15/1, 4102 Liege, Belgium
Delivery address: Waterfront, Galileilaan 18, 2845 Niel, Belgium

Nexeon Medsystems Europe, SARL
33, rue du Puits Romain, L-8070 Bertrange, Grand Duchy of Luxembourg

Nexeon Medsystems Puerto Rico Operating Company, Inc.
Antiguq Pentinciaria Estata
Carr #21 Bo Monacillos
Rio Piedras, Puerto Rico 00927

Nexeon Medsystems Belgium, SPRL
Headquarters: Nexeon MedSystems Belgium SPRL, Rue Bois Saint-Jean 15/1, 4102
Liege, Belgium,
Delivery address: Waterfront, Galileilaan 18, 2845 Niel, Belgium

Pulsus Medical, LLC
1708 Jaggie Fox Way
Lexington, KY 40511
 
13
 
EXHIBIT A
 
COLLATERAL
 
 
1 .        All accounts, chattel paper, contracts, contract rights, accounts receivable, tax refunds, tax credits, Note receivable, Pledged Equity, documents, other choses in action and general intangibles, including, but not limited to, proceeds of inventory and returned goods and proceeds from the sale of goods and services, and all rights, liens, securities, guaranties, remedies and privileges related thereto, including the right of stoppage in transit and rights and property of any kind forming the subject matter of any of the foregoing;
 
2.          All time, savings, demand, certificate of deposit or other accounts in the name of Obligor or in which Obligor has any right, title or interest, including but not limited to all sums now or at any time hereafter on deposit, and any renewals, extensions or replacements of and all other property which may from time to time be acquired directly or indirectly using the proceeds of any of the foregoing;
 
3.          All inventory and equipment of every type or description wherever located, including, but not limited to all raw materials, parts, containers, work in process, finished goods, goods in transit, wares, merchandise furniture, fixtures, hardware, machinery, tools, parts, supplies, automobiles, trucks, other intangible property of whatever kind and wherever located associated with the Obligor's business, tools and goods returned for credit, repossessed, reclaimed or otherwise reacquired by Obligor;
 
4.         All documents of title and other property from time to time received, receivable or otherwise distributed in respect of, exchange or substitution for or addition to any of the foregoing including, but not limited to, any documents of title;
 
5 .         All know-how, information, permits, patents, copyrights, goodwill, trademarks, trade names, licenses and approvals held by Obligor, including all other intangible property of Obligor;
 
6.         All assets of  any type or description  that may at any time be assigned or delivered to or come into possession of Obligor for any purpose for the account of Obligor or as to which Debtor may have any right, title, interest or power, and property in the possession or custody of or in transit to anyone for the account of Obligor, as well as all proceeds and products thereof and accessions and annexations thereto; and
 
7.         All proceeds (including but not limited to insurance proceeds) and products of and accessions and annexations to any of the foregoing.
 
 
 
EXHIBIT 10.6




SHARE PLEDGE AGREEMENT

in respect of the shares in
Nexeon Medsystems Belgium SPRL



between


Rosellini Scientific LLC
Nexeon Medsystems Europe S.à.r.l.

as Pledgor


and

Leonite Capital LLC

as Pledgee





Date: August 18, 2017
 
i
 
TABLE OF CONTENTS
 
 
1.            DEFINITIONS - INTERPRETATION
2
     
1.1
Definitions
2
1.2
Interpretation
3
   
2.            PLEDGE
5
     
2.1
Creation of pledge
5
2.2
Undertaking to pledge
5
2.3
Form
5
   
3.            RECORDATION AND DECLARATION
6
     
3.1
Recordation of Pledge
6
3.2
Declaration by the Company
6
   
4.            SCOPE OF THE PLEDGE
7
     
4.1
Continuing security
7
4.2
Rights additional
7
4.3
Preservation of security
7
   
5.            ANCILLARY RIGHTS ATTACHED TO THE SHARES
8
     
5.1
Voting rights
8
5.2
Cash and non-cash returns on the Shares
8
5.3
Subscription rights and contribution calls
9
   
6.            REPRESENTATIONS AND WARRANTIES
9
     
6.1
Representations and warranties relating to the Pledgors
9
6.2
Representations and warranties relating to the Shares
10
6.3
Representations and warranties relating to the Pledge
10
   
7.            COVENANTS OF THE PLEDGORS
11
     
7.1
Affirmative covenants
11
7.2
Negative covenants
11
   
8.            ENFORCEMENT
11
   
9.            APPLICATION OF PROCEEDS
13
   
10.          DISCLAIMER
13
   
11.          DISCHARGE OF PLEDGE
14
     
11.1
Release
14
11.2
Retention of security
14
   
12.          POWER OF ATTORNEY
14
     
12.1
Appointment
14
12.2
Ratification
14
   
13.          EVIDENCE OF DEBT
15
   
14.          WAIVER
15
   
15.          MISCELLANEOUS PROVISIONS
15
     
15.1
Notices
15
15.2
Costs and expenses
15
 
ii
 
15.4
No implied waiver
15
15.5
Severability
16
15.6
Benefit of this Agreement
16
15.7
Assignment
16
15.8
Counterparts
16
15.9
Governing law
16
15.10
Jurisdiction
16
15.11
Waiver of immunity
17
   
SCHEDULE 1. DECLARATION BY THE COMPANY
19
 
iii
 
THIS SHARE PLEDGE AGREEMENT is dated August 18, 2017 and is made between:

BETWEEN:

1.
Rosellini Scientific LLC , a limited liability company organized under the laws of the State of Texas, United States of America, having its seat at 2820 Lynn Dell Tool, Dallas, Texas 75143, Division of Corporations under number 46.0827294, acting as pledgor;

hereinafter referred to as the “ Pledgor ”, it being understood that upon the exercise of the right to purchase, granted by Rosellini Scientific LLC to the benefit of Nexeon Medsystems Europe S.à.r.l. by means of an acquisition agreement dated 10 January 2017 (the “ Right to Purchase ”), Nexeon Medsystems Europe S.à.r.l. shall be the legal and beneficial owner of 100% of the issued share capital of the Company (as defined below) and all references in this Agreement to Pledgor shall be deemed to be a reference to:
 
Nexeon Medsystems Europe S.à.r.l. , a limited liability company organized under the laws of the Grand Dutchy of Luxembourg, having its registered address at 33, rue du Puits Romain, L-8070 Bertrange, registered with the Luxembourg Trade and Companies register under number B 210009,
 

AND

2.
Leonite Capital LLC. , a limited liability company organized under the laws of the  State of Delaware, United States of America, having its seat at 1 Hillcrest Centre Drive, Suite 232, Spring Valley, New York 10977, acting as pledgee

Hereinafter referred to as Leonite Capital or as the “ Pledgee ”


The Pledgor and the Pledgee are hereinafter collectively referred to as the “ Parties ”.


WHEREAS
 
A.
Reference is made to a $1,120,000 Senior Secured Convertible Promissory Note issued by Nexeon Medsystems Inc. (the “ Issuer ”) to Leonite Capital LLC as lender, as documented by (i) that certain Securities Purchase Agreement, dated on or about the date hereof between the Issuer and the Pledgee, (ii) that certain senior secured convertible promissory note by the Issuer in favor of Pledgee, dated on or about the date hereof, and (iii) the security agreement, dated on or about the date hereof, among the Issuer and certain of its affiliates and the Pledgee, (iv) certain warrants granted by the Issuer in favor of the Pledgee, and (v) such other subscription documents as are referenced in the foregoing documents (collectively, the “ Note Subscription Documents ”).
 
1
 
B.
The Parties have agreed that the Pledgor will create the security rights purported to be created hereunder in favor of the Pledgee.
 
C.
The Pledgor holds all shares in the Company (as defined below), which represent 100% of its entire issued share capital.
 
D.
It is a condition precedent under the Note Subscription Documents that the Pledgor enters into this Agreement.


NOW, THEREFORE , THE PARTIES HAVE AGREED AS FOLLOWS:


1.
DEFINITIONS - INTERPRETATION

1.1
Definitions

a)
Capitalized terms used in this Agreement, including the preamble and the recitals, shall have the meaning specified in the Note Subscription Documents, except where the context requires otherwise or when defined herein.

b)
In addition the following terms shall have the following meanings for the purpose of this Pledge Agreement:
 
 
Agreement
the present share pledge agreement (including its schedules).
     
 
Ancillary Rights
all rights attached to any of the Shares or the Future Shares (as the case may be), including (without limitation) dividends or redemption proceeds or any other values, securities, rights or property received in respect of such shares, and all warrants, options and other rights to subscribe for, purchase or otherwise acquire any shares in the Company.
     
 
Collateral Act
the Act of 15 December 2004 on financial collateral ( Wet van 15 december 2004 betreffende financiële zekerheden/ Loi du 15 décembre 2004 relative aux sûretés financières ), as amended from time to time.
     
 
Company
 
Nexeon Medsystems Belgium SPRL , a private limited liability company ( société privée à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid ) organized under the laws of Belgium, having its registered office at Rue du Bois Saint-Jean, 15/1, 4102 Ougrée and registered with the Crossroads Bank for Enterprises under number 0525.673.682.
 
2
 
 
Encumbrance
any mortgage, charge, pledge, lien, security interest, attachment ( saisie / beslag ) or similar restriction of any kind or other security interest securing any obligation of any person or any other agreement, undertaking or arrangement having a similar effect.
     
 
Enforcement Event
an Event of Default within the meaning of the Note Subscription Documents which is continuing unremedied and unwaived.
     
 
Future Shares
any shares in the Company that the Pledgor may subscribe to or otherwise acquire after the date hereof, together with the Ancillary Rights attached to such shares.
     
 
Pledge
the right of pledge ( pand/gage ) on shares created or expressed to be created by this Agreement.
     
 
Pledged Assets
the Shares and the Future Shares.
     
 
Shares
107,154 registered shares, in the share capital of the Company, representing 100% of the entire issued share capital of the Company, together with the Ancillary Rights attached to such shares.
     
 
Secured Obligations
any and all obligations and liabilities, whether present or future, actual or contingent, and whether incurred solely or jointly and whether as principal, guarantor or in some other capacity, owed to the Pledgee (i) by the Issuer under or in connection with the Note Subscription Documents, and (ii) by the Pledgor under or in connection with this Agreement, such obligations and liabilities to be increased by interests, commissions, fees and all other costs, charges and incidental amounts related or in connection with the foregoing.


1.2
Interpretation

a)
Unless indicated to the contrary in this Agreement, a reference to:

(i)
a provision of law shall be construed to refer to that provision as amended or re-enacted;
(ii)
a person includes its successors, transferees and assignees; and
(iii)
the plural form shall be construed to include the singular and vice versa, and words denoting one gender shall be construed to include the other.

b)
No provision of this Agreement shall be interpreted against a Party solely because that Party was responsible for drafting, or is relying on, that particular provision.
 
3
 
c)
English terms are used in this Agreement only to describe Belgian legal concepts, and the meaning of these words under any foreign law shall be disregarded.

d)
In respect of any jurisdiction other than Belgium, any Belgian legal concept referred to in this Agreement shall be deemed to refer in that jurisdiction to the concept that most closely approximates the Belgian legal concept.

e)
Titles and headings in this Agreement are used for convenience and reference purposes only and in no way affect the meaning, construction or interpretation of any provision of this Agreement.

f)
A reference to any " Pledged Asset " is a reference to that Pledged Asset in whole or in part and includes all rights attached to that Pledged Asset, including dependent rights and ancillary rights.

g)
A reference to " Pledge " or a " right of pledge " is, unless the context requires otherwise, a reference to a right of pledge purported to be created under this Agreement over each individual asset falling within the scope of the definition of Pledged Assets.

h)
A reference to a " Pledgee " is also a reference to any successor or assignee of the Pledgee, and a reference to the " Pledgor " is also a reference to any successor or assignee of the Pledgor and the Pledgor as successor or assignee of any other party.

i)
References to this Pledge, this Agreement, the Note Subscription Documents or any other document or agreement (or to any specified provision thereof) shall be construed as references to this Pledge, this Agreement, the Note Subscription Documents, that document or agreement (including for the purpose of the Secured Obligations and without prejudice to any restriction on amendments) as in force for the time being and as, from time to time, amended, modified, restated, novated, varied, extended or supplemented, which the Pledgor specifically agrees and acknowledges, in relation to any relevant document, may include, without limitation (i) any additional facilities and any increase in any amount made available thereunder and/or any alteration and/or addition to the purposes for which any such amount, or increased amount, may be used, (ii) any facilities provided in substitution or in addition to the facilities originally made available thereunder, (iii) any rescheduling of the indebtedness incurred thereunder whether in isolation or in connection with any of the foregoing, and (iv) any combination of any of the foregoing in accordance with the terms thereof or, as the case may be, with the agreement of the relevant parties and (where any consents are, by the terms of this Agreement or the relevant document, required to be obtained as a condition to such amendment, extension or restatement being permitted) with the requisite consents.  Similarly, references in this Agreement to Secured Obligations will be deemed to include (y) such Secured Obligations as they may be so varied, amended, modified, novated, restated, extended or supplemented from time to time, and (z) any obligations and liabilities which are assumed by any successor to the Pledgor further to any merger, demerger, partial merger, contribution of assets or other corporate restructuring affecting the Pledgor, any assignment, novation, delegation, subrogation of obligations or liabilities, or otherwise.
 
4
 
2.
PLEDGE

2.1
Creation of pledge

a)
As security for the due performance of the Secured Obligations, the Pledgor hereby unconditionally and irrevocably grants to the Pledgee a first-ranking pledge ( pand/gage en premier rang/pand in eerste rang ) over all Pledged Assets it currently owns and all Pledged Assets it will acquire in the future, to the extent legally possible, as further set out herein. The Pledgee, where applicable in advance, hereby accepts such Pledge.

b)
The Pledge shall be governed by the Collateral Act.

c)
The Pledgor confirms that it has taken note of the content of the Note Subscription Documents and that it is aware of the scope of the Secured Obligations and the provisions relating to the payment thereof.

2.2
Undertaking to pledge

a)
To the extent not covered by Clause 2.1 Error! Reference source not found. ( Creation of Pledge ) and permitted by applicable law, as security for the due performance of the Secured Obligations, the Pledgor undertakes to grant a first ranking pledge ( pand in eerste rang/gage de premier rang ) to the Pledgee over the Future Shares under the same terms and conditions as set out in this Agreement.

b)
Upon the acquisition of Future Shares by the Pledgor, the Pledgor shall forthwith (i) notify the Pledgee of the acquisition of the Future Shares, (ii) confirm that the Future Shares are pledged to the benefit of the Pledgee under this Agreement, and (iii) arrange for a similar notice as mentioned in Clause 3.1 ( Recordation of Pledge ) to be recorded on the folio of the relevant Pledgor in the share register of the Company and provide to the Pledgee forthwith upon such recording a copy of the relevant folio of the share register of the Company reflecting such recording.

c)
Upon the acquisition and pledge of Future Shares in accordance with this Agreement, any reference to Shares in this Agreement shall be deemed to include a reference to such Future Shares.

2.3
Form

The Shares are in registered form.  The Pledgor shall not, without the Pledgee's prior written consent, permit the conversion of the Shares into dematerialized shares.
 
5

3.
RECORDATION AND DECLARATION

3.1
Recordation of Pledge

a)
Simultaneously with the execution hereof, the Pledgor shall arrange for the following notice to be recorded and dated on the relevant folio in the share register of the Company and signed therein on behalf of the Pledgor and the Pledgee:

“En vertu d’une convention de gage sur actions (parts) (Share Pledge Agreement) en date du ___ ________ 2017 tous les parts de la Société ont été mis en gage au bénéfice de Leonite Capital LLCen conformité avec l’article 5 de la Loi du 15 décembre 2004 relative aux sûretés financières et portant des dispositions fiscales diverses en matière de conventions constitutives de sûreté réelle et de prêts portant sur des instruments financiers.”

(“Pursuant to a share pledge agreement (Share Pledge Agreement) dated _____, 2017, all the shares of the Company have been pledged to the benefit of Leonite Capital LLC in accordance with Article 5 of the Collateral Act.”)

b)
Forthwith upon (i) the recordation of the Pledge as referred to in the previous paragraph, the Pledgor shall deliver to the Pledgee a copy of the relevant folio of the share register of the Company reflecting such recordation, and (ii) the exercise of the Right to Purchase, the Pledgor shall deliver to the Pledgee a copy of the relevant folio of the share register reflecting the recordiation of the Pledge as referred to in the previous paragraph.

c)
The Pledgor and the Pledgee hereby appoint as their special attorneys each of (i) Pascal Faes, Marian Vanden Broeck, attorneys-at-law, and/or any other attorney-at-law ( advocaat/avocat ) at law firm Antaxius, and (ii) Pieter Meeus, Inez Vermeesch, Pieterjan Van Assche, Tom Geudens and any other attorney-at-law ( advocaat/avocat ) at law firm Lydian CVBA, , each with power to act individually and with power of substitution, for the purposes of recording the Pledge (including a pledge over any Future Shares) in the share register of the Company.

3.2
Declaration by the Company

The Pledgor shall procure ( porte-fort/sterkmaking ) that the Company shall immediately upon the execution hereof provide the Pledgee with the declaration in the form of Schedule 1 ( Declaration by the Company ) signed by the Company.
 
6

4.
SCOPE OF THE PLEDGE

4.1
Continuing security

a)
The Pledge shall constitute continuing security for the due performance of the Secured Obligations and shall remain in full force and effect until released in accordance with the provisions of Clause 11 ( Discharge of Pledge ) below.

b)
Without prejudice to Clause 11 ( Discharge of Pledge ), the Pledge shall not be discharged by virtue of the fact that the Pledgor does not currently owe the Pledgee any Secured Obligations. Nor shall the Pledge be discharged by any intermediate payment, satisfaction of any part of the Secured Obligations or any settlement of accounts.

c)
The Pledge shall not be discharged by the entry of any Secured Obligations into any current account ( compte courant /rekening-courant ), in which case the Pledge shall secure any provisional or final balance of such account up to the amount of Secured Obligations contained therein.

d)
The Pledgee may at any time, without discharging or in any way affecting the Pledge (i) grant the Pledgor additional time or any indulgence, (ii) agree to any moratorium of payments in respect of the Secured Obligations, (iii) amend the terms and conditions of the Secured Obligations in accordance with their terms, (iv) abstain from taking, perfecting or discharging any other security, and (v) abstain from exercising any right or recourse or from proving or claiming any debt and waive any right or recourse.

4.2
Rights additional

a)
All rights of the Pledgee under this Agreement are in addition to and without prejudice to any other rights vested in the Pledgee. The Pledge may be enforced by the Pledgee without prior recourse to any other security interest or remedy and is in addition to and shall not prejudice or otherwise affect any such security interest or remedy.

b)
The Pledgor waives any right it may have to first require the Pledgee to take action against or seek payment from any other party or enforce any other Encumbrance granted by such Pledgor or any other person before seeking to enforce the Pledge.

4.3
Preservation of security

In accordance with article 1278 of the Civil Code and without prejudice to the scope of the Secured Obligations, the Pledgor and the Pledgee agree that in the event of novation of all or any parts of the Secured Obligations or any party to this Agreement, the Note Subscription Documents or any other document or agreement pertaining thereto, the Pledge will be maintained automatically, without any further formality or consent, and will continue in full force and effect.
 
7

5.
ANCILLARY RIGHTS ATTACHED TO THE SHARES

5.1
Voting rights

a)
As long as no Enforcement Event has occurred which is continuing, the Pledgor shall retain and exercise its voting rights in respect of the Shares to the extent that the Pledgor in exercising those rights does not: (i) cause an Enforcement Event to occur, or (ii) materially prejudice the validity or enforceability of the Pledge.

b)
The Pledgor shall not without the prior written consent of the Pledgee vote in favor of:
(i)
the issuance, cancellation or transfer of any shares in the Company's capital by the Company or any reduction of any reserve of the Company;
(ii)
a resolution to transfer the authority of the general meeting to issue shares in the Company's capital or to grant rights to subscribe for shares in the Company's capital to any other corporate body;
(iii)
a resolution to amend the articles of association of the Company;
(iv)
a resolution to dissolve the Company or relating to the liquidation of the Company's business or disposal of all or a material part of the Company's assets;
(v)
a resolution which would adversely affect the validity and enforceability of the rights of Pledge;
(vi)
a resolution for any merger ( fusie ) or demerger ( splitsing ) in which the Company is involved; or
(vii)
a resolution for the granting of any security interest in, or encumbrance upon the Shares or any Future Shares.

c)
Without limiting the Pledgee's rights under Clause 8 ( Enforcement ), if an Enforcement Event has occurred and is continuing, the Pledgor (i) shall cast the votes attaching to the Shares in accordance with the Pledgee's instructions, which instructions the Pledgor shall timeously seek, and (ii) shall not, unless with the Pledgee’s prior consent, waive the right (whether statutory or in accordance with the Company's articles of association) to any notice period in respect of the convening of shareholders' meetings of the Company.

5.2
Cash and non-cash returns on the Shares

a)
As long as no Enforcement Event has occurred and is continuing, all dividends or any other cash return on the Shares (whether in the form of repayment of capital, or otherwise) shall be paid to the Pledgor.

b)
After the occurrence and continuance of an Enforcement Event, any dividend or any other cash return on the Shares (whether in the form of repayment of capital, or otherwise) shall be paid exclusively to the Pledgee, which shall apply the same towards the Secured Obligations.  If no Secured Obligations are due and payable, the Pledgee shall hold the amount in pledge as collateral for the Secured Obligations on an account bearing interest at a market rate applicable at such time for similar deposits. If the Pledgor nevertheless receives any dividends or any other cash return on the Shares, such Pledgor shall hold such dividend or other cash return on behalf of the Pledgee and shall transfer it immediately to the Pledgee.
 
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c)
Any return on the Shares other than a cash return, irrespective of whether in the form of dividend shares, bonus shares, shares allocated on the occasion of a partial scission or otherwise, shall be delivered (to hold the same in pledge in accordance with the terms of this Agreement) exclusively to the Pledgee, or shall as the case may be give rise to the recording in the Company's share register of a notice as provided in Clause 3.1 ( Recordation of Pledge ) in the name of the Pledgee and shall be part of the Pledged Assets.

d)
The Pledge shall not in any way be affected by any stamping, regrouping, splitting or renewal of the Shares, or by any similar operation, and the securities resulting from any such operation shall be part of the Pledged Assets and subject to this Agreement and the Pledge created hereunder.

5.3
Subscription rights and contribution calls

a)
Unless expressly agreed otherwise by the Pledgee, the Pledgor shall exercise all subscription rights to which its Shares may be entitled.  The shares resulting from the exercise of any such right shall be held in pledge by the Pledgee as collateral for the Secured Obligations, shall be part of the Shares for the purposes of this Agreement, and shall be delivered to the Pledgee or shall as the case may be give rise to the recording in the Company's share register of a notice as provided in Clause 3.1 ( Recordation of pledge ) in the name of the Pledgee.

b)
The Pledgor shall forthwith pay up any contribution duly called in respect of the Shares.


6.
REPRESENTATIONS AND WARRANTIES

The Pledgor makes the following representations and warranties to the Pledgee and represents to the Pledgee that these representations and warranties are and shall remain true, correct and not misleading at all times, each time with reference to the facts and circumstances then existing, until full release of the Pledge in accordance with the provisions of Clause 11 ( Discharge of the Pledge ) below.

6.1
Representations and warranties relating to the Pledgor

a)
The Pledgor has satisfied itself that it is in its own interest to grant this Pledge for the due performance of the Secured Obligations.

b)
The assets of the Pledgor are not subject to any Encumbrance; nor has any authority been granted or commitment made to create the same (other than as set forth or permitted under the Note Subscription Documents).
 
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6.2
Representations and warranties relating to the Shares

a)
The Pledgor has full right and title to its Shares and it has full power to dispose of and encumber those Shares.  Except as permitted under the Note Subscription Documents, there is no Encumbrance on any Pledged Assets other than the Pledge, nor has any authority been granted or commitment made to create the same.

b)
The share capital of the Company is represented entirely by the Shares and except for the Shares no other shares of the capital stock of the Company are outstanding and no options, warrants, securities or other rights for the purchase of share capital of the Company or for conversion or exchange into the share capital of the Company are outstanding. The Shares are validly issued. There are no profit shares or other shares which do not represent the capital of the Company in existence, nor any warrant, convertible bond or other right whatsoever to acquire shares in the Company.

c)
The Shares represent 100% of the issued share capital of the Company.  There is no cause for suspension of the voting rights attached to the Shares and there are no restrictions on the exercise of the voting rights attached thereto.

d)
The Shares are capable of being pledged hereunder without the consent of the Company or any third party.

e)
The Shares have not been acquired by the Pledgor, or by any earlier owner, as part of an acquisition of a business or of another set of assets falling under Article 442 bis of the Income Tax Code 1992, Article 93u ndecies .B of the VAT Code or Article 16 ter of the Royal Decree No. 38 of 27 July 1967 on the social status of self-employed persons.

f)
The Company has not declared any dividends in respect of the Shares that are still unpaid on the date hereof.

g)
No share certificates have been or will be issued in respect of the Shares.

6.3
Representations and warranties relating to the Pledge

a)
This Agreement creates a valid and first ranking pledge on the Pledged Assets.

b)
No filing, authorization, consent or approval other than as provided in Clause 3 ( Recordation ) is required to render the Pledge enforceable.

c)
The signor of this Agreement on behalf of Leonite Capital LLC is duly authorized to enter in to this Agreement on behalf of the Pledgee.

d)
There is no fact known to the Pledgor which materially adversely affects, or which is reasonably likely in the future to materially adversely affect, the Pledge.
 
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7.
COVENANTS OF THE PLEDGOR

7.1
Affirmative covenants

a)
The Pledgor shall ensure that no executory seizure ( saisie exécutoire / uitvoerend beslag ) is made on any of the Pledged Assets and that any conservatory seizure ( saisie conservatoire /  bewarend beslag ) thereon is lifted within 60 Business Days of the date on which it was first made.

b)
The Pledgor shall notify the Pledgee of the occurrence of (i) any seizure or attachment on any of the Pledged Assets, or (ii) any event or circumstance which could adversely affect  the Pledge or the value of the Pledged Assets.

c)
At the Pledgee's first reasonable request, the Pledgor shall supply such information and copies of all documents relating to the Pledged Assets as the Pledgee may require.

7.2
Negative covenants

The Pledgor shall not, without the prior written consent of the Pledgee:

a)
create or permit any Encumbrance on any of the Pledged Assets or any part thereof (irrespective of whether said Encumbrance has priority over the Pledge), other than the Pledge and as permitted under the Note Subscription Documents;

b)
(agree to) sell, lend, transfer or otherwise dispose of any of the Pledged Assets;

c)
permit the conversion of the Shares into dematerialized shares;

d)
permit or perform any act liable to adversely affect the Pledge; or

e)
do anything or permit anything to be done which jeopardizes or could reasonably likely jeopardize the Pledge or the rights of the Pledgee under this Agreement.


8.
ENFORCEMENT

a)
Upon the occurrence of an Enforcement Event which is continuing, the Pledgee shall be entitled:

(i)
to enforce the Pledge in accordance with the laws and regulations applicable at such time of enforcement, and in particular:

A.
sell the Pledged Assets or any part thereof even without prior written notice or judgement in accordance with Article 8, §1 of the Collateral Act; or
 
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B.
appropriate the Pledged Assets or any part thereof in accordance with Article 8, § 2 of the Collateral Act and the following provisions:

i.
The Pledgee shall notify the Pledgor and the Company of its intention to appropriate the Shares, and the transfer of the Shares resulting from the appropriation shall take effect on the date of such notice.  The Pledgor shall procure that, in such event, the transfer is recorded in the share register of the Company on the day on which the Pledgee notifies the Pledgor that it appropriates the Shares, and the Pledgor hereby grants a power of attorney to the Pledgee to record in the share register of the Company the transfer of ownership of the Shares or any part thereof to the Pledgee, as appropriated by the Pledgee in accordance with the provisions of Article 8§2 of the Collateral Act.

ii.
For the purposes of this Clause 8.a) B, the value of the Shares or any part thereof shall be the value as determined by an independent expert who must be a member of the Institut des Réviseurs d'Entreprises/Instituut der Bedrijfsrevisoren and a partner in an independent firm of accountants of good international repute and who has not acted for any of the Parties in any material capacity for a period of at least two years before the date of his appointment as expert (the " Expert "). Such Expert shall be appointed by the Parties or, if the Parties fail to agree on the identity of such Expert with five (5) Business Days after the request to appoint such Expert is made by the Pledgee, the Pledgee shall propose to the Pledgor at least three Experts, members of at least two different firms.  The Pledgor shall within five (5) Business Days of the proposal notify the Pledgee (i) that it accepts the proposal, or (ii) that it rejects some, but not all, of the proposed Experts.  The Pledgee shall then select the Expert among those who have not been validly rejected, and inform the Pledgor of the appointment made.

iii.
The Expert shall value the Shares in going concern as at the date of the notice under Clause 8 a) (i) B.i (unless the Expert reasonably determines that given the circumstances at the time of the valuation, that assumption is no longer appropriate) based on a multi-criteria approach consistent with best practices for business calculations (including discounted cash flow method, publicly traded comparables, asset valuation, EBIT or EBITDA multiples). The Pledgor shall procure that all necessary documents and data are promptly made available by the Company to the Expert. If the Company fails to make any documents or data promptly available to the Expert, the Expert may value the Shares on the basis of information publicly available or otherwise available to the Pledgee as at the date on which the Pledgee appropriates the Shares.
 
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iv.
The valuation of the Shares determined by the Expert shall be final and binding on the Parties except in case of manifest error.

v.
Notwithstanding the foregoing, the Pledgor may at all times refrain from appropriating the Pledged Assets and proceed with the option set out under Clause 8 a)(i)A, above.

(ii)
to exercise all or any of its rights and remedies and may act generally in relation to the Pledged Assets in such manner as it shall reasonably determine,

but always in accordance with the terms of this Agreement, the terms of the Note Subscription Documents and applicable law.

b)
Unless otherwise provided for under any mandatory law, the exercise by the Pledgee of the rights set out in this Clause 8 ( Enforcement ) shall not be subject to any prior notice to, nor any authorizations from, the courts.

c)
The Pledgee shall not have any responsibility in connection with enforcement measures contemplated hereunder, except for its gross negligence or wilful misconduct.


9.
APPLICATION OF PROCEEDS

a)
All monies received under this Agreement by the Pledgee shall be applied towards performance of the Secured Obligations, subject to mandatory provisions of Belgian law.

b)
The Pledgor explicitly waives the benefit of articles 1253 and 1256 of the Belgian Civil Code.


10.
DISCLAIMER

a)
The Pledgee (including any attorney, agent or other person appointed by the Pledgee) shall not be liable for any costs, losses, claims, duties or expenses in connection with the exercise or non-exercise of any of its rights and powers under this Agreement, except for its gross negligence or willful misconduct.

b)
The Pledgor shall fully indemnify the Pledgee, its officers, directors and employees at first request, in respect of all reasonable costs, claims and losses incurred by the Pledgee (including any attorney, agent or other person appointed by the Pledgee) in connection with the exercise or non-exercise of any of its rights and powers under this Agreement, except for the gross negligence or willful misconduct of the Pledgee.
 
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11.
DISCHARGE OF PLEDGE

11.1
Release


a)
Subject to Clause 11.2 ( Retention of security ), as soon as all Secured Obligations have been irrevocably and fully discharged and all facilities liable to give rise to Secured Obligations terminated and there is no possibility of any further Secured Obligations coming into existence, the Pledgee shall at the request and cost of the Pledgor and without undue delay release the Pledge.

11.2
Retention of security

Any release of the Pledge shall be null and void and without effect if any payment received by the Pledgee and applied towards satisfaction of all or part of the Secured Obligations (i) is avoided or declared invalid against creditors of the maker of such payment, or (ii) becomes repayable by the Pledgee or (iii) proves not to have been effectively received by the Pledgee and the Pledgee shall be entitled upon notice to the Pledgor to enforce the Pledge as if such discharge had not occurred.


12.
POWER OF ATTORNEY

12.1
Appointment

The Pledgor hereby irrevocably appoints the Pledgee, as its agent (with power of substitution) to act in its name and on its behalf for the purposes of:

a)
doing anything the Pledgor is obliged to do but has failed to do under this Agreement, following a period of five (5) Business Days after notification of the omission or negligence; and

b)
upon the occurrence and during the continuance of an Enforcement Event, exercising any rights conferred on the Pledgor in relation to the Pledged Assets under this Agreement, the Note Subscription Documents or any applicable law.

12.2
Ratification

The Pledgor agrees to ratify and confirm any actions taken by the Pledgee as its agent in the exercise or purported exercise of the power of attorney granted pursuant to Clause 12.1 ( Appointment ).
 
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13.
EVIDENCE OF DEBT

A certificate signed by the Pledgee setting forth any amounts due by the Pledgor in respect of the Secured Obligations shall, in the absence of manifest error and until evidence to the contrary is produced, constitute evidence of the existence and amount of the Secured Obligations.


14.
WAIVER

In general, and to the extent applicable, the Pledgor waives the benefit of article 1285 of the Belgian Civil Code.


15.
MISCELLANEOUS PROVISIONS

15.1
Notices

All notices or other communications under or in connection with this Agreement shall be made in accordance with the Note Subscription Documents.

15.2
Costs and expenses

The Pledgee may charge all costs, losses, claims and expenses of whatever nature (including legal fees in accordance with the fee arrangements made between the Issuer and the Pledgee) incurred by it in connection with this Agreement. The Pledgor’s obligation of reimbursement shall form part of the Secured Obligations.

15.3
Delegation of authority

The Pledgee shall be entitled, at any time and as often as may be expedient, to delegate any or all of the power vested in it by this Agreement in such a manner, upon such terms and to such person(s) as the Pledgee sees fit.

15.4
No implied waiver

Nothing shall be construed as a waiver of the rights or powers of the Parties under this Agreement unless a document to this effect has been signed by the relevant Party or notice to that effect has been given. No failure or delay by any Party to exercise any right, power or remedy under this Agreement shall operate as a waiver of the same.
 
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15.5
Severability

a)
Each provision of this Agreement is several and distinct from the others. If at any time one or more provisions of this Agreement is or becomes invalid, illegal   or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired in any way.

b)
In the event of any such illegality, invalidity or unenforceability, the Parties shall negotiate in good faith with a view to agreeing on a legal, valid and enforceable replacement provision which, to the extent practicable, is in accordance with the intent and purposes of this Agreement and in its economic effect comes as close as possible to the illegal, invalid or unenforceable provision.

15.6
Benefit of this Agreement

This Agreement shall be binding on, and inure to the benefit of, the Parties and their respective successors, transferees and assignees.

15.7
Assignment

a)
The Pledgor may not assign or transfer their rights and obligations under this Agreement, in whole or in part, without the prior written consent of the Pledgee.

b)
The Pledgee may assign or transfer its rights and obligations under this Agreement, in whole or in part.

15.8
Counterparts

This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when signed shall be an original, but all counterparts shall together constitute one and the same original of this Agreement.

15.9
Governing law

This Agreement shall be governed by and construed in accordance with Belgian law.

15.10
Jurisdiction

a)
All disputes arising out of or in connection with this Agreement which the Parties are unable to settle amicably shall be submitted to the jurisdiction of the relevant Brussels courts (French division).

b)
Submission to the jurisdiction of the Brussels courts (French division), as referred to under paragraph a) above, shall not limit the Pledgee's right to initiate proceedings before any other court that may otherwise have jurisdiction.
 
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15.11
Waiver of immunity

The Pledgor irrevocably and unconditionally:

a)
agrees not to claim immunity from proceedings brought by the Pledgee against it in relation to this Agreement and to ensure that no such claim is made on its behalf; and

b)
waives all rights of immunity in respect of it or its assets.

(s ignature page follows on next page )
 
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Executed on August 18, 2017 in three (3) originals, each Party acknowledging receipt of one original.

This Agreement was executed outside Belgium.


Rosellini Scientific LLC as Pledgor
 

By: /s/ Will Rosellini      
       
Name: Will Rosellini    
Title:  CEO    

 
Nexeon Medsystems Europe S.à.r.l. as Pledgor
 
 
By: /s/ Will Rosellini      
       
Name: Will Rosellini    
Title:  CEO    

 

Leonite Capital LLC as Pledgee
 
 
By: /s/ Avrohom Geller      
       
Name: Avrohom Geller    
Title:  CIO    
 
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SCHEDULE 1.
DECLARATION BY THE COMPANY


TO:            Leonite Capital LLC
1 Hillcrest Centre Drive, Suite 232
Spring Valley, New York 10977


Dear Sir/Madam,

Re : Share Pledge Agreement dated August 18, 2017

We refer to the share pledge agreement dated on or about the date of this declaration (the “ Pledge Agreement ”), between Rosellini Scientific LLC as pledgor and Leonite Capital LLC  as pledgee, in respect of 107,154  shares (the “ Shares ”) representing the entire issued share capital of Nexeon Medsystems Belgium SPRL , a private limited liability company ( société privée à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid ) organized under the laws of Belgium, having its registered office at Rue du Bois Saint-Jean, 15/1, 4102 Ougrée and registered with the Crossroads Bank for Enterprises under number 0525.673.682 (the “ Company ”).
 

We hereby declare, confirm and acknowledge as follows:

1.
Rosellini Scientific LLC is recorded in the share register of the Company as the holder of 100% of the Shares;

2.
we have not received notice of and there has been no transfer of the Shares by the Pledgor;

3.
we have not received notice of and are not aware of any pledge, attachment or other encumbrance on the Shares other than the Pledge created under the Pledge Agreement;

4.
we have full knowledge of the terms and conditions of the above-referenced Pledge Agreement.

Signed on ____ ___________ 2017

For Nexeon Medsystems Belgium SPRL:

Name:
Title:
 
 
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EXHIBIT 10.7

PERSONAL GUARANTY

THIS PERSONAL GUARANTY (“ Guaranty ”), dated as of August 18, 2017, is made by Randy Michael Rosellini, an individual (the “ Guarantor ”), in favor of Leonite Capital, LLC, a Delaware limited liability company (the “ Lender ”) (together with the Guarantor, the “ Parties ”).

W I T N E S S E T H:

WHEREAS , Lender is making a loan (the “Loan”) to NEXEON MEDSYSTEMS INC, a Nevada corporation (“ Borrower ”), in the amount of $1,120,000.00.  The Loan is being made pursuant to a securities purchase agreement, by and between Lender and Borrower, dated as of even date herewith (as the same may be amended or modified from time to time, the “ Loan Agreements ”), and is evidenced by that certain senior secured convertible promissory note in the original principial amount of $1,120,000.000 (the “ Note ”), issued by the Borrower to the Lender of even date herewith (as the same may be amended, replaced, renewed, extended or otherwise modified from time to time).

WHEREAS , as a condition to making the Loan and accepting the Note, Lender has required that Guarantor execute and deliver this Guaranty. Guarantor is willing to execute and deliver this Guaranty for the express and intended purpose of inducing Lender to make the Loan and accept the Note.

WHEREAS , Guarantor acknowledges that it expects to benefit from Lender's making of the Loan and acceptance of the Note because of Guarantor's relationship with Borrower and that it is executing this Guaranty in consideration of that anticipated benefit.

NOW, THEREFORE , in order to induce the Lender to make the Loan to the Borrower and accept the Note, and in consideration thereof, the foregoing recitals, as well as mutual covenants contained herein, the Parties hereby agrees as follows:

1. Guaranty .  Guarantor hereby absolutely and unconditionally guarantees to Lender and its successors and assigns the payment of the entire principal balance of the Loan, all accrued interest thereon and all costs and expenses incurred by Lender, including without limitation, the costs and expenses of Lender's outside counsel, in connection with the enforcement of Borrower's obligations under the Note (the “ Obligations ”), as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Obligations as a primary obligor and that it shall fully perform each and every term and provision hereof.

2. Guaranty Absolute; Unsecured Recourse Obligations .

(a) The Guarantor guarantees that the Obligations will be paid and performed strictly in accordance with the terms of the Note and the Loan Agreements, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Lender with respect thereto. The liability of the Guarantor under this Guaranty shall be absolute and unconditional irrespective of:

(i)
any lack of validity or enforceability of any of the Loan Agreements;

(ii)
any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any of the Loan Agreements, including, without limitation, changes in the terms of disbursement of the Loan proceeds or repayment thereof, modifications, extensions (including extensions beyond and after the original term) or renewals of payment dates, changes in interest rate or the advancement of additional funds by the Lender in its discretion;
 
1
 
(iii)
any exchange, release or non perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Obligations; or

(iv)
any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Borrower in respect of the Obligations or the Guarantor in respect of this Guaranty.

(b) Notwithstanding any termination of this Guaranty or the cancellation of the Note or any other agreement evidencing the Obligations, if at any time any payment of any of the Obligations (from any source) is rescinded, repaid or must otherwise be returned by the Lender (i) due to or upon the insolvency, bankruptcy or reorganization of the Borrower or the Guarantor, or (ii) for any other circumstance, this Guaranty shall continue to be effective or be reinstated, as the case may be, all as though such payment had not been made.

(c) Notwithstanding anything herein or in any Loan Agreements to the contrary, the obligations of Guarantor hereunder are unsecured recourse obligations of Guarantor. Without limiting the generality of the foregoing, none of the Guarantor's obligations under or pursuant to this Guaranty shall be secured by the lien of the Deeds of Trust or any of the other Loan Agreements.

3. Subrogation .  As a material inducement to Lender's agreement to make the Loan and in view of the fact that Guarantor could be considered an “insider” as defined in Section 101 of the United States Bankruptcy Code, Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against Borrower that arises from the existence or performance of Guarantor's obligations under this Guaranty or any of the other Loan Agreements, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of Lender against Borrower or any collateral security which Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, by any payment made hereunder or otherwise, including, without limitation, the right to take or receive from Borrower, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or security on account of such claim or other rights. An agreement between Guarantor and Borrower which is in any respect contrary to the foregoing shall be null and void and of no force or effect. If any amount shall be paid to Guarantor in violation of the preceding sentences and the Obligations shall not have been fully paid or performed, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for the benefit of, Lender, and shall forthwith be paid to Lender to be credited and applied upon the Obligations, whether matured or un-matured, in accordance with the terms of the Loan Agreements.

4. Guaranty Independent; Waivers .

(a) The Guarantor agrees that:

(i)
The Obligations hereunder are independent of and in addition to the undertakings of the Borrower pursuant to the Loan Agreements, any evidence of indebtedness issued in connection therewith, any deed of trust or security agreement given to secure the same, any other guaranties given in connection with the Loan and any other obligations of the Guarantor to the Lender,

(ii)
A separate action may be brought to enforce the provisions hereof whether the Borrower is a party in any such action or not,
 
2
 
(iii)
The Lender may at any time, or from time to time to the extent that such is permited by the terms of the Loan, in its sole discretion (A) extend or change the time of payment and/or performance and/or the manner, place or terms of payment and/or performance of all or any of the Obligations; (B) exchange, release and/or surrender all or any of the collateral security, or any part thereof, by whomsoever deposited, which is now or may hereafter be held by the Lender in connection with all or any of the Obligations; (C) sell and/or purchase all or any such collateral at public or private sale, or at any broker's board, in the manner permitted by law and after giving any notice which may be required, and after deducting all costs and expenses of every kind for collection, sale or delivery, the net proceeds of any such sale may be applied by the Lender upon all or any of the Obligations; and (D) settle or compromise with the Borrower, and/or any other person liable thereon, any and all of the Obligations, and/or subordinate the payment of same, or any part thereof, to the payment of any other debts or claims, which may at any time be due or owing to the Lender and/or any other person or corporation, and

(iv)
The Lender shall be under no obligation to marshal any assets in favor of the Guarantor or in payment of any or all of the Obligations.

(b) The Guarantor hereby waives:

(i)
Presentment, demand, protest, notice of acceptance, notice of dishonor, notice of nonperformance and any other notice with respect to any of the Obligations and this Guaranty, and promptness in commencing suit against any party thereto or liable thereon, and/or in giving any notice to or making any claim or demand hereunder upon the Guarantor;

(ii)
any right to require the Lender to (A) proceed against the Borrower, (B) proceed against or exhaust any security held from the Borrower, or (C) pursue any remedy in the Lender's power whatsoever;

(iii)
any defense arising by reason of any disability or other defense of the Borrower or by reason of the cessation from any cause whatsoever of the liability of the Borrower other than full payment of the Obligations;

(iv)
any defense it may acquire by reason of the Lender's election of any remedy against it or the Borrower or both, including, without limitation, election by the Lender to exercise its rights under the power of sale provisions set forth in the Loan Agreements;

Without limitation on the generality of the foregoing, if applicable, Guarantor waives (i) all rights and defenses arising out of an election of remedies by the Lendor, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed the guarantor's rights of subrogation and reimbursement against the principal by the operation of law or otherwise, and (ii) all rights and defenses that the Guarantor may have because Borrower's debt to Lender is secured by real property. This means, among other things: (a) Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledges by Borrower; and (b) if Lender forecloses on any real property collateral pledged by Borrower, the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price and Lender may collect from Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights and defenses that Guarantor may have because Borrower's debt is secured by real property.

5. Does Not Supersede Other Guaranties .  The obligations of the Guarantor hereunder shall be in addition to any obligations of the Guarantor under any other guaranties, and this Guaranty shall not affect or invalidate any such other guaranties. The liability of the Guarantor to the Lender shall at all times be deemed to be the aggregate liability of the Guarantor under the terms of this Guaranty.
 
3
 
6. Representations And Warranties .  The Guarantor hereby represents and warrants as follows:

(a) Validity of Guaranty.

(i)
The execution, delivery and performance by the Guarantor of this Guaranty (A) has received all necessary governmental approvals, and (B) will not violate any provision of law, any order of any court or agency of government, or any indenture, agreement or any other instrument to which the Guarantor is a party, or be in conflict with, result in a breach of or constitute (with due notice and/or lapse of time) a default under any such indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of its property or assets.

(ii)
This Guaranty, when delivered to the Lender, will constitute a legal, valid and binding obligation enforceable against the Guarantor in accordance with its terms.

(b) Financial Statements.

(i)
All financial statements and data that have been given to the Lender by the Guarantor with respect to the Guarantor, including, but not limited to, the Personal Financial Statement signed by the Guarantor, (A) are complete and correct in all material respects as of the date given; and (B) accurately present the financial condition of the Guarantor on each date as of which the same have been furnished.

(ii)
There has been no adverse change in the financial condition or operations of the Guarantor since the date of the most recent financial statement given to the Lender with respect to the Guarantor.

(c) Guarantor’s Business.  The Guarantor, a dentist, is the owner of a dental practice located at 189 Historic Town Square, Lancaster, TX 75146.

(d) Guarantor owns or holds the rights to grant a security interest in the Mortgaged Properties (defined below).

(e) Other Arrangements. The Guarantor is not a party to any agreement or instrument materially and adversely affecting the Guarantor's present or proposed business, properties or assets, or operations or conditions (whether financial or otherwise); and the Guarantor is not in default in the performance, observance or fulfillment of any of the material obligations, covenants or conditions set forth in any agreement or instrument to which the Guarantor is a party.

(f) Litigation. There is not now pending against or affecting the Guarantor, nor to the knowledge of the Guarantor is there threatened, any action, suit or proceeding at law or in equity or by or before any administrative agency that, if adversely determined, would materially impair or affect the financial condition or operations of the Guarantor.

(g) Taxes. The Guarantor has filed all national, state, provincial, county, municipal and other income tax returns required to have been filed by the Guarantor and has paid all taxes that have become due pursuant to such returns or pursuant to any assessments received by the Guarantor, and the Guarantor does not know of any basis for any material additional assessment against it in respect of such taxes.

7. Affirmative Covenants .  The Guarantor covenants and agrees that, so long as any part of the Note shall remain unpaid, the Guarantor will, unless the Lender shall otherwise consent in writing:

(a) Taxes Affecting the Guarantor. File all tax returns required to be filed by it under the laws of any jurisdiction in which Guarantor does business or is otherwise required to file tax returns and pay before the same become delinquent all taxes that become due pursuant to such returns or pursuant to any assessments received by it.
 
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(b) Compliance with Law. Promptly and faithfully comply in all material respects with all laws, ordinances, rules, regulations and requirements, both present and future, of every duly constituted governmental authority or agency having jurisdiction that may be applicable to it.

(c) Litigation or Adverse Conditions. Promptly notify Lender in writing of any litigation, action, suit or proceeding at law or in equity or by or before any administrative agency, or any other adverse condition, affecting Guarantor.

8. Amendments .  No amendment or waiver of any provision of this Guaranty nor consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Guarantor shall in any case entitle it to any other or further notice or demand in similar or other circumstances.

9. Notices .  All notices that may be required or otherwise provided for or contemplated under the terms of this Guaranty for any party to serve upon or give to any other shall, whether or not so stated, be in writing, and if not so in writing shall not be deemed to have been given, and be either (i) personally served, or (ii) sent by a nationally recognized commercial overnight service that provides a receipt, (iii) sent with return receipt requested by registered or certified mail with postage (including registration or certification charges) prepaid in a securely enclosed and sealed envelope, sent to the following addresses, or (iv) via electronic mail:

(a) If to the Guarantor, addressed to:

Randy Michael Rosellini
12147 Lueders
Dallas, TX 75230
rmikerose@gmail.com


(b) If to the Lender, addressed to:

Leonite Capital, LLC
1 Hillcrest Center Dr., Suite 232
Spring Valley, NY 10977
E-mail: avi@leonitecap.com

Such addresses may be changed from time to time by written notice to the other parties given in the same manner.

10. No Waiver; Remedies .  No failure on the part of the Lender to exercise and no delay in exercising any right or remedy hereunder shall operate as a waiver thereof; nor shall the Lender be estopped to exercise any such right or remedy at any future time because of any such failure or delay; nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

11. Continuing Guaranty; Transfer of Note .  This Guaranty is a continuing guaranty and shall remain in full force and effect until payment and performance in full of the Loan and all other amounts payable under this Guaranty. The Lender may assign or otherwise transfer the Loan Agreements to any person, corporation, firm, partnership, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity (collectively, a “Person”), pursuant to the provisions of the Loan Agreements, and such other Person shall thereupon become vested with all the rights in respect thereof granted to the Lender herein or otherwise.
 
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12.  Subordination .  Any indebtedness of the Borrower now or hereafter held by the Guarantor is hereby subordinated to the indebtedness of the Borrower to the Lender, and such indebtedness of the Borrower to the Guarantor shall, if the Lender so requests, be collected, enforced and received by the Guarantor as trustee for the Lender and be paid over to the Lender on account of the indebtedness of the Borrower to the Lender, but without reducing or limiting in any manner the liability of the Guarantor under the other provisions of this Guaranty.

13. No Dut y .  The Guarantor assumes the responsibility for keeping informed of the financial condition of the Borrower and of all other circumstances bearing upon the risk of nonpayment of the Obligations, and agrees that the Lender shall have no duty to advise the Guarantor of any information known to the Lender regarding any such financial condition or circumstances.

14. Waiver of Right To Trial By Jury .  The Guarantor hereby waives any right to trial by jury with respect to any action or proceeding (i) brought by the Guarantor, the Borrower, the Lender or any other Person, relating to (A) the Note and/or any understandings or prior dealings between the parties hereto, (B) this Guaranty or (C) the Loan Agreements, or (ii) to which the Lender is a party. The Guarantor hereby agrees that this Guaranty constitutes a written consent to waiver of trial by jury, and the Guarantor does hereby constitute and appoint the Lender its true and lawful attorney-in-fact, which appointment is coupled with an interest, and the Guarantor does hereby authorize and empower the Lender, in the name, place and stead of the Guarantor, to file this Guaranty with the clerk or judge of any court of competent jurisdiction as a statutory written consent to waiver of trial by jury.

15. Bankruptcy of Borrower .  Notwithstanding any modification, discharge or extension of the Obligations or any amendment, modification, stay or cure of the Lender's rights which may occur in any bankruptcy or reorganization case or proceeding concerning the Borrower, whether permanent or temporary, and whether assented to by the Lender, the Guarantor hereby agrees that it shall be obligated hereunder to pay and perform the Obligations and discharge its other obligations in accordance with the terms of the Obligations and the terms of this Guaranty in effect on the date hereof. The Guarantor understands and acknowledges that by virtue of this Guaranty, it has specifically assumed any and all risks of a bankruptcy or reorganization case or proceeding with respect to the Borrower. As an example and not in any way of limitation, a subsequent modification of the Obligations in any reorganization case concerning the Borrower shall not affect the obligation of the Guarantor to pay and perform the Obligations in accordance with their original terms.

16. Entire Agreement .  This Guaranty is intended as a final expression of this agreement of guaranty and is intended also as a complete and exclusive statement of the terms of this agreement. No course of prior dealings between the Guarantor and Lender, no usage of the trade, and no parol or extrinsic evidence of any nature, shall be used or be relevant to supplement, explain, contradict or modify the terms and/or provisions of this Guaranty.

17. Governing Law .  The validity of this Guaranty, its construction, interpretation and enforcement, and the rights of the parties hereunder, shall be determined under, governed by, and construed in accordance with the laws of the state of New York as applied to contracts made and to be fully performed in such state, without regard to the conflicts of laws provisions thereof.  Any action brought by either party against the other concerning the  transactions contemplated by this Note shall be brought only in the state and/or federal courts located in New York. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens .

18. Attorney Fees .  If either party hereto fails to perform any of its obligations under this Guaranty or if any dispute arises between the parties hereto concerning the meaning or interpretation of any provision of this Guaranty, then the defaulting party or the party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorney fees and disbursements. Any such attorney fees and other expenses incurred by either party in enforcing a judgment in its favor under this Guaranty shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorney fees obligation is intended to be severable from the other provisions of this Guaranty and to survive and not be merged into any such judgment.
 
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19. Security Interest .  The Guarantor’s obligations under this Guarantee are secured by a first priority security interest in three certain real properties (the “Mortgaged Properties”) owned by the Guarantor and described on Schedule A hereto.

20. Miscellaneous .

(a) This Guaranty is made for the sole protection and benefit of Lender and its successors and assigns, and no other person shall have any right of action hereon.

(b) If any term, provision, covenant or condition hereof or any application thereof should be held by a court of competent jurisdiction to be invalid, void or unenforceable, all provisions, covenants and conditions hereof, and all applications thereof not held invalid, void or unenforceable, shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby.

(c) This Guaranty may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of such counterparts taken together shall constitute but one and the same instrument.

(d) Section headings in this Guaranty are included for convenience of reference only and do not constitute a part of this Guaranty for any other purpose.

(e) All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Paragraph 6(b) above.

(f) Non-Default .  Until the Note is satisfied in its entirety, Guarantor shall not enforce Guarantor’s rights to any default under any loan made by Guarantor to the Company.


[Signature page to follow]
 
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IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Guaranty as of the date first above written. GUARANTOR /s/ Randy Michael Rosellini Randy Michael Rosellini State of Virginia County of James City On August 18 , 2017, before me, Toni Josette Wright , (date) (notary) personally appeared, Randy Michael Rosellini (signer) personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity,and that by his signature on the instrument the person or the entity upon behalf of which the person acted, executed the instrument WITNESS my hand and official seal  /s/ Toni Josette Wright Notary Public SEALS: LENDER: LEONITE CAPITAL, LLC By: /s/ Avrohom Geller Name: Avrohom Geller Title: CIO
 
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Schedule A

Grantor Mortgaged Properties

 
 
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EXHIBIT 10.8

NEITHER THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


COMMON STOCK PURCHASE WARRANT

NEXEON MEDSYSTEMS INC

Warrant Shares: 200,000
Date of Issuance: August 24, 2017 (“ Issuance Date ”)

This COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received (in connection with the issuance of a Personal Guaranty by Michael Rosellini in the amount of $1,120,000.00 in conjunctions with a senior secured convertible promissory note issued to Leonite Capital LLC (the “ Note ”), Michael Rosellini (including any permitted and registered assigns, the “ Holder ”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from Nexeon Medsystems Inc, a Nevada corporation (the “ Company ”), up to 200,000 shares of Common Stock (as defined below) (the “ Warrant Shares ”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant)   at the Exercise Price per share then in effect.

Capitalized terms used in this Warrant shall have the meanings set forth in the body of this Warrant or in Section 13 below.  For purposes of this Warrant, the term “ Exercise Price ” shall mean $1.50, subject to adjustment as provided herein (including but not limited to cashless exercise), and the term “ Exercise Period ” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the two-year anniversary thereof.

1.              EXERCISE OF WARRANT .

(a)            Mechanics of Exercise .  Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit A (the “ Exercise Notice ”), of the Holder’s election to exercise this Warrant.  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  On or before the third Trading Day (the “ Warrant Share Delivery Date ”) following the date on which the Company shall have received the Exercise Notice, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “ Aggregate Exercise Price ” and together with the Exercise Notice, the “ Exercise Delivery Documents ”) in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares.  If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 6) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
 
 
If the Company fails to cause its transfer agent to transmit to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion, and such failure shall be deemed an event of default under the Note.

If the Market Price of one share of Common Stock is greater than the Exercise Price and the Warrant Shares are not registered under an effective non-stale registration statement of the Company, the Holder may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and a Notice of Exercise, in which event the Company shall issue to Holder a number of Common Stock computed using the following formula:

X = Y (A-B)
 
A
 
Where X =
the number of Shares to be issued to Holder.
   
Y =
the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
   
A =
the Market Price (at the date of such calculation).
   
B =
Exercise Price (as adjusted to the date of such calculation).

 
(b)            No Fractional Shares .  No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto.  All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share.  If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
 
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(c)            Holder’s Exercise Limitations .  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, to the extent that after giving effect to issuance of Warrant Shares upon exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation, as defined below.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including without limitation any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this paragraph (d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this paragraph applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.

For purposes of this paragraph, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the request of a Holder, the Company shall within two Trading Days confirm to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  Upon no fewer than 61 days’ prior notice to the Company, a Holder may increase or decrease the Beneficial Ownership Limitation provisions of this paragraph, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this paragraph shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company and shall only apply to such Holder and no other Holder.  The limitations contained in this paragraph shall apply to a successor Holder of this Warrant.

2.               ADJUSTMENTS .  The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

(a)            Distribution of Assets .  If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “ Distribution ”), at any time after the issuance of this Warrant, then, in each such case:
 
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(i)            any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction (i) the numerator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (ii) the denominator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date; and

(ii)            the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i); provided, however, that in the event that the Distribution is of shares of common stock of a company (other than the Company) whose common stock is traded on a national securities exchange or a national automated quotation system (“ Other Shares of Common Stock ”), then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i) and the number of Warrant Shares calculated in accordance with the first part of this clause (ii).

(b)            Adjustments for Stock Splits and Combinations and Stock Dividends .  If the Company shall at any time or from time to time after the date hereof, effect a stock split of the outstanding Common Stock or pay a stock dividend in shares of Common Stock, then the Exercise Price shall be proportionately adjusted.  Any adjustments under this Section 2(b) shall be effective at the close of business on the date the stock split or combination becomes effective or the date of payment of the stock dividend, as applicable.

(c)            Anti-dilution Adjustment .  If at any time while this Warrant is outstanding, the Company sells or grants (or has sold or granted, as the case may be) any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or has sold or issued, as the case may be, or announces any sale, grant or any option to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for or otherwise entitled the any person or entity the right to acquire shares of Common Stock at an effective price per share that is lower than the then Exercise Price (such lower price, the “ Base Exercise Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (it being agreed that if the holder of the Common Stock or other securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced to a price equal the Base Exercise Price.  Such adjustment shall be made whenever such Common Stock or other securities are issued.  Notwithstanding the foregoing, no adjustment will be made under this Section 2(c) in respect of an Exempt Issuance.  For purposes of this Section 2(c), an “ Exempt Issuance ” means an issuance of shares (i) reserved as employee shares described under the Company’s option pool now or created in the future, (ii) shares issued for consideration other than cash pursuant to a merger, consolidation, acquisition, or similar business combination approved by the Company’s Board of Directors (the “ Board ”), provided, however, that any such issuance shall only be to a person (or to the equity holders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; (iii) shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board; or (iv) shares with respect to which the Holder waives its anti-dilution rights granted hereby.  In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 2(c) shall be calculated as if all such securities were issued at the initial closing.
 
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3.            FUNDAMENTAL TRANSACTIONS .  If, at any time while this Warrant is outstanding, (i) the Company effects any merger of the Company with or into another entity and the Company is not the surviving entity (such surviving entity, the “ Successor Entity ”), (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or by another individual or entity, and approved by the Company) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities, cash or property and the holders of at least 50% of the Common Stock accept such offer, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock) (in any such case, a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive the number of shares of Common Stock of the Successor Entity or of the Company and any additional consideration (the “ Alternate Consideration ”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event (disregarding any limitation on exercise contained herein solely for the purpose of such determination).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any Successor Entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration.

4.            NON-CIRCUMVENTION .  The Company covenants and agrees that it will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise).

5.            WARRANT HOLDER NOT DEEMED A STOCKHOLDER .  Except as otherwise specifically provided herein, this Warrant, in and of itself, shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
 
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6.              REISSUANCE .

(a)            Lost, Stolen or Mutilated Warrant .  If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

(b)            Issuance of New Warrants .  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.

7.               TRANSFER .

(a)            Notice of Transfer .  The Holder agrees that, if practicable, it will give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer.  Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel.  If the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder thereof, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided, however, that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute the Assignment of Warrant attached hereto as Exhibit B and such other documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.

(b)            If the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Holder will limit its activities in respect to such transfer or disposition as are permitted by law.

8.               NOTICES .  Whenever notice is required to be given under this Warrant, such notice shall be given in accordance with the notice provisions contained herein.  The Company shall provide the Holder with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

9.               AMENDMENT AND WAIVER .  The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.
 
6
 
10.             GOVERNING LAW .  This Warrant shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts or federal courts located in Nevada.  The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens .  THE HOLDER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY .  The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Warrant or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.   Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document 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 other manner permitted by law.

11.             ACCEPTANCE .  Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

12.             CERTAIN DEFINITIONS .  For purposes of this Warrant, the following terms shall have the following meanings:

(a)            “ Nasdaq ” means The Nasdaq Stock Market (www.Nasdaq.com).

(b)            “ Closing Sale Price ” means, for any security as of any date, (i) the last closing trade price for such security on the Principal Market, as reported by Nasdaq, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Nasdaq, or (ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Nasdaq, or (iii) if no last trade price is reported for such security by Nasdaq, the average of the bid and ask prices of any market makers for such security as reported by the OTC Markets.  If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

(c)            “ Common Stock ” means the Company’s common stock, and any other class of securities into which such securities may hereafter be reclassified or changed.

(d)            “ Common Stock Equivalents ” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
 
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(e)            “ Principal Market ” means the primary national securities exchange on which the Common Stock is then traded.

(f)            “ Market Price ” means the highest traded price of the Common Stock during the thirty (30) Trading Days prior to the date of the respective Exercise Notice.

(g)            “ Trading Day ” means (i) any day on which the Common Stock is listed or quoted and traded on its Principal Market, (ii) if the Common Stock is not then listed or quoted and traded on any national securities exchange, then a day on which trading occurs on any over-the-counter markets, or (iii) if trading does not occur on the over-the-counter markets, any Business Day.



 
*  *  *  *  *  *  *
8

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.


 
NEXEON MEDSYSTEMS INC
   
   
   
  /s/ William Rosellini
 
Name: William Rosellini
 
Title: Chief Executive Officer
 

EXHIBIT A

EXERCISE NOTICE

(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)


The Undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Nexeon Medsystems Inc, a Nevada corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1.
Form of Exercise Price .  The Holder intends that payment of the Exercise Price shall be made as (check one):

☐
a cash exercise with respect to _________________ Warrant Shares; or
☐ by cashless exercise pursuant to the Warrant.


2.
Payment of Exercise Price .  If cash exercise is selected above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

3.
Delivery of Warrant Shares .  The Company shall deliver to the holder __________________ Warrant Shares in accordance with the terms of the Warrant.



Date:
 


   
 
(Print Name of Registered Holder)
     
     
 
By:
 
 
Name:
 
 
Title:
 
 

EXHIBIT B

ASSIGNMENT OF WARRANT

(To be signed only upon authorized transfer of the Warrant)


For Value Received , the undersigned hereby sells, assigns, and transfers unto ____________________ the right to purchase _______________ shares of common stock of Nexeon MedSystems Inc, to which the within Common Stock Purchase Warrant relates and appoints ____________________, as attorney-in-fact, to transfer said right on the books of Nexeon MedSystems Inc with full power of substitution and re-substitution in the premises.  By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.



Dated:
 

 
 
 
   Signature) *
   
   
 
(Name)
   
   
 
(Address)
   
   
 
(Social Security or Tax Identification No.)



* The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever.  When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

 

Exhibit 10.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DEED OF TRUST 352002.1 PAGE 1 OF 10 NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER. DEED OF TRUST Terms Date: August ____, 2017 Grantor: Roselancland Limited Partnership Grantor’s Mailing Address: 12147 Lueders Lane Dallas, Texas 75230 Trustee: Bryon R. Hammer Trustee’s Mailing Address: 301 Commerce Street, Suite 1500 Fort Worth, Texas 76102 Lender: Leonite Capital, LLC Lender’s Mailing Address: 1 Hillcrest Center Drive, Suite 232 Spring Valley, New York 10977 Attn: Avi Geller Obligation: Senior Secured Convertible Promissory Note (the “Note”) Date: Of even date herewith. Original principal amount: One Million One Hundred Twenty Thousand and No/100 Dollars ($1,120,000.00) Borrower: Nexeon Medsystems Inc. Attn.: William Rosellini, CEO 1910 Pacific Avenue, Suite 20000 Dallas, Texas 75201 Lender: Leonite Capital, LLC 1 Hillcrest Center Drive, Suite 232 Spring Valley, New York 10977 Attn: Avi Geller Maturity date: Twenty Four (24) months from the Issue Date (as defined in the Note) Notarize ID: XV2DZCDR 21 EXHIBIT 10.9 DEED OF TRUST 352002.1 PAGE 2 OF 10 Other Debt: This conveyance is also made in trust to secure payment of all other present and future debts that Borrower may owe to Lender, its successors or assigns, regardless of how any other such debt is incurred or evidenced. This conveyance is also made to secure payment of any renewal or extension of any present or future debt that Borrower owes to Lender, its successors or assigns, including any loans and advancements from Lender to Borrower under the provisions of this deed of trust. When Borrower repays all debts owed to Lender, its successors or assigns, this deed of trust lien will terminate only if Lender releases this deed of trust at the request of Borrower and at Borrower’s expense. Until Lender, its successors or assigns releases it, this deed of trust will remain fully in effect to secure other present and future advances and debts, regardless of any additional security given for any debt and regardless of any modification. Property (including any improvements): That certain property described on Exhibit A attached hereto and incorporated herein by reference, together with the following personal property: 1. all fixtures, supplies, building materials, and other goods of every nature now or hereafter located, used, or intended to be located or used on the Property; 2. all plans and specifications for development of or construction of improvements on the Property; 3. All accounts, contract rights, instruments, documents, general intangibles, and chattel paper arising from or by virtue of any transactions relating to the Property; 4. All permits, licenses, franchises, certificates, and other rights and privileges obtained in connection with the Property; 5. All proceeds payable or to be payable under each policy of insurance relating to the Property; and 6. All products and proceeds of the foregoing. Notwithstanding any other provision in this deed of trust, the term “Property” does not include personal property that is located, used, or intended to be located or used on the Property, but not owned by Grantor. Prior Lien: None. Other Exceptions to Conveyance and Warranty: Any and all restrictions, covenants, conditions, and easements, if any, relating to the Property, but only to the extent that they are in effect as of the date hereof and shown of record, and all zoning laws, regulations and ordinances of municipal and other governmental authorities, if any, but only to the extent that they are still in effect and relate to the herein described Property. A. Granting Clause For value received, including $100 paid by Borrower to Grantor and the benefit to be derived by Grantor from the Note, and to secure payment of the Note, Grantor conveys the Property to Trustee in trust. Notarize ID: XV2DZCDR DEED OF TRUST 352002.1 PAGE 3 OF 10 Grantor warrants that Grantor has good, indefeasible and insurable title to the Property and has the right to mortgage, give, grant, bargain, sell, convey, pledge, assign and hypothecate the same and that Grantor possesses a fee estate in the Property and that it owns the Property free and clear of all liens, encumbrances and charges whatsoever. Grantor shall forever warrant, defend and preserve such title and the validity and priority of the lien of this deed of trust and shall forever warranty and defend the same to Lender against the claims of all persons whomsoever, subject to the Other Exceptions to Conveyance and Warranty. On payment and satisfaction in full of the Note and all other amounts secured by this deed of trust, this deed of trust will have no further effect, and Lender will release it at Grantor’s expense. B. Grantor’s Obligations B.1. Grantor agrees to maintain, at Grantor’s expense, all property and liability insurance coverages with respect to the Property, revenues generated by the Property, and operations on the Property that Lender reasonably requires (“Required Insurance Coverages”), issued by insurers and written on policy forms acceptable to Lender, and as to property loss, that are payable to Lender under policies containing standard mortgagee clauses, and deliver evidence of the Required Insurance Coverages in a form acceptable to Lender before execution of this deed of trust and again at least ten (10) days before the expiration of the Required Insurance Coverages. B.2. Grantor agrees to— a. keep the Property in good repair and condition; b. pay all taxes, charges, impositions, levies, and assessments on the Property before delinquency, not authorize a taxing entity to transfer its tax lien on the Property to anyone other than Lender, and not request a deferral of the collection of taxes pursuant to section 33.06 of the Texas Tax Code; c. furnish to Lender or other holder of the Note annually, before taxes become delinquent, copies of tax receipts showing that all taxes and assessments on the Property have been paid; d. defend title to the Property subject to the Other Exceptions to Conveyance and Warranty and preserve the lien’s priority as it is established in this deed of trust; e. obey all laws, ordinances, and restrictive covenants applicable to the Property; f. keep any buildings occupied as required by the Required Insurance Coverages; g. if the lien of this deed of trust is not a first lien, pay or cause to be paid all prior lien notes and abide by or cause to be abided by all prior lien instruments; h. notify Lender of any change of address; i. allow Lender or Lender’s agents to enter the Property at reasonable times and inspect it and any personal property in which Lender is granted a security interest by this deed of trust; and Notarize ID: XV2DZCDR DEED OF TRUST 352002.1 PAGE 4 OF 10 j. duly and punctually observe and perform each and every term, provision, condition, and covenant to be observed or performed by Grantor pursuant to the terms of any agreement or recorded instrument affecting or pertaining to the Property, and not suffer or permit any default or event of default to exist under any of the foregoing. C. Lender’s Rights C.1. Lender or its mortgage servicer may appoint in writing one or more substitute trustees, succeeding to all rights and responsibilities of Trustee. C.2. If the proceeds of the Note are used to pay any debt secured by prior liens, Lender is subrogated to all the rights and liens of the holders of any debt so paid. C.3. Lender may apply any proceeds received under the property insurance policies covering the Property either to reduce the Note or to repair or replace damaged or destroyed improvements covered by the policy. If the Property is Grantor’s primary residence and Lender reasonably determines that repairs to the improvements are economically feasible, Lender will make the property insurance proceeds available to Grantor for repairs. C.4. Notwithstanding the terms of the Note to the contrary, and unless applicable law prohibits, all payments received by Lender from Borrower or Grantor with respect to the Note or this deed of trust may, at Lender’s discretion, be applied first to amounts payable under this deed of trust and then to amounts due and payable to Lender with respect to the Note, to be applied to late charges, principal, or interest in the order Lender in its discretion determines. C.5. If Grantor fails to perform any of Grantor’s obligations, Lender may perform those obligations and be reimbursed by Grantor on demand for any amounts so paid, including attorney’s fees, plus interest on those amounts from the dates of payment at the rate stated in the Note for matured, unpaid amounts. The amount to be reimbursed will be secured by this deed of trust. C.6. If a default exists in payment of the Note or performance of Grantor’s obligations and the default continues after any required notice of the default and the time allowed to cure, Lender may— a. declare the unpaid principal balance and earned interest on the Note immediately due; b. exercise Lender’s rights with respect to rent under the Texas Property Code as then in effect; c. direct Trustee to foreclose this lien, in which case Lender or Lender’s agent will cause notice of the foreclosure sale to be given as provided by the Texas Property Code as then in effect; d. purchase the Property at any foreclosure sale by offering the highest bid and then have the bid credited on the Note; and e. exercise any other rights available under law. Notarize ID: XV2DZCDR DEED OF TRUST 352002.1 PAGE 5 OF 10 C.7. Lender may remedy any default without waiving it and may waive any default without waiving any prior or subsequent default. C.8. COLLATERAL PROTECTION INSURANCE NOTICE In accordance with the provisions of section 307.052(a) of the Texas Finance Code, the Lender hereby notifies the Grantor as follows: (a) the Grantor is required to: (i) keep the collateral insured against damage in the amount the Lender specifies; (ii) purchase the insurance from an insurer that is authorized to do business in the state of Texas or an eligible surplus lines insurer; and (iii) name the Lender as the person to be paid under the policy in the event of a loss; (b) the Grantor must, if required by the Lender, deliver to the Lender a copy of the policy and proof of the payment of premiums; and (c) if the Grantor fails to meet any requirement listed in Paragraph (A) or (B), the Lender may obtain collateral protection insurance on behalf of the Grantor at the Grantor’s expense. D. Trustee’s Rights and Duties If directed by Lender to foreclose this lien, Trustee will— D.1. either personally or by agent give notice of the foreclosure sale as required by the Texas Property Code as then in effect; D.2. sell and convey all or part of the Property “AS IS” to the highest bidder for cash with a general warranty binding Grantor, subject to the Prior Lien and to the Other Exceptions to Conveyance and Warranty and without representation or warranty, express or implied, by Trustee; D.3. from the proceeds of the sale, pay, in this order— a. expenses of foreclosure, including a reasonable commission to Trustee; b. to Lender, the full amount of principal, interest, attorney’s fees, and other charges due and unpaid; c. any amounts required by law to be paid before payment to Grantor; and d. to Grantor, any balance. D.4. be indemnified, held harmless, and defended by Lender against all costs, expenses, and liabilities incurred by Trustee for acting in the execution or enforcement of the trust created by this deed of trust, Notarize ID: XV2DZCDR DEED OF TRUST 352002.1 PAGE 6 OF 10 which includes all court and other costs, including attorney’s fees, incurred by Trustee in defense of any action or proceeding taken against Trustee in that capacity. E. General Provisions E.1. If any of the Property is sold under this deed of trust, Grantor must immediately surrender possession to the purchaser. If Grantor does not, Grantor will be a tenant at sufferance of the purchaser, subject to an action for forcible detainer. E.2. Recitals in any trustee’s deed conveying the Property will be presumed to be true. E.3. Proceeding under this deed of trust, filing suit for foreclosure, or pursuing any other remedy will not constitute an election of remedies. E.4. This lien will remain superior to liens later created even if the time of payment of all or part of the Note is extended or part of the Property is released. E.5. If any portion of the Note cannot be lawfully secured by this deed of trust, payments will be applied first to discharge that portion. E.6. Grantor assigns to Lender all amounts payable to or received by Grantor from condemnation of all or part of the Property, from private sale in lieu of condemnation, and from damages caused by public works or construction on or near the Property. After deducting any expenses incurred, including attorney’s fees and court and other costs, Lender will either release any remaining amounts to Grantor or apply such amounts to reduce the Note. Lender will not be liable for failure to collect or to exercise diligence in collecting any such amounts. Grantor will immediately give Lender notice of any actual or threatened proceedings for condemnation of all or part of the Property. E.7. Grantor collaterally assigns to Lender all present and future rent from the Property and its proceeds. Grantor warrants the validity and enforceability of the assignment. Grantor will apply all rent to payment of the Note and performance of this deed of trust, but if the rent exceeds the amount due with respect to the Note and the deed of trust, Grantor may retain the excess. If a default exists in payment of the Note or performance of this deed of trust, Lender may exercise Lender’s rights with respect to rent under the Texas Property Code as then in effect. Lender neither has nor assumes any obligations as lessor or landlord with respect to any occupant of the Property. Lender may exercise Lender’s rights and remedies under this paragraph without taking possession of the Property. Lender will apply all rent collected under this paragraph as required by the Texas Property Code as then in effect. Lender is not required to act under this paragraph, and acting under this paragraph does not waive any of Lender’s other rights and remedies. E.8. Interest on the debt secured by this deed of trust will not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law. Any interest in excess of that maximum amount will be credited on the principal of the debt or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any such excess will be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt or, if the principal of the debt has been paid, refunded. This provision overrides any conflicting provisions in this and all other instruments concerning the debt. Notarize ID: XV2DZCDR DEED OF TRUST 352002.1 PAGE 7 OF 10 E.9. In no event may this deed of trust secure payment of any debt that may not lawfully be secured by a lien on real estate or create a lien otherwise prohibited by law. E.10. If all or any party of the Property is sold, transferred, or conveyed without the prior written consent of Lender, Lender may declare the outstanding principal balance of the Note plus accrued interest immediately due and payable. Lender has no obligation to consent to any such sale or conveyance of the Property, and Lender is entitled to condition any consent on a change in the interest rate that will thereafter apply to the Note and any other change in the terms of the Note or this deed of trust that Lender in Lender’s sole discretion deems appropriate. A lease with an option to purchase, or a contract for deed will be deemed to be a sale, transfer, or conveyance of the Property for purposes of this provision. Any deed under threat or order of condemnation, any conveyance solely between makers, and the passage of title by reason of death of a maker or by operation of law will not be construed as a sale or conveyance of the Property. The creation of a subordinate lien without the consent of Lender will be construed as a sale or conveyance of the Property, but any subsequent sale under a subordinate lien to which Lender has consented will not be construed as a sale or conveyance of the Property. E.11. Grantor may not cause or permit any of the following events to occur without the prior written consent of Lender: if Grantor is (a) a corporation, the dissolution of the corporation or the sale, pledge, encumbrance, or assignment of any shares of its stock; (b) a limited liability company, the dissolution of the company or the sale, pledge, encumbrance, or assignment of any of its membership interests; (c) a general partnership or joint venture, the dissolution of the partnership or venture or the sale, pledge, encumbrance, or assignment of any of its partnership or joint venture interests, or the withdrawal from or admission into it of any general partner or joint venturer; or (d) a limited partnership, (i) the dissolution of the partnership, (ii) the sale, pledge, encumbrance, or assignment of any of its general partnership interests, or the withdrawal from or admission into it of any general partner, (iii) the sale, pledge, encumbrance, or assignment of a controlling portion of its limited partnership interests, or (iv) the withdrawal from or admission into it of any controlling limited partner or partners. If granted, consent may be conditioned upon (y) the integrity, reputation, character, creditworthiness, and management ability of the person succeeding to the ownership interest in Grantor (or security interest in such ownership) being satisfactory to Lender; and (z) the execution, before such event, by the person succeeding to the interest of Grantor in the Property or ownership interest in Grantor (or security interest in such ownership) of a written modification or assumption agreement containing such terms as Lender may require, such as a principal pay down on the Note, an increase in the rate of interest payable with respect to the Note, a transfer fee, or any other modification of the Note, this deed of trust, or any other instruments evidencing or securing the Note. E.12. When the context requires, singular nouns and pronouns include the plural. E.13. The term Note includes all extensions, modifications, and renewals of the Note and all amounts secured by this deed of trust. E.14. This deed of trust binds, benefits, and may be enforced by the successors in interest of all parties. Lender may assign its rights and/or obligations under this deed of trust without the prior written consent of Grantor. E.15. If Grantor and Borrower are not the same person, the term Grantor includes Borrower. Notarize ID: XV2DZCDR DEED OF TRUST 352002.1 PAGE 8 OF 10 E.16. Grantor and each surety, endorser, and guarantor of the Note waive, to the extent permitted by law, all (a) demand for payment, (b) presentation for payment, (c) notice of intention to accelerate maturity, (d) notice of acceleration of maturity, (e) protest, and (f) notice of protest. E.17. Grantor agrees to pay reasonable attorney’s fees, trustee’s fees, and court and other costs of enforcing Lender’s rights under this deed of trust if an attorney is retained for its enforcement. E.18. If any provision of this deed of trust is determined to be invalid or unenforceable, the validity or enforceability of any other provision will not be affected. E.19. Grantor agrees to execute, acknowledge, and deliver to Lender any document requested by Lender, at Lender’s request from time to time, to (a) correct any defect, error, omission, or ambiguity in this deed of trust or in any other document executed in connection with the Note or this deed of trust; (b) comply with Grantor’s obligations under this deed of trust and other documents; (c) subject to and perfect the liens and security interests of this deed of trust and other documents any property intended to be covered thereby; and (d) protect, perfect, or preserve the liens and the security interests of this deed of trust and other documents against third persons or make any recordings, file any notices, or obtain any consents requested by lender in connection therewith. Grantor agrees to pay all costs of the foregoing. E.20. In addition to creating a deed-of-trust lien on all the real and other property described above, Grantor also grants to Lender a security interest in all of the above-described personal property pursuant to and to the extent permitted by the Texas Uniform Commercial Code. E.21. In the event of a foreclosure sale under this deed of trust, Grantor agrees that all the Property may be sold as a whole at Lender’s option and that the Lender need not be present at the place of sale. E.22. Grantor represents to Lender that no part of the Property is either the residential or business homestead of Grantor and that Grantor neither resides nor intends to reside in nor conducts nor intends to conduct a business on the Property. Grantor renounces all present and future rights to a homestead exemption for the Property. Grantor acknowledges that Lender relies on the truth of representations in this paragraph in making the loan secured by this deed of trust. E.23. The lien security interest and other security rights of Lender hereunder shall not be impaired by any indulgence, moratorium, or release granted by Lender, including, but not limited to, any renewal, extension, increase, or modification which Lender may grant with respect to the Note or this deed of trust. E.24. Grantor warrants to Lender and agrees that the proceeds of the Note will be used primarily for business or commercial purposes and not primarily for personal, family, or household purposes. [Remainder of the Page Left Intentionally Blank] Notarize ID: XV2DZCDR DEED OF TRUST 352002.1 PAGE 9 OF 10 GRANTOR: ROSELANCLAND LIMITED PARTNERSHIP, a Texas limited partnership By: Michael Rosellini, its General Partner STATE OF TEXAS § § COUNTY OF ___________ § This instrument was acknowledged before me on the ________ day of August, 2017, by Michael Rosellini, the General Partner of Roselancland Limited Partnership, on behalf of such limited partnership. _____________________________ Notary Public, State of Texas AFTER RECORDING, RETURN TO: Bryon R. Hammer 301 Commerce Street, Suite 1500 Fort Worth, Texas 76102 Notarize ID: XV2DZCDR VIRGINIA Campbell 21st : Pa Pleuni Clazina D Finley VIRGINIA __________________ ___ euni Finle My Commission expires: 01-31-2020 My Notary ID: 7669630 DEED OF TRUST 352002.1 PAGE 10 OF 10 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY Being a part of the P. KIRKLAND SURVEY, PATENT NO. 352, Volume 10, Abstract No. 746, and described by metes and bounds as follows: BEGINNING at the Northwest corner of 160 acres deeded to H. Bailey by R.P. Henry and wife on December 31, 1901; THENCE South with the West line of said 160 acre tract 1460 feet; THENCE East, passing an iron stake under a fence on the East side of the public road, in all 572 feet to corner, an iron stake; THENCE North 404 feet; THENCE East 1540 feet to an iron stake on the East line of said 160 acre tract; THENCE North 1056 feet to a bois d'arc stake at the N.E. corner of said 160 acre tract; THENCE West 2112 feet to the PLACE OF BEGINNING; EXCEPTING about 3-1/2 acres heretofore set apart and occupied by the right-of-way of the M.K. & T. R.R. and the County Public Road and excepting 3.29 acres of land conveyed by J.N. Lowrance et ux to E.T. Moore, Trustee, by Deed recorded in Volume 529, Page 472, Deed Records of Dallas County, Texas, leaving approximately 47-1/2 acres of land. FURTHER SAVE AND EXCEPT 3.154 acres of land described in Deed recorded in Volume 79173, Page 1603, Real Property Records, Dallas County, Texas. FURTHER SAVE AND EXCEPT 1.00 acre conveyed by Randy Michael Rosellini to Rose Wade Limited Partnership by Deed recorded under Clerk's File No. 20070194882, Real Property Records, Dallas County, Texas. Notarize ID: XV2DZCDR