Form 8-K
8-K — Scienture Holdings, Inc.
Accession: 0001493152-26-020931
Filed: 2026-05-01
Period: 2026-04-27
CIK: 0001382574
SIC: 2834 (PHARMACEUTICAL PREPARATIONS)
Item: Entry into a Material Definitive Agreement
Item: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Item: Financial Statements and Exhibits
Documents
8-K — form8-k.htm (Primary)
EX-10.1 (ex10-1.htm)
EX-10.2 (ex10-2.htm)
EX-10.3 (ex10-3.htm)
EX-10.4 (ex10-4.htm)
EX-10.5 (ex10-5.htm)
EX-10.6 (ex10-6.htm)
EX-10.7 (ex10-7.htm)
EX-10.8 (ex10-8.htm)
XML — IDEA: XBRL DOCUMENT (R1.htm)
8-K
8-K (Primary)
Filename: form8-k.htm · Sequence: 1
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0001382574
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2026-04-27
2026-04-27
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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): April 27, 2026
Scienture
Holdings, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
001-39199
46-3673928
(State
or other jurisdiction
of
incorporation)
(Commission
File
No.)
(I.R.S.
Employer
Identification
No.)
20
Austin Blvd.
Commack,
NY 11725
(Address
of Principal Executive Offices)
(631)
670-6039
(Registrant’s
Telephone Number)
Not
Applicable
(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 (see General Instruction A.2. below):
☐
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))
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading
Symbol(s)
Name
of each exchange on which registered
Common
Stock, par value $0.00001 per share
SCNX
The
Nasdaq Stock Market LLC
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. ☐
Item
1.01.
Entry
into a Material Definitive Agreement.
The
information provided in Item 2.03 is hereby incorporated by reference.
Item
2.03
Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On
April 27, 2026, Scienture Holdings, Inc. (the “Company”) entered into and closed on a note purchase agreement
(the “Purchase Agreement”) with Streeterville Capital, LLC, (the “Lender”) providing
for the issuance of two secured promissory notes: (i) a Secured Promissory Note A-1 in the original principal amount of $8.42 million
(the “A-1 Note”) and (ii) a Secured Promissory Note B in the original principal amount of $3 million (the “B
Note”). The A-1 Note carries an original issue discount of $400,000 and the Company agreed to pay $20,000 to the Lender
to cover the Lender’s transaction costs. The B Note does not carry an original issuance discount.
At
closing, the Lender paid $8 million to the Company and deposited an additional $3 million into an account at Lakeside Bank owned by the
Company’s newly formed wholly-owned subsidiary, SCNX Holdings, LLC, a Utah limited liability company (“SCNX Sub”),
to be held pursuant to a Deposit Account Control Agreement entered into among SCNX Sub, the Lender, and Lakeside Bank (the “DACA”).
The Company intends to utilize the net proceeds from closing of the Purchase Agreement for working capital, related to commercialization
expenses, portfolio and product development expenses, and other general corporate purposes. Maxim Group LLC served as placement agent
for the transaction.
Each
time the aggregate outstanding balance of the A-1 Note is reduced by $1 million, the Company will have the right to exchange $1 million
(or such other amount as the parties mutually agree) of the B Note for a new secured note in the same form as the A-1 Note (each, a “Note
Exchange”) pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended. Each additional note issued pursuant
to a Note Exchange will have the same interest rate, original issuance discount percentage, and other economic and other terms as the
A-1 Note. The maturity date for each additional note will be equal to the greater of 12 months and the length of time remaining on the
B Note. The Company will not incur additional transaction expenses as a result of a Note Exchange.
The
principal amount of the A-1 Note is due eighteen months following the date of issuance. Interest under the A-1 Note accrues at a rate
of 9% per annum. The A-1 Note can be prepaid in whole or in part at any time, subject to a prepayment premium of 115% if the prepayment
is made in connection with third-party refinancing. Beginning eight months after the closing date, the Lender may redeem (i) up to $175,000
per calendar month (a “Monthly Redemption”), and (ii) up to 10% of the daily dollar trading volume of the Company’s
common stock in the event shares of the Company’s common stock trade at a price that is more than 20% greater than the “Minimum
Price” as defined under The Nasdaq Stock Market LLC Rule 5635(d) (a “Limited Redemption”). The Lender
may effect a Limited Redemption within five trading days of the date that shares of the Company’s common stock trade at a price
that is more than 20% greater than the Minimum Price. The applicable redemption amount is due and payable in cash within four trading
days of the Company’s receipt of a redemption notice from the Lender.
The
principal amount of the B Note is due eighteen months following the date of issuance. Interest under the B Note accrues at a rate of
5% per annum. The B Note can be prepaid in whole or in part at any time, subject to a prepayment premium of 115% if the prepayment is
made in connection with third-party refinancing.
Each
of the A-1 Note and B Note contain “Major Trigger Events” and “Minor Trigger Events.” A Major Trigger Event will
occur if: (a) the Company does not pay any principal, interest, fees, charges, or any other amount when due and payable; (b) a receiver,
trustee or other similar official is appointed over the Company or a material part of its assets and such appointment either is uncontested
for 20 days or is not dismissed or discharged within 90 days; (c) the Company becomes insolvent or generally fails to pay, or admits
in writing that the Company is unable to pay, its debts as they become due, subject to any applicable grace periods; (d) the Company
makes a general assignment for the benefit of creditors; (e) the Company files a petition for relief under any bankruptcy, insolvency
or similar law; (f) an involuntary bankruptcy proceeding is commenced or filed against the Company and has not been dismissed or discharged
within 90 days; (g) the Company fails to observe or perform any covenant set forth in Section 4 of the Purchase Agreement; or (h) the
Company effects a Fundamental Transaction (as defined in the A-1 Note or B Note) without the Lender’s prior written consent. A
Minor Trigger Event will occur if: (i) the Company fails to cure, within 15 days of receiving written notice from the Lender, a default
or failure to observe or perform a covenant, obligation, condition or agreement contained in the Purchase Agreement or in any other related
agreement, other than those specifically set forth in Section 4 of the Purchase Agreement; (ii) any representation, warranty or other
statement made or furnished by or on behalf of the Company to the Lender in the Purchase Agreement or any related agreement, or otherwise
in connection with the issuance of the A-1 Note or B Note, respectively, is false, incorrect, incomplete or misleading in any material
respect when made or furnished; (iii) the Company effectuates a reverse split of its shares of common stock without providing the Lender
with written notice at least 20 trading days before such reverse split; (iv) absent the Lender’s written consent, any money judgment,
writ or similar process is entered or filed against the Company or any of its subsidiaries, or property and assets for more than $500,000
and it remains unvacated, unbonded or unstayed for a period of 30 calendar days; (v) the Company fails to be DWAC eligible; or (vi) the
Company breaches any covenant or other term or condition contained in any agreement with the Lender or any financing agreement or material
agreement affecting the Company’s ongoing business operations in any material respect beyond any applicable notice or cure period,
resulting in the acceleration of the Company’s obligations under any such agreement.
At
any time following the occurrence of a Major Trigger Event or Minor Trigger Event, the Lender may, upon prior written notice to the Company,
increase the outstanding balance of the A-1 Note or B-1 Note, as applicable, by 15% for each occurrence of any Major Trigger Event and
5% for each occurrence of any Minor Trigger Event (the “Trigger Effect”). However, the aggregate application
of the Trigger Effect may not exceed 25%. If the Company fails to cure a Major Trigger Event or Minor Trigger Event within 5 trading
days following the date of transmission of a written cure demand notice by the Lender, the event will automatically become an “Event
of Default.” Following the occurrence of an Event of Default, the Lender may, upon written notice to the Company: (i) accelerate
the A-1 Note or B Note (as applicable), with the outstanding balance of the corresponding A-1 Note or B Note—including application
of the Trigger Effect—becoming immediately due and payable in cash; provided, however, that upon the occurrence of
certain types of Major Trigger Events and Minor Trigger Events as specified in the A-1 Note and B Note, respectively, an Event of Default
will be deemed to have occurred and the outstanding balance as of the date of the occurrence of such event will become immediately and
automatically due and payable in cash, without any written notice required by the Lender, and (ii) cause interest on the outstanding
balance of the respective A-1 Note or B Note to accrue at an interest rate equal to the lesser of 18% per annum simple interest or the
maximum rate permitted under applicable law beginning on the date the applicable Event of Default occurred. In connection with any acceleration,
the Lender need not provide any presentment, demand, protest, or other notice of any kind, and the Lender may immediately and without
expiration of any grace period enforce any and all of its rights and remedies under the respective A-1 Note or B Note and all other remedies
available to the Lender under applicable law.
The
Company made various customary representations, warranties, and covenants in the Purchase Agreement. These include that, until all of
the Company’s obligations under the A-1 Note and B Note, respectively, and all other transaction documents are paid and performed
in full, or within the timeframes otherwise specifically set forth therein, the Company will (i) timely file on the applicable deadline
all reports required to be filed with the Securities and Exchange Commission (the “SEC”) pursuant to Sections
13 or 15(d) of the Securities Exchange Act of 1934, as amended, and will take all reasonable action under its control to ensure that
adequate current public information with respect to the Company is publicly available, and will not terminate its status as an issuer
required to file reports with the SEC under applicable law or the rules and regulations thereunder would permit such termination; (ii)
ensure that its shares of common stock are listed or quoted for trading on a national securities exchange; (iii) ensure that trading
in its shares of common stock will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease trading on the Company’s
principal trading market; (iv) not make a Restricted Issuance (as defined in the Purchase Agreement) without the Lender’s prior
written consent; (v) not enter into any agreement or otherwise agree to any covenant, condition, or obligation that locks up, restricts
in any way or otherwise prohibits the Company from: (a) entering into a variable rate transaction with the Lender or any affiliate of
the Lender, or (b) issuing common stock, preferred stock, warrants, convertible notes, other debt securities, or any other securities
of the Company to the Lender or any affiliate of the Lender; (vi) not grant, and refrain from causing the Company’s subsidiaries
from granting, any security interest, lien, pledge or other encumbrance with respect to any of the Company’s assets; (vii) grant
the Lender online access to monitor the SCNX Sub deposit account at Lakeside Bank; (viii) notify the Lender of any action, suit, proceeding,
inquiry or investigation filed or initiated in writing against the Company or its subsidiaries within 3 trading days of the Company receiving
written notice of such event; (ix) not sell, transfer, or issue any equity or grant any rights to any equity interest or voting rights
in the Company’s subsidiaries; (x) not allow SCNX Holdings to issue, incur, or guaranty any debt or conduct any business operations;
and (xi) not allow Scienture, LLC to issue, incur or guaranty any debt other than in the ordinary course of business.
The
representations and warranties made by the Company in the Purchase Agreement were made solely for the benefit of the Company and the
Lender. These representations and warranties (i) may be intended not as statements of fact, but rather as a way of allocating risk to
one of the parties if those statements prove to be inaccurate, (ii) may apply materiality standards different from what may be viewed
as material to investors, and (iii) were made only as of the date of the respective agreements or as of such other date or dates as may
be specified in such agreements. Moreover, information concerning the subject matter of such representations and warranties may change
after the date of the respective agreements, which subsequent information may or may not be fully reflected in the Company’s public
disclosures. Investors are urged not to rely on such representations and warranties as characterizations of the actual state of facts
or circumstances at this time or any other time.
The
Company’s obligations under the Purchase Agreement are secured by the DACA, a guaranty from SCNX Sub and Scienture, LLC (the “Guaranty”),
a security agreement by Scienture, LLC granting the Lender a security interest in all of Scienture, LLC’s assets (the “Scienture
Security Agreement”), a security agreement by the Company granting the Lender a security interest in all of the Company’s
assets (the “Company Security Agreement”), an intellectual property security agreement by Scienture, LLC granting
the Lender a security interest in all of Scienture, LLC’s intellectual property (the “IP Security Agreement”
and together with the Scienture Security Agreement and the Company Security Agreement, the “Security Agreements”),
and a pledge (the “Pledge Agreement”) by the Company of all membership interests in SCNX Sub.
The
foregoing descriptions of the Purchase Agreement, A-1 Note, B Note, Security Agreements, Pledge Agreement, and Guaranty do not purport
to be complete and are qualified in entirety by reference to the full text of such documents, copies of which are filed as Exhibits 10.1,
10.2, 10.3, 10.4, 10.5, 10.6, and 10.7, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
Exhibit
No.
Description
10.1
Note Purchase Agreement dated April 27, 2026, by and between the Company and Streeterville Capital, LLC.
10.2
Secured Promissory Note A-1 dated April 27, 2026, made by the Company in favor of Streeterville Capital, LLC.
10.3
Secured Promissory Note B dated April 27, 2026, made by the Company in favor of Streeterville Capital, LLC.
10.4
Security Agreement dated April 27, 2026, by and between the Company and Streeterville Capital, LLC.
10.5
Security Agreement dated April 27, 2026, by and between Scienture, LLC and Streeterville Capital, LLC.
10.6
Intellectual Property Security Agreement dated April 27, 2026, by and between Scienture, LLC and Streeterville Capital, LLC.
10.7
Pledge Agreement dated April 27, 2026, by and between the Company and Streeterville Capital, LLC.
10.8
Guaranty dated April 27, 2026, made by Scienture, LLC and SCNX Holdings, LLC for the benefit of Streeterville Capital, LLC.
104
Cover
Page Interactive Data File (embedded with the Inline XBRL document).
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.
SCIENTURE
HOLDINGS, INC.
By:
/s/
Dr. Narasimhan Mani
Dr.
Narasimhan Mani
Co-Chief
Executive Officer
Date:
May 1, 2026
EX-10.1
EX-10.1
Filename: ex10-1.htm · Sequence: 2
Exhibit
10.1
Note
Purchase Agreement
This
Note Purchase Agreement (this “Agreement”),
dated as of April 27, 2026, is entered into by and between Scienture Holdings, Inc., a
Delaware corporation (“Company”), and Streeterville Capital, LLC, a
Utah limited liability company, its successors and/or assigns (“Investor”).
A. Company
and Investor are executing and delivering this Agreement in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended (the
“1933 Act”), and Rule 506 promulgated thereunder by the United States Securities and Exchange Commission (the “SEC”).
B. Investor
desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement: (i) a Secured Promissory
Note A-1 in the original principal amount of $8,420,000.00 in the form attached hereto as Exhibit A (the “A-1 Note”,
and together with any notes issued pursuant to Section 1.7 below, the “A Notes”); and (ii) a Secured Promissory Note
B in the original principal amount of $3,000,000.00 in the form attached hereto as Exhibit B (the “B Note”,
and together with the A Notes, the “Notes”; each individually, a “Note”).
C. This
Agreement, the Notes, the DACA (as defined below), the Collateral Agreements (as defined below), and all other certificates, documents,
agreements, resolutions and instruments delivered to any party under or in connection with this Agreement, as the same may be amended
from time to time, are collectively referred to herein as the “Transaction Documents.”
NOW,
THEREFORE, in consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Company and Investor hereby agree as follows:
1. Purchase
and Sale of Notes.
1.1. Purchase
of Notes. Company hereby agrees to issue and sell to Investor and Investor hereby agrees to purchase from Company the A-1 Note and
the B Note. In consideration thereof, Investor agrees to pay $11,000,000.00 (the “Purchase Price”) to Company.
1.2. Form
of Payment. On the Closing Date (as defined below), Investor shall pay the Purchase Price to Company via wire transfer of immediately
available funds against delivery of the A-1 Note and the B Note as follows: (i) $8,000,000.00 of the Purchase Price will be sent to Company
for the A-1 Note; and (ii) $3,000,000.00 of the Purchase Price will be sent to Lakeside Bank to be held pursuant to the DACA for the
B Note.
1.3. Closing
Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below, the date of the
issuance and sale of the Notes pursuant to this Agreement (the “Closing Date”) shall be April 27, 2026, or such other
mutually agreed upon date. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur
on the Closing Date by means of the exchange by exchange of electronic signatures but shall be deemed for all purposes to have occurred
at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.
1.4. Original
Issue Discount; Transaction Expense Amount. The A-1 Note carries an original issue discount of $400,000.00 (the “OID”).
In addition, Company agrees to pay $20,000.00 to Investor to cover Investor’s legal, administrative and due diligence expenses
incurred in connection with the purchase and sale of the Notes (the “Transaction Expense Amount”), all of which amount
is included in the initial principal balance of the A-1 Note.
1
1.5. DACA.
The Notes will be secured by cash held in a deposit account (“Deposit Account”) pursuant to a Deposit Account Control
Agreement in substantially the form attached hereto as Exhibit C (the “DACA”). Company hereby grants to Investor
a first-position security interest in the Deposit Account and acknowledges and agrees that Investor will have the right to file a UCC-1
Financing Statement with respect to the Deposit Account. If at any time the amount held in the Deposit Account is at least $25,000.00
greater than the outstanding balance of the B Note, Borrower will have the right to withdraw an amount equal to such difference from
the Deposit Account.
1.6. Collateral.
In addition to the DACA, Company’s obligations under the Notes will be secured by: (a) a Guaranty in the form attached hereto as
Exhibit D (the “Guaranty”), to be executed by Scienture LLC (“Scienture LLC”) and SCNX Holdings,
LLC (“SCNX Holdings”, and together with Scienture LLC, the “Subsidiaries”; and each individually,
a “Subsidiary”); (b) a Pledge Agreement in the form attached hereto as Exhibit E (the “Pledge Agreement”);
(c) a Security Agreement executed by Company in the form attached hereto as Exhibit F (the “Company Security Agreement”);
(d) a Security Agreement executed by Scienture LLC in substantially the form attached hereto as Exhibit G (the “Scienture
LLC Security Agreement”); and (e) an Intellectual Property Security Agreement executed by Scienture LLC in substantially the
form attached hereto as Exhibit H (the “IP Security Agreement”, and together with the Guaranty, the Pledge
Agreement, the Company Security Agreement, and the Scienture LLC Security Agreement, the “Collateral Agreements”).
1.7. B
Note Exchanges. Each time the aggregate outstanding balance of all A Notes is reduced by an amount equal to $1,000,000.00, then Company
will have the right to exchange $1,000,000.00 (or such other amount as the parties mutually agree) of the B Note for an A Note in the
same form as the A-1 Note (each, a “Note Exchange”). Each Note Exchange will be effected pursuant to Section 3(a)(9)
of the 1933 Act. Each additional A Note issued pursuant to a Note Exchange will have the same interest rate, OID percentage, and other
economic and other terms as the A-1 Note. The maturity date for each additional A Note will be equal to the greater of twelve (12) months
and the length of time remaining on the B Note. Upon completion of a Note Exchange, an amount equal to the portion of the outstanding
balance of the B Note exchanged for the applicable A Note will be released from the Deposit Account. No additional Transaction Expense
Amount will be assessed in connection with the issuance of any A Note pursuant to a Note Exchange.
2. Investor’s
Representations and Warranties. Investor represents and warrants to Company that as of the Closing Date: (i) this Agreement has been
duly and validly authorized; (ii) this Agreement constitutes a valid and binding agreement of Investor enforceable in accordance with
its terms; (iii) Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the 1933
Act; and (iv) Investor is not registered as a ‘dealer’ under the 1934 Act.
2
3. Company’s
Representations and Warranties. Company represents and warrants to Investor that as of the Closing Date: (i) Company is a corporation
duly organized, validly existing and in good standing under the laws of its state of incorporation and has the requisite corporate power
to own its properties and to carry on its business as now being conducted; (ii) Company is duly qualified as a foreign corporation to
do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such
qualification necessary; (iii) Company has registered its shares of common stock, $0.00001 par value per share (the “Common
Shares”), under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and is
obligated to file reports pursuant to Section 13 or Section 15(d) of the 1934 Act; (iv) each of the Transaction Documents and the transactions
contemplated hereby and thereby, have been duly and validly authorized by Company and all necessary actions have been taken; (v) each
of the Transaction Documents has been duly executed and delivered by Company and constitute the valid and binding obligations of Company
enforceable in accordance with their terms; (vi) the execution and delivery of the Transaction Documents by Company and the consummation
by Company of the other transactions contemplated by the Transaction Documents do not and will not conflict with or result in a breach
by Company of any of the terms or provisions of, or constitute a default under (a) Company’s incorporation documents or bylaws,
each as currently in effect, (b) any indenture, mortgage, deed of trust, or other material agreement or instrument to which Company is
a party or by which it or any of its properties or assets are bound or (c) any existing applicable law, rule, or regulation or any applicable
decree, judgment, or order of any court, United States federal, state or foreign regulatory body, administrative agency, or other governmental
body having jurisdiction over Company or any of Company’s properties or assets; (vii) no further authorization, approval or consent
of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders or
any lender of Company is required to be obtained by Company for the issuance of the Notes to Investor or the entering into of the Transaction
Documents; (viii) during the twelve months preceding the date of this Agreement, none of Company’s filings with the SEC contained,
at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (ix) during
the twelve months preceding the date of this Agreement and except for current reports on Form 8-K Company has filed all reports, schedules,
forms, statements and other documents required to be filed by Company with the SEC under the 1934 Act on a timely basis or has received
a valid extension of such time of filing and has filed any such report, schedule, form, statement or other document prior to the expiration
of any such extension; (x) except as disclosed in the reports filed by the Company with the SEC, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending or, to the knowledge of Company, threatened against or
affecting Company before or by any governmental authority or non-governmental department, commission, board, bureau, agency or instrumentality
or any other person, wherein an unfavorable decision, ruling or finding would reasonably be expected to have a material adverse effect
on Company or which would adversely affect the validity or enforceability of, or the authority or ability of Company to perform its obligations
under, any of the Transaction Documents; (xi) Company has not consummated any financing transaction that is required to be disclosed
and has not been disclosed in a periodic filing or current report with the SEC under the 1934 Act; (xii) Company is not, nor has it been
at any time in the previous twelve (12) months, a “Shell Company,” as such type of “issuer” is described in Rule
144(i)(1) under the 1933 Act; (xiii) with respect to any commissions, placement agent or finder’s fees or similar payments that
will or would become due and owing by Company to any person or entity as a result of this Agreement or the transactions contemplated
hereby (“Broker Fees”), any such Broker Fees will be made in full compliance with all applicable laws and regulations
and only to a person or entity that is a registered investment adviser or registered broker-dealer; (xiv) Investor shall have no obligation
with respect to any Broker Fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated in
this subsection that may be due in connection with the transactions contemplated hereby and Company shall indemnify and hold harmless
each of Investor, Investor’s employees, officers, directors, stockholders, managers, agents, and partners, and their respective
affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and reasonable attorneys’ fees)
and expenses suffered in respect of any such claimed or existing Broker Fees; (xv) neither Investor nor any of its officers, directors,
members, managers, employees, agents or representatives has made any representations or warranties to Company or any of its officers,
directors, employees, agents or representatives except as expressly set forth in the Transaction Documents and, in making its decision
to enter into the transactions contemplated by the Transaction Documents, Company is not relying on any representation, warranty, covenant
or promise of Investor or its officers, directors, members, managers, employees, agents or representatives other than as set forth in
the Transaction Documents; (xvi) Company acknowledges that the State of Utah has a reasonable relationship and sufficient contacts to
the transactions contemplated by the Transaction Documents and any dispute that may arise related thereto such that the laws and venue
of the State of Utah, as set forth more specifically in Section 7.2 below, shall be applicable to the Transaction Documents and the transactions
contemplated therein; (xvii) Company acknowledges that Investor is not registered as a ‘dealer’ under the 1934 Act; and (xviii)
Company has performed due diligence and background research on Investor and its affiliates and has received and reviewed the due diligence
packet provided by Investor. Company, being aware of the matters and legal issues described in subsections (xvii) and (xviii) above,
acknowledges and agrees that such matters, or any similar matters, have no bearing on the transactions contemplated by the Transaction
Documents and covenants and agrees it will not use any such information or legal theory as a defense to performance of its obligations
under the Transaction Documents or in any attempt to avoid, modify, reduce, rescind or void such obligations.
3
4. Company
Covenants. Until all of Company’s obligations under all of the Transaction Documents are paid and performed in full, or within
the timeframes otherwise specifically set forth below, Company will at all times comply with the following covenants: (i) so long as
Investor beneficially owns any Note and for at least twenty (20) Trading Days (as defined in the Notes) thereafter, Company will timely
file on the applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and will
take all reasonable action under its control to ensure that adequate current public information with respect to Company, as required
in accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; (ii) Company will ensure
that the Common Shares are listed or quoted for trading on NYSE, NYSE American, or Nasdaq; (iii) Company will ensure that trading in
the Common Shares will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease trading on Company’s principal
trading market; (iv) Company will not make any Restricted Issuance (as defined below) without Investor’s prior written consent,
which consent may be granted or withheld in Investor’s sole and absolute discretion; (v) Company will not enter into any agreement
or otherwise agree to any covenant, condition, or obligation that locks up, restricts in any way or otherwise prohibits Company: (a)
from entering into a variable rate transaction with Investor or any affiliate of Investor, or (b) from issuing Common Shares, preferred
stock, warrants, convertible notes, other debt securities, or any other Company securities to Investor or any affiliate of Investor;
(vi) neither Company nor either Subsidiary will grant any security interest, lien, pledge or other encumbrance with respect to any of
its assets; (vii) Company will grant Investor online access to monitor the Deposit Account and maintain such access until the B Note
is paid in full; (viii) Company will notify Investor of any action, suit, proceeding, inquiry or investigation filed or initiated in
writing against Company or the Subsidiaries within three (3) Trading Days of the Company receiving written notice of such (it being acknowledged
by Investor that Company has notified it of any action, suit, proceeding, inquiry and investigation filed or initiated against Company
or the Subsidiaries as of the date hereof and that the same are excluded from this Section 4(viii)); (ix) Company will not sell, transfer,
or issue any equity or grant any rights to any equity interest or voting rights in the Subsidiaries; (x) Company will not allow SCNX
Holdings to issue, incur, or guaranty any debt or conduct any business operations; and (xi) Company will not allow Scienture LLC to issue,
incur or guaranty any debt other than in the ordinary course of business.
For
purposes hereof, the term “Restricted Issuance” means the issuance, incurrence or guaranty of any debt obligations
(including any merchant cash advance, account receivable factoring or other similar agreement) other than trade payables in the ordinary
course of business, or the issuance of any securities that: (1) have or may have conversion rights of any kind, contingent, conditional
or otherwise, in which the number of shares that may be issued pursuant to such conversion right varies with the market price of the
Common Shares, (2) are or may become convertible into Common Shares (including without limitation convertible debt, warrants or convertible
preferred shares), with a conversion price that varies with the market price of the Common Shares, even if such security only becomes
convertible following an event of default, the passage of time, or another trigger event or condition; (3) have a fixed conversion price,
exercise price or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt
or equity security (A) due to a change in the market price of Company’s Common Shares since the date of the initial issuance, or
(B) upon the occurrence of specified or contingent events directly or indirectly related to the business of Company (including, without
limitation, any “full ratchet” or “weighted average” anti-dilution provisions, but not including any standard
anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction); or (4)
are issued in connection with a Section 3(a)(9) exchange, a Section 3(a)(10) settlement, or any other similar settlement or exchange.
For the avoidance of doubt, none of the following will be considered Restricted Issuances: (i) current or future ATM facilities; and
(ii) primary offerings of Common Shares or warrants without variable price mechanics or any anti-dilution, “alternate cash exercise”
or other similar mechanics or provisions that would allow for the reduction of the exercise price of the warrants or increase the number
of shares exercisable under the warrants.
4
5. Conditions
to Company’s Obligation to Sell. The obligation of Company hereunder to issue and sell the A-1 Note and B Note to Investor
at the Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:
5.1. Investor
shall have executed all applicable Transaction Documents and delivered the same to Company.
5.2. Investor
shall have delivered the Purchase Price to Company in accordance with Section 1.2 above.
6. Conditions
to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the A-1 Note and the B Note at the Closing
is subject to the satisfaction, on or before the Closing Date, of each of the following conditions, provided that these conditions are
for Investor’s sole benefit and may be waived by Investor at any time in its sole discretion:
6.1. Company
shall have executed all applicable Transaction Documents and delivered the same to Investor.
6.2. Company
shall have delivered to Investor a fully executed Officer’s Certificate substantially in the form attached hereto as Exhibit
I evidencing Company’s approval of the Transaction Documents.
6.3. SCNX
Holdings and Lakeside Bank shall have executed and delivered the DACA to Investor.
6.4. Each
Subsidiary shall have executed and delivered the Guaranty to Investor.
6.5. Scienture
LLC shall have executed and delivered the Scienture LLC Security Agreement and IP Security Agreement and delivered the same to Investor.
7. Miscellaneous.
The provisions set forth in this Section 7 shall apply to this Agreement, as well as all other Transaction Documents as if these terms
were fully set forth therein; provided, however, that in the event there is a conflict between any provision set forth in this Section
7 and any provision in any other Transaction Document, the provision in such other Transaction Document shall govern.
7.1. Arbitration
of Claims. The parties shall submit all Claims (as defined in Exhibit J) arising under this Agreement or any other Transaction
Document or any other agreement between the parties and their affiliates or any Claim relating to the relationship of the parties to
binding arbitration pursuant to the arbitration provisions set forth in Exhibit J attached hereto (the “Arbitration Provisions”).
For the avoidance of doubt, the parties agree that the injunction described in Section 7.3 below may be pursued in an arbitration that
is separate and apart from any other arbitration regarding all other Claims arising under the Transaction Documents. The parties hereby
acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other
provisions of this Agreement. By executing this Agreement, Company represents, warrants and covenants that Company has reviewed the Arbitration
Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration
Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations
set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. Company
acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Company regarding the Arbitration
Provisions.
5
7.2. Governing
Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Utah. Each party consents to and expressly agrees that the exclusive
venue for arbitration of any dispute arising out of or relating to any Transaction Document or the relationship of the parties or their
affiliates shall be in Salt Lake County, Utah. Without modifying the parties’ obligations to resolve disputes hereunder pursuant
to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents, each party hereto hereby
(i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in Salt Lake County,
Utah, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, and (iii) waives any claim of improper
venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense or objection to the bringing
of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper. Company acknowledges
that the governing law and venue provisions set forth in this Section 7.2 are material terms to induce Investor to enter into the Transaction
Documents and that but for Company’s agreements set forth in this Section 7.2 Investor would not have entered into the Transaction
Documents.
7.3. Specific
Performance. Company acknowledges and agrees that Investor may suffer irreparable harm if Company fails to perform any material provision
of this Agreement or any of the other Transaction Documents in accordance with its specific terms. It is accordingly agreed that Investor
shall be entitled to one or more injunctions to prevent or cure breaches of the provisions of this Agreement or such other Transaction
Document and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which
Investor may be entitled under the Transaction Documents, at law or in equity. Company specifically agrees that: (i) following an Event
of Default (as defined in the Notes) under any Note, Investor shall have the right to seek and receive injunctive relief from a court
or an arbitrator prohibiting Company from issuing any of its Common Shares or preferred stock to any party unless fifty percent (50%)
of the gross proceeds received by Company in connection with such issuance are simultaneously used by Company to make a payment under
the Notes; (ii) following a breach of Section 4(v) above, Investor shall have the right to seek and receive injunctive relief from a
court or arbitrator invalidating such lock-up; and (iii) if Company enters into a definitive agreement that contemplates a Fundamental
Transaction (as defined in the Notes), unless such agreement contains a closing condition that the Notes are repaid in full upon consummation
of the transaction or Investor has provided its written consent in writing to such Fundamental Transaction, Investor shall have the right
to seek and receive injunctive relief from a court or arbitrator preventing the consummation of such transaction. Company specifically
acknowledges that Investor’s right to obtain specific performance constitutes bargained for leverage and that the loss of such
leverage would result in irreparable harm to Investor. For the avoidance of doubt, in the event Investor seeks to obtain an injunction
from a court or an arbitrator against Company or specific performance of any provision of any Transaction Document, such action shall
not be a waiver of any right of Investor under any Transaction Document, at law, or in equity, including without limitation its rights
to arbitrate any Claim pursuant to the terms of the Transaction Documents, nor shall Investor’s pursuit of an injunction prevent
Investor, under the doctrines of claim preclusion, issues preclusion, res judicata or other similar legal doctrines, from pursuing other
Claims in the future in a separate arbitration.
6
7.4. 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 exchange of electronic signatures (including pdf or any
electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) 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.
7.5. Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this
Agreement.
7.6. Severability.
In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute
or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
7.7. Entire
Agreement. This Agreement, together with the other Transaction Documents, contains the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Company nor Investor makes
any representation, warranty, covenant or undertaking with respect to such matters. For the avoidance of doubt, all prior term sheets
or other documents between Company and Investor, or any affiliate thereof, related to the transactions contemplated by the Transaction
Documents (collectively, “Prior Agreements”), that may have been entered into between Company and Investor, or any
affiliate thereof, are hereby null and void and deemed to be replaced in their entirety by the Transaction Documents. To the extent there
is a conflict between any term set forth in any Prior Agreement and the term(s) of the Transaction Documents, the Transaction Documents
shall govern.
7.8. No
Reliance. Company acknowledges and agrees that neither Investor nor any of its officers, directors, members, managers, representatives
or agents has made any representations or warranties to Company or any of its officers, directors, representatives, agents or employees
except as expressly set forth in the Transaction Documents and, in making its decision to enter into the transactions contemplated by
the Transaction Documents, Company is not relying on any representation, warranty, covenant or promise of Investor or its officers, directors,
members, managers, agents or representatives other than as set forth in the Transaction Documents.
7.9. Amendments.
No provision of this Agreement may be waived or amended other than by an instrument in writing signed by both parties hereto.
7.10. Notices.
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to
an executive officer, or by facsimile (with successful transmission confirmation), (ii) the earlier of the date delivered or the third
business day after deposit, postage prepaid, in the United States Postal Service by certified mail, or (iii) the earlier of the date
delivered or the third business day after mailing by express courier, with delivery costs and fees prepaid, in each case, addressed to
each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by five
(5) calendar days’ advance written notice similarly given to each of the other parties hereto):
7
If
to Company:
Scienture
Holdings, Inc.
Attn:
Shankar Hariharan
20
Austin Blvd.
Commack,
New York 11725
If
to Investor:
Streeterville
Capital, LLC
Attn:
John Fife
297
Auto Mall Drive, Suite #4
St.
George, Utah 84770
Email:
jfife@chicagoventure.com
With
a copy to (which copy shall not constitute notice):
Hansen
Black Anderson Ashcraft PLLC
Attn:
Jonathan Hansen
3051
West Maple Loop Drive, Suite 325
Lehi,
Utah 84083
Email:
jhansen@hbaalaw.com
7.11. Successors
and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor
hereunder may be assigned by Investor to a third party, including its affiliates, in whole or in part, without the need to obtain Company’s
consent thereto. Company may not assign its rights or obligations under this Agreement or delegate its duties hereunder without the prior
written consent of Investor.
7.12. Survival.
The representations and warranties of Company and the agreements and covenants set forth in this Agreement shall survive the Closing
hereunder notwithstanding any due diligence investigation conducted by or on behalf of Investor. Company agrees to indemnify and hold
harmless Investor and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related
to any breach or alleged breach by Company of any of its representations, warranties and covenants set forth in this Agreement or any
of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.
7.13. Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
7.14. Investor’s
Rights and Remedies Cumulative. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents are cumulative
and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that Investor may
have, whether specifically granted in this Agreement or any other Transaction Document, or existing at law, in equity, or by statute,
and any and all such rights and remedies may be exercised from time to time and as often and in such order as Investor may deem expedient.
8
7.15. Attorneys’
Fees and Cost of Collection. In the event any suit, action or arbitration is filed by either party against the other to interpret
or enforce any of the Transaction Documents, the unsuccessful party to such action agrees to pay to the prevailing party all costs and
expenses, including reasonable attorneys’ fees incurred therein, including the same with respect to an appeal. The “prevailing
party” shall be the party in whose favor a judgment is entered, regardless of whether judgment is entered on all claims asserted
by such party and regardless of the amount of the judgment; or where, due to the assertion of counterclaims, judgments are entered in
favor of and against both parties, then the arbitrator shall determine the “prevailing party” by taking into account the
relative dollar amounts of the judgments or, if the judgments involve nonmonetary relief, the relative importance and value of such relief.
Nothing herein shall restrict or impair an arbitrator’s or a court’s power to award fees and expenses for frivolous or bad
faith pleading. If (i) any Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or
legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Investor otherwise takes action to collect
amounts due under the Notes or to enforce the provisions of the Notes, or (ii) there occurs any bankruptcy, reorganization, receivership
of Company or other proceedings affecting Company’s creditors’ rights and involving a claim under the Notes; then Company
shall pay the costs incurred by Investor for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, reasonable attorneys’ fees, expenses, deposition costs, and disbursements.
7.16. Waiver.
No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by the party granting the
waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to
any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a
party to provide a waiver or consent in the future except to the extent specifically set forth in writing.
7.17. Waiver
of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE RELATIONSHIPS
OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW
OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY
WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.
7.18. Time
is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and the other
Transaction Documents.
7.19. Voluntary
Agreement. Company has carefully read this Agreement and each of the other Transaction Documents and has asked any questions needed
for Company to understand the terms, consequences and binding effect of this Agreement and each of the other Transaction Documents and
fully understand them. Company has had the opportunity to seek the advice of an attorney of Company’s choosing, or has waived the
right to do so, and is executing this Agreement and each of the other Transaction Documents voluntarily and without any duress or undue
influence by Investor or anyone else.
7.20. Third-Party
Beneficiaries. This Agreement and each of the other Transaction Documents is intended for the benefit of the parties hereto and their
respective permitted successors and assigns. There are no third-party beneficiaries of this Agreement or any other Transaction Document.
Nothing in this Agreement or any other Transaction Document, express or implied, is intended to confer upon any other person any rights,
remedies, obligations or liabilities of any nature whatsoever.
[Remainder
of page intentionally left blank; signature page follows]
9
IN
WITNESS WHEREOF, the undersigned Investor and Company have caused this Agreement to be duly executed as of the date first above written.
INVESTOR:
Streeterville
Capital, LLC
By:
s/
John Fife
John
Fife, President
COMPANY:
Scienture
Holdings, Inc.
By:
s/
Shankar Hariharan
Shankar
Hariharan, Executive Chairman and Co-
CEO
ATTACHED
EXHIBITS:
Exhibit A
A-1 Note
Exhibit B
B Note
Exhibit C
DACA
Exhibit D
Guaranty
Exhibit E
Pledge Agreement
Exhibit F
Company Security Agreement
Exhibit G
Scienture LLC Security Agreement
Exhibit H
IP Security Agreement
Exhibit I
Officer’s Certificate
Exhibit J
Arbitration Provisions
[Signature
Page to Note Purchase Agreement]
Exhibit
J
ARBITRATION
PROVISIONS
1. Dispute
Resolution. For purposes of these arbitration provisions (the “Arbitration Provisions”), the term “Claims”
means any disputes, claims, demands, causes of action, requests for injunctive relief, requests for specific performance, liabilities,
damages, losses, or controversies whatsoever arising from, related to, or connected with the transactions contemplated in the Transaction
Documents and any communications between the parties related thereto, including without limitation any claims of mutual mistake, mistake,
fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel, unconscionability, failure of condition
precedent, rescission, and any statutory claims, tort claims, contract claims, or claims to void, invalidate or terminate the Agreement
(or these Arbitration Provisions (defined below)) or any of the other Transaction Documents. For the avoidance of doubt, Investor’s
pursuit of an injunction or other Claim pursuant to these Arbitration Provisions or with a court will not later prevent Investor under
the doctrines of claim preclusion, issue preclusion, res judicata or other similar legal doctrines from pursuing other Claims in a separate
arbitration in the future. The parties to the Agreement (the “parties”) hereby agree that the Claims may be arbitrated
in one or more arbitrations pursuant to these Arbitration Provisions (one for an injunction or injunctions and a separate one for all
other Claims). The parties to the Agreement hereby agree that these Arbitration Provisions are binding on each of them. As a result,
any attempt to rescind the Agreement (or these Arbitration Provisions) or any other Transaction Document) or declare the Agreement (or
these Arbitration Provisions) or any other Transaction Document invalid or unenforceable pursuant to Section 29 of the 1934 Act or for
any other reason is subject to these Arbitration Provisions. Any capitalized term not defined in these Arbitration Provisions shall have
the meaning set forth in the Agreement.
2. Arbitration.
Except as otherwise provided herein, all Claims must be submitted to arbitration (“Arbitration”) to be conducted exclusively
in Salt Lake County, Utah and pursuant to the terms set forth in these Arbitration Provisions. Subject to the arbitration appeal right
provided for in Paragraph 5 below (the “Appeal Right”), the parties agree that the award of the arbitrator rendered
pursuant to Paragraph 4 below (the “Arbitration Award”) shall be (a) final and binding upon the parties, (b) the sole
and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator,
and (c) promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Subject to
the Appeal Right, any costs or fees, including without limitation reasonable attorneys’ fees, incurred in connection with or incident
to enforcing the Arbitration Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement.
The Arbitration Award shall include default interest (as defined or otherwise provided for in the Note, “Default Interest”)
(with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration Award.
Judgment upon the Arbitration Award will be entered and enforced by any state or federal court sitting in Salt Lake County, Utah.
3. The
Arbitration Act. The parties hereby incorporate herein the provisions and procedures set forth in the Utah Uniform Arbitration Act,
U.C.A. § 78B-11-101 et seq. (as amended or superseded from time to time, the “Arbitration Act”). Notwithstanding
the foregoing, pursuant to, and to the maximum extent permitted by, Section 105 of the Arbitration Act, in the event of conflict or variation
between the terms of these Arbitration Provisions and the provisions of the Arbitration Act, the terms of these Arbitration Provisions
shall control and the parties hereby waive or otherwise agree to vary the effect of all requirements of the Arbitration Act that may
conflict with or vary from these Arbitration Provisions.
4. Arbitration
Proceedings. Arbitration between the parties will be subject to the following:
4.1 Initiation
of Arbitration. Pursuant to Section 110 of the Arbitration Act, the parties agree that a party may initiate Arbitration by giving
written notice to the other party (“Arbitration Notice”) in the same manner that notice is permitted under Section
7.10 of the Agreement (the “Notice Provision”); provided, however, that the Arbitration Notice may not be given
by email or fax. Arbitration will be deemed initiated as of the date that the Arbitration Notice is deemed delivered to such other party
under the Notice Provision (the “Service Date”). After the Service Date, information may be delivered, and notices
may be given, by email or fax pursuant to the Notice Provision or any other method permitted thereunder. The Arbitration Notice must
describe the nature of the controversy, the remedies sought, and the election to commence Arbitration proceedings. All Claims in the
Arbitration Notice must be pleaded consistent with the Utah Rules of Civil Procedure.
Arbitration Provisions, Page 1
4.2 Selection
and Payment of Arbitrator.
(a)
Within ten (10) calendar days after the Service Date, Investor shall select and submit to Company the names of three (3) arbitrators
that are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com) (such three
(3) designated persons hereunder are referred to herein as the “Proposed Arbitrators”). For the avoidance of doubt,
each Proposed Arbitrator must be qualified as a “neutral” with Utah ADR Services. Within five (5) calendar days after Investor
has submitted to Company the names of the Proposed Arbitrators, Company must select, by written notice to Investor, one (1) of the Proposed
Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Company fails to select one of the Proposed
Arbitrators in writing within such 5-day period, then Investor may select the arbitrator from the Proposed Arbitrators by providing written
notice of such selection to Company.
(b)
If Investor fails to submit to Company the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant to subparagraph
(a) above, then Company may at any time prior to Investor so designating the Proposed Arbitrators, identify the names of three (3) arbitrators
that are designated as “neutrals” or qualified arbitrators by Utah ADR Service by written notice to Investor. Investor may
then, within five (5) calendar days after Company has submitted notice of its Proposed Arbitrators to Investor, select, by written notice
to Company, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Investor
fails to select in writing and within such 5-day period one (1) of the three (3) Proposed Arbitrators selected by Company, then Company
may select the arbitrator from its three (3) previously selected Proposed Arbitrators by providing written notice of such selection to
Investor.
(c)
If a Proposed Arbitrator chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected
such Proposed Arbitrator may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the
chosen Proposed Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators
decline or are otherwise unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this
Paragraph 4.2.
(d)
The date that the Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both
parties to serve as the arbitrator hereunder is referred to herein as the “Arbitration Commencement Date”. If an arbitrator
resigns or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to
continue the Arbitration. If Utah ADR Services ceases to exist or to provide a list of neutrals and there is no successor thereto, then
the arbitrator shall be selected under the then prevailing rules of the American Arbitration Association.
(e)
Subject to Paragraph 4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if
one party refuses or fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject to
the accrual of Default Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration Award.
4.3 Applicability
of Certain Utah Rules. The parties agree that the Arbitration shall be conducted generally in accordance with the Utah Rules of Civil
Procedure and the Utah Rules of Evidence. More specifically, the Utah Rules of Civil Procedure shall apply, without limitation, to the
filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions. The Utah Rules of Evidence
shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding the foregoing, it is the parties’
intent that the incorporation of such rules will in no event supersede these Arbitration Provisions. In the event of any conflict between
the Utah Rules of Civil Procedure or the Utah Rules of Evidence and these Arbitration Provisions, these Arbitration Provisions shall
control.
4.4 Answer
and Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating
the Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required
deadline, the arbitrator must provide written notice to the defaulting party stating that the arbitrator will enter a default award against
such party if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within
the five (5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the Arbitration
Notice, against a party that fails to submit an answer within such time period.
Arbitration Provisions, Page 2
4.5 Related
Litigation. The party that delivers the Arbitration Notice to the other party shall have the option to also commence concurrent legal
proceedings with any state or federal court sitting in Salt Lake County, Utah (“Litigation Proceedings”), subject
to the following: (a) the complaint in the Litigation Proceedings is to be substantially similar to the claims set forth in the Arbitration
Notice, provided that an additional cause of action to compel arbitration will also be included therein, (b) so long as the other party
files an answer to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice, the Litigation Proceedings will
be stayed pending an Arbitration Award (or Appeal Panel Award (defined below), as applicable) hereunder, (c) if the other party fails
to file an answer in the Litigation Proceedings or an answer in the Arbitration proceedings, then the party initiating Arbitration shall
be entitled to a default judgment consistent with the relief requested, to be entered in the Litigation Proceedings, and (d) any legal
or procedural issue arising under the Arbitration Act that requires a decision of a court of competent jurisdiction may be determined
in the Litigation Proceedings. Any award of the arbitrator (or of the Appeal Panel (defined below)) may be entered in such Litigation
Proceedings pursuant to the Arbitration Act. In the event either party successfully petitions a court to compel arbitration, the losing
party in such action shall be required to pay the prevailing party’s reasonable attorneys’ fees and costs incurred in connection
with such action.
4.6 Discovery.
Pursuant to Section 118(8) of the Arbitration Act, the parties agree that discovery shall be conducted as follows:
(a)
Written discovery will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof,
and the written discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded
in the Arbitration. The party seeking written discovery shall always have the burden of showing that all of the standards and limitations
set forth in these Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited
as follows:
(i) To
facts directly connected with the transactions contemplated by the Agreement.
(ii) To
facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome or less
expensive than in the manner requested.
(b)
No party shall be allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests
for admission (including discrete subparts), (iii) more than ten (10) document requests (including discrete subparts), or (iv) more than
three (3) depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs associated with depositions
will be borne by the party taking the deposition. The party defending the deposition will submit a notice to the party taking the deposition
of the estimated reasonable attorneys’ fees that such party expects to incur in connection with defending the deposition. If the
party defending the deposition fails to submit an estimate of reasonable attorneys’ fees within five (5) calendar days of its receipt
of a deposition notice, then such party shall be deemed to have waived its right to the estimated reasonable attorneys’ fees. The
party taking the deposition must pay the party defending the deposition the estimated reasonable attorneys’ fees prior to taking
the deposition, unless such obligation is deemed to be waived as set forth in the immediately preceding sentence. If the party taking
the deposition believes that the estimated reasonable attorneys’ fees are unreasonable, such party may submit the issue to the
arbitrator for a decision. All depositions will be taken in Utah.
(c)
All discovery requests (including document production requests included in deposition notices) must be submitted in writing to the arbitrator
and the other party. The party submitting the written discovery requests must include with such discovery requests a detailed explanation
of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Utah Rules of Civil Procedure.
The receiving party will then be allowed, within five (5) calendar days of receiving the proposed discovery requests, to submit to the
arbitrator an estimate of the reasonable attorneys’ fees and costs associated with responding to such written discovery requests
and a written challenge to each applicable discovery request. After receipt of an estimate of reasonable attorneys’ fees and costs
and/or challenge(s) to one or more discovery requests, consistent with subparagraph (c) above, the arbitrator will within three (3) calendar
days make a finding as to the likely reasonable attorneys’ fees and costs associated with responding to the discovery requests
and issue an order that (i) requires the requesting party to prepay the reasonable attorneys’ fees and costs associated with responding
to the discovery requests, and (ii) requires the responding party to respond to the discovery requests as limited by the arbitrator within
twenty-five (25) calendar days of the arbitrator’s finding with respect to such discovery requests. If a party entitled to submit
an estimate of reasonable attorneys’ fees and costs and/or a challenge to discovery requests fails to do so within such 5-day period,
the arbitrator will make a finding that (A) there are no reasonable attorneys’ fees or costs associated with responding to such
discovery requests, and (B) the responding party must respond to such discovery requests (as may be limited by the arbitrator) within
twenty-five (25) calendar days of the arbitrator’s finding with respect to such discovery requests. Any party submitting any written
discovery requests, including without limitation interrogatories, requests for production subpoenas to a party or a third party, or requests
for admissions, must prepay the estimated reasonable attorneys’ fees and costs, before the responding party has any obligation
to produce or respond to the same, unless such obligation is deemed waived as set forth above.
(d)
In order to allow a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth
in these Arbitration Provisions and the Utah Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a discovery
request does not satisfy any of the standards set forth in these Arbitration Provisions or the Utah Rules of Civil Procedure, the arbitrator
may modify such discovery request to satisfy the applicable standards, or strike such discovery request in whole or in part.
Arbitration Provisions, Page 3
(e)
Each party may submit expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days of
the Arbitration Commencement Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following:
(i) a complete statement of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the expert’s name
and qualifications, including a list of all the expert’s publications within the preceding ten (10) years, and a list of any other
cases in which the expert has testified at trial or in a deposition or prepared a report within the preceding ten (10) years; and (iii)
the compensation to be paid for the expert’s report and testimony. The parties are entitled to depose any other party’s expert
witness one (1) time for no more than four (4) hours. An expert may not testify in a party’s case-in-chief concerning any matter
not fairly disclosed in the expert report.
4.6 Dispositive
Motions. Each party shall have the right to submit dispositive motions pursuant Rule 12 or Rule 56 of the Utah Rules of Civil Procedure
(a “Dispositive Motion”). The party submitting the Dispositive Motion may, but is not required to, deliver to the
arbitrator and to the other party a memorandum in support (the “Memorandum in Support”) of the Dispositive Motion.
Within seven (7) calendar days of delivery of the Memorandum in Support, the other party shall deliver to the arbitrator and to the other
party a memorandum in opposition to the Memorandum in Support (the “Memorandum in Opposition”). Within seven (7) calendar
days of delivery of the Memorandum in Opposition, as applicable, the party that submitted the Memorandum in Support shall deliver to
the arbitrator and to the other party a reply memorandum to the Memorandum in Opposition (“Reply Memorandum”). If
the applicable party shall fail to deliver the Memorandum in Opposition as required above, or if the other party fails to deliver the
Reply Memorandum as required above, then the applicable party shall lose its right to so deliver the same, and the Dispositive Motion
shall proceed regardless.
4.7 Confidentiality.
All information disclosed by either party (or such party’s agents) during the Arbitration process (including without limitation
information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential in nature. Each party
agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration process (including
without limitation during the discovery process or any Appeal) unless (a) prior to or after the time of disclosure such information becomes
public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party or its agents, (b) such
information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified the other
party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent jurisdiction prior
to disclosure, or (c) such information is disclosed to the receiving party’s agents, representatives and legal counsel on a need
to know basis who each agree in writing not to disclose such information to any third party. Pursuant to Section 118(5) of the Arbitration
Act, the arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure of privileged information
and confidential information upon the written request of either party.
4.8 Authorization;
Timing; Scheduling Order. Subject to all other sections of these Arbitration Provisions, the parties hereby authorize and direct
the arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the Arbitration
proceedings to be efficient and expeditious. Pursuant to Section 120 of the Arbitration Act, the parties hereby agree that an Arbitration
Award must be made within one hundred twenty (120) calendar days after the Arbitration Commencement Date. The arbitrator is hereby authorized
and directed to hold a scheduling conference within ten (10) calendar days after the Arbitration Commencement Date in order to establish
a scheduling order with various binding deadlines for discovery, expert testimony, and the submission of documents by the parties to
enable the arbitrator to render a decision prior to the end of such 120-day period.
4.9 Relief.
The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief which the arbitrator
deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator
may not award exemplary or punitive damages.
4.10 Fees
and Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being awarded
the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration, and
(b) reimburse the prevailing party for all reasonable attorneys’ fees, arbitrator costs and fees, deposition costs, other discovery
costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration.
Arbitration Provisions, Page 4
4.11 Motion
to Vacate. Following the entry of the Arbitration Award, if either party desires to file a Motion to Vacate the Arbitration Award
with a court in Salt Lake County, Utah, it must do so within the earlier of: (a) thirty (30) days of entry of the Arbitration; and (b)
in response to the prevailing party’s Motion of Confirm the Arbitration Award.
5. Arbitration
Appeal.
5.1 Initiation
of Appeal. Following the entry of the Arbitration Award, either party (the “Appellant”) shall have a period of
thirty (30) calendar days in which to notify the other party (the “Appellee”), in writing, that the Appellant elects
to appeal (the “Appeal”) the Arbitration Award (such notice, an “Appeal Notice”) to a panel of
arbitrators as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice to the Appellee is referred to herein
as the “Appeal Date”. The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph
4.1 above with respect to delivery of an Arbitration Notice. In addition, together with delivery of the Appeal Notice to the Appellee,
the Appellant must also pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond
in the amount of 110% of the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing.
In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance
with the provisions of this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set forth herein, will
not be further conditioned. In the event a party does not deliver an Appeal Notice (along with proof of payment of the applicable bond)
to the other party within the deadline prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award.
The Arbitration Award will be considered final until the Appeal Notice has been properly delivered and the applicable appeal bond has
been posted (along with proof of payment of the applicable bond). The parties acknowledge and agree that any Appeal shall be deemed part
of the parties’ agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.
5.2 Selection
and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment
of the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3) person arbitration
panel (the “Appeal Panel”).
(a)
Within ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5)
arbitrators that are designated as “neutrals” or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com)
(such five (5) designated persons hereunder are referred to herein as the “Proposed Appeal Arbitrators”). For the
avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a “neutral” with Utah ADR Services, and shall not
be the arbitrator who rendered the Arbitration Award being appealed (the “Original Arbitrator”). Within five (5) calendar
days after the Appellee has submitted to the Appellant the names of the Proposed Appeal Arbitrators, the Appellant must select, by written
notice to the Appellee, three (3) of the Proposed Appeal Arbitrators to act as the members of the Appeal Panel. If the Appellant fails
to select three (3) of the Proposed Appeal Arbitrators in writing within such 5-day period, then the Appellee may select such three (3)
arbitrators from the Proposed Appeal Arbitrators by providing written notice of such selection to the Appellant.
(b)
If the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after
the Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed
Appeal Arbitrators, identify the names of five (5) arbitrators that are designated as “neutrals” or qualified arbitrators
by Utah ADR Service (none of whom may be the Original Arbitrator) by written notice to the Appellee. The Appellee may then, within five
(5) calendar days after the Appellant has submitted notice of its selected arbitrators to the Appellee, select, by written notice to
the Appellant, three (3) of such selected arbitrators to serve on the Appeal Panel. If the Appellee fails to select in writing within
such 5-day period three (3) of the arbitrators selected by the Appellant to serve as the members of the Appeal Panel, then the Appellant
may select the three (3) members of the Appeal Panel from the Appellant’s list of five (5) arbitrators by providing written notice
of such selection to the Appellee.
(c)
If a selected Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal
Arbitrator may select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date
a chosen Proposed Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three
(3) of the five (5) designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal Arbitrator
selection process shall begin again in accordance with this Paragraph 5.2; provided, however, that any Proposed Appeal Arbitrators
who have already agreed to serve shall remain on the Appeal Panel.
Arbitration Provisions, Page 5
(d) The
date that all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via email) delivered
to both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein as the “Appeal
Commencement Date”. No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate in
writing (including via email) to the Appellant and the Appeal Panel the name of one (1) of the three (3) members of the Appeal Panel
to serve as the lead arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator for purposes
of these Arbitration Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only act or make
determinations upon the approval or vote of no less than the majority vote of its members, as announced or communicated by the lead arbitrator
on the Appeal Panel. If an arbitrator on the Appeal Panel ceases or is unable to act during the
Appeal proceedings, a replacement arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member
of the Appeal Panel. If Utah ADR Services ceases to exist or to provide a list of neutrals, then the arbitrators for the Appeal
Panel shall be selected under the then prevailing rules of the American Arbitration Association.
(d)
Subject to Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the Appellant.
5.3 Appeal
Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel shall
conduct a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and all other
provisions of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate for a fair
and expeditious disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous evidence
and discovery, together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents filed
with the Appeal Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the Appeal Panel
shall not permit the parties to conduct any additional discovery or raise any new Claims to be arbitrated, shall not permit new witnesses
or affidavits, and shall not base any of its findings or determinations on the Original Arbitrator’s findings or the Arbitration
Award.
5.4 Timing.
(a) Within
seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal Panel
copies of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings and other documents
filed with the Original Arbitrator (which material Appellee shall have the right to review and supplement if necessary), and (ii) may,
but is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of the Appellant’s arguments concerning
or position with respect to all Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration. Within seven (7)
calendar days of the Appellant’s delivery of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal
Panel and to the Appellant a Memorandum in Opposition to the Memorandum in Support. Within seven (7) calendar days of the Appellee’s
delivery of the Memorandum in Opposition, as applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply
Memorandum to the Memorandum in Opposition. If the Appellant shall fail to substantially comply with the requirements of clause (i) of
this subparagraph (a), the Appellant shall lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final.
If the Appellee shall fail to deliver the Memorandum in Opposition as required above, or if the Appellant shall fail to deliver the Reply
Memorandum as required above, then the Appellee or the Appellant, as the case may be, shall lose its right to so deliver the same, and
the Appeal shall proceed regardless.
(b) Subject to subparagraph (a) above, the parties hereby agree that the Appeal must be heard by
the Appeal Panel within thirty (30) calendar days of the Appeal Commencement Date, and that the Appeal Panel must render its decision
within thirty (30) calendar days after the Appeal is heard (and in no event later than sixty (60) calendar days after the Appeal Commencement
Date).
5.5 Appeal
Panel Award. The Appeal Panel shall issue its decision (the “Appeal Panel Award”) through the lead arbitrator
on the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety
and make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall
remain in full force and effect), (b) be final and binding upon the parties, with no further rights of appeal, (c) be the sole and exclusive
remedy between the parties regarding any Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration, and (d)
be promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any costs or fees,
including without limitation reasonable attorneys’ fees, incurred in connection with or incident to enforcing the Appeal Panel
Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Appeal Panel Award
shall include Default Interest (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and
after the Arbitration Award. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in
Salt Lake County, Utah.
Arbitration Provisions, Page 6
5.6 Relief.
The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel deems proper
under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal Panel may
not award exemplary or punitive damages.
5.7 Fees
and Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party being awarded
the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration and
the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal Panel, which,
for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any
part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery costs, and
other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including without
limitation in connection with the Appeal).
6.
Miscellaneous.
6.1 Severability.
If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision shall be
modified to the minimum extent necessary to make such provision enforceable under applicable law, and the remainder of the Arbitration
Provisions shall remain unaffected and in full force and effect.
6.2 Governing
Law. These Arbitration Provisions shall be governed by the laws of the State of Utah without regard to the conflict of laws principles
therein.
6.3 Interpretation.
The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of, or affect the interpretation
of, these Arbitration Provisions.
6.4 Waiver.
No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed by the party
granting the waiver.
6.5 Time
is of the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions.
[Remainder
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Arbitration Provisions, Page 7
EX-10.2
EX-10.2
Filename: ex10-2.htm · Sequence: 3
Exhibit
10.2
SECURED
PROMISSORY NOTE A-1
Effective Date: April 27, 2026
U.S. $8,420,000.00
FOR
VALUE RECEIVED, Scienture Holdings, Inc., a Delaware corporation (“Borrower”),
promises to pay to Streeterville Capital, LLC, a Utah limited liability company, or its
successors or assigns (“Lender”), $8,420,000.00 and any interest, fees, charges, and late fees accrued hereunder on
the date that is eighteen (18) months after the Purchase Price Date (the “Maturity Date”) in accordance with the terms
set forth herein and to pay interest on the Outstanding Balance at the rate of nine percent (9%) per annum from the Purchase Price Date
until the same is paid in full. All interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve
(12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Note. This Secured Promissory
Note A-1 (this “Note”) is issued and made effective as of April 27, 2026 (the “Effective Date”).
This Note is issued pursuant to that certain Note Purchase Agreement dated April 27, 2026, as the same may be amended from time to time,
by and between Borrower and Lender (the “Purchase Agreement”). Certain capitalized terms used herein are defined in
Attachment 1 attached hereto and incorporated herein by this reference. Any capitalized term referred to herein without definition
shall have the meaning ascribed to such term in the Purchase Agreement.
This
Note carries an original issue discount of $400,000.00 (the “OID”). In addition, Borrower agrees to pay $20,000.00
to Lender to cover Lender’s legal, accounting and due diligence expenses incurred in connection with the purchase and sale of this
Note (the “Transaction Expense Amount”). The OID and the Transaction Expense Amount are included in the initial principal
balance of this Note and are deemed to be fully earned and non-refundable as of the Purchase Price Date. The purchase price for this
Note shall be $8,000,000.00 (the “Purchase Price”), computed as follows: $8,420,000.00 original principal balance,
less the OID and the Transaction Expense Amount.
1.
Payment; Prepayment.
1.1.
Payment. All payments owing hereunder shall be in lawful money of the United States of America and delivered to Lender at the
address or bank account furnished by Lender to Borrower for that purpose. All payments shall be applied first to (a) Lender’s reasonable
costs of collection, if any, then to (b) fees and charges hereunder, if any, then to (c) accrued and unpaid interest hereunder, and thereafter,
to (d) principal hereunder.
1.2.
Prepayment. Borrower may pay all or any portion of the Outstanding Balance earlier than it is due. If Borrower exercises its right
to prepay this Note in full in connection with a third-party refinancing, Borrower shall make payment to Lender of an amount in cash
equal to 115% multiplied by the portion of the Outstanding Balance Borrower elects to prepay (the “Prepayment Premium”).
Early payments of less than all principal, fees and interest outstanding will not, unless agreed to by Lender in writing, relieve Borrower
of Borrower’s remaining obligations hereunder. Notwithstanding anything to the contrary contained herein, and for the avoidance
of doubt, the Prepayment Premium shall not apply to any prepayments of this Note that are made in connection with: (a) a Redemption Amount
(as defined below) as provided below; (b) a Limited Redemption (as defined below) as provided below; (c) a Trigger Event (as defined
below); (d) an Event of Default (as defined below); (e) the application of all or any portion of the funds held in the Deposit Account;
or (f) a Note Exchange.
2.
Security. Borrower’s obligations under this Note are secured by the Collateral Agreements (as defined in the Purchase Agreement).
3.
Redemptions.
3.1.
Monthly Redemptions. Beginning on the eight (8) month anniversary of the Purchase Price Date, Lender shall have the right, exercisable
at any time in its sole and absolute discretion, to redeem up to the Maximum Monthly Redemption Amount (such amount, the “Redemption
Amount”) per calendar month by providing written notice to Borrower (each, a “Redemption Notice”). The Maximum
Monthly Redemption Amount will be aggregated with redemptions submitted under all other Notes (as defined in the Purchase Agreement).
For the avoidance of doubt, Lender may submit to Borrower one (1) or more Redemption Notices in any given calendar month. Upon receipt
of a Redemption Notice, Borrower shall pay the applicable Redemption Amount to Lender in cash within four (4) Trading Days (the “Redemption
Amount Due Date”). If Company fails to pay the Redemption Amount on or before the Redemption Amount Due Date, the Outstanding
Balance shall automatically and without further action by any party be increased on a one-time basis by an amount equal to twenty percent
(20%) of the Redemption Amount (the “Redemption Failure Balance Increase Amount”). For the avoidance of doubt, the
failure by Company to pay the Redemption Amount on or before the Redemption Amount Due Date shall not be considered a Trigger Event.
The Company shall then pay the Redemption Amount plus the Redemption Failure Balance Increase Amount, within four (4) Trading Days of
the date of the Redemption Failure Balance Increase.
3.2.
Limited Redemptions. Beginning on the eight (8) month anniversary of the Closing Date, if at any time thereafter a Limited Redemption
Event occurs, then Lender shall have the right to submit a Redemption Notice in an amount up to the Maximum Limited Redemption Amount
at any time during the Limited Redemption Window (“Limited Redemptions”). The Maximum Limited Redemption Amount will
be aggregated with Limited Redemptions made under all outstanding Notes (as defined in the Purchase Agreement). Borrower must pay the
applicable Limited Redemption amount to Lender in cash within four (4) Trading Days of delivery of the applicable Redemption Notice.
In addition, any Limited Redemption paid in cash will be subject to a Limited Redemption premium, also payable in cash, equal to ten
percent (10%) of the applicable Limited Redemption amount. For the avoidance of doubt, Limited Redemptions will not count toward the
Maximum Monthly Redemption Amount.
4.
Trigger Events; Defaults; Remedies.
4.1.
Trigger Events. The following are trigger events under this Note (each, a “Trigger Event”): (a) Borrower fails
to pay any principal, interest, fees, charges, or any other amount when due and payable hereunder; (b) a receiver, trustee or other similar
official shall be appointed over Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20)
days or shall not be dismissed or discharged within ninety (90) days; (c) Borrower becomes insolvent or generally fails to pay, or admits
in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; (d) Borrower makes a general
assignment for the benefit of creditors; (e) Borrower files a petition for relief under any bankruptcy, insolvency or similar law (domestic
or foreign); (f) an involuntary bankruptcy proceeding is commenced or filed against Borrower and shall not be dismissed or discharged
within ninety (90) days; (g) Borrower fails to observe or perform any covenant set forth in Section 4 of the Purchase Agreement; (h)
the occurrence of a Fundamental Transaction without Lender’s prior written consent; (i) Borrower defaults or otherwise fails to
observe or perform any covenant, obligation, condition or agreement of Borrower contained herein or in any other Transaction Document
(as defined in the Purchase Agreement), other than those specifically set forth in this Section 4.1 and Section 4 of the Purchase
Agreement, and such default or failure continues for fifteen (15) calendar days after Lender notifies Borrower of such default or failure;
(j) any representation, warranty or other statement made or furnished by or on behalf of Borrower to Lender herein, in any Transaction
Document, or otherwise in connection with the issuance of this Note is false, incorrect, incomplete or misleading in any material respect
when made or furnished; (k) Borrower effectuates a reverse split of its Common Shares without twenty (20) Trading Days prior written
notice to Lender; (l) any money judgment, writ or similar process is entered or filed against Borrower or any subsidiary of Borrower
or any of its property or other assets for more than $500,000.00, and shall remain unvacated, unbonded or unstayed for a period of thirty
(30) calendar days unless otherwise consented to by Lender; (m) Borrower fails to be DWAC Eligible; and (n) Borrower breaches any covenant
or other term or condition contained in any Other Agreements in any material respect beyond any applicable notice or cure period, resulting
in the acceleration of Borrower’s obligations under any such Other Agreements.
2
4.2.
Trigger Event Remedies. At any time following the occurrence of any Trigger Event, Lender may, at its option, increase the Outstanding
Balance by applying the Trigger Effect (subject to the limitation set forth below).
4.3.
Defaults. At any time following the occurrence of a Trigger Event, Lender may, at its option, send written notice to Borrower
demanding that Borrower cure such Trigger Event within five (5) Trading Days. If Borrower fails to cure the Trigger Event within the
required five (5) Trading Day cure period, the Trigger Event will automatically become an event of default hereunder (an “Event
of Default”).
4.4.
Default Remedies. At any time and from time to time following the occurrence of any Event of Default, Lender may accelerate this
Note by written notice to Borrower, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default
Amount. Notwithstanding the foregoing, upon the occurrence of any Trigger Event described in clauses 4.1(b) - 4.1(f), an Event
of Default will be deemed to have occurred and the Outstanding Balance as of the date of the occurrence of such Trigger Event shall become
immediately and automatically due and payable in cash at the Mandatory Default Amount, without any written notice required by Lender
for the Trigger Event to become an Event of Default. At any time following the occurrence of any Event of Default, upon written notice
given by Lender to Borrower, interest shall accrue on the Outstanding Balance beginning on the date the applicable Event of Default occurred
at an interest rate equal to the lesser of eighteen percent (18%) per annum or the maximum rate permitted under applicable law (“Default
Interest”). In connection with acceleration described herein, Lender need not provide, and Borrower hereby waives, any presentment,
demand, protest or other notice of any kind, and Lender may immediately and without expiration of any grace period enforce any and all
of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded
and annulled by Lender at any time prior to payment hereunder and Lender shall have all rights as a holder of the Note until such time,
if any, as Lender receives full payment pursuant to this Section 4.4. No such rescission or annulment shall affect any subsequent
Trigger Event or Event of Default or impair any right consequent thereon. Nothing herein shall limit Lender’s right to pursue any
other remedies available to it at law or in equity.
5.
Unconditional Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable
obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now
has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments called for herein in accordance
with the terms of this Note.
6.
Waiver. No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the party granting
the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent
to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit
a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.
7.
Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the right
to have any such opinion provided by its counsel.
3
8.
Governing Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine
the proper venue for any disputes are incorporated herein by this reference.
9.
Arbitration of Disputes. By its issuance or acceptance of this Note, each party agrees to be bound by the Arbitration Provisions
(as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
10.
Cancellation. After repayment of the entire Outstanding Balance, this Note shall be deemed paid in full, shall automatically be
deemed canceled, and shall not be reissued.
11.
Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.
12.
Assignments. Borrower may not assign this Note without the prior written consent of Lender. This Note may be offered, sold, assigned
or transferred by Lender to any of its affiliates without the consent of Borrower.
13.
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given
in accordance with the subsection of the Purchase Agreement titled “Notices.”
14.
Liquidated Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions of
this Note, Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’
inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Lender
and Borrower agree that any fees, balance adjustments, Default Interest or other charges assessed under this Note are not penalties but
instead are intended by the parties to be, and shall be deemed, liquidated damages.
15.
Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the
objective of Borrower and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.
[Remainder
of page intentionally left blank; signature page follows]
4
IN
WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Effective Date.
BORROWER:
Scienture Holdings,
Inc.
By:
/s/ Shankar Hariharan
Shankar Hariharan, Executive Chairman and Co-CEO
ACKNOWLEDGED,
ACCEPTED AND AGREED:
LENDER:
Streeterville
Capital, LLC
By:
/s/ John Fife
John Fife, President
[Signature
Page to Secured Promissory Note A-1]
ATTACHMENT
1
DEFINITIONS
For
purposes of this Note, the following terms shall have the following meanings:
A1.
“Common Shares” means shares of Borrower’s common stock, par value $0.00001 per share.
A2.
“Fundamental Transaction” means that (a) (i) Borrower or any of its subsidiaries shall, directly or indirectly, in
one or more related transactions, consolidate or merge with or into (whether or not Borrower or any of its subsidiaries is the surviving
corporation) any other person or entity, (ii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related
transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties
or assets to any other person or entity, (iii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related
transactions, allow any other person or entity to make a purchase, tender or exchange offer that is accepted by the holders of more than
50% of the outstanding shares of voting stock of Borrower (not including any shares of voting stock of Borrower held by the person or
persons making or party to, or associated or affiliated with the persons or entities making or party to, such purchase, tender or exchange
offer), (iv) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock
or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with any other person or entity whereby such other person or entity acquires more than 50% of the outstanding
shares of voting stock of Borrower (not including any shares of voting stock of Borrower held by the other persons or entities making
or party to, or associated or affiliated with the other persons or entities making or party to, such stock or share purchase agreement
or other business combination), (v) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions,
reorganize, recapitalize or reclassify the Common Shares or preferred stock, other than an increase in the number of authorized Common
Shares or preferred stock, (vi) Borrower transfers any material asset to any subsidiary, affiliate, person or entity under common ownership
or control with Borrower, or (vii) Borrower pays or makes any monetary or non-monetary dividend or distribution to its shareholders;
or (b) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934
Act (as defined in the Purchase Agreement) and the rules and regulations promulgated thereunder) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented
by issued and outstanding voting stock of Borrower. For the avoidance of doubt, Borrower or any of its subsidiaries entering into a definitive
agreement that contemplates a Fundamental Transaction will be deemed to be a Fundamental Transaction unless such agreement contains a
closing condition that this Note is repaid in full upon consummation of the transaction.
A3.
“Limited Redemption Event” means that on any given Trading Day the Common Shares trade at a price that is more than
twenty (20%) greater than the Nasdaq Minimum Price for such Trading Day.
A4.
“Limited Redemption Window” means the period beginning on the date a Limited Redemption Event occurs and ending on
the date that is five (5) Trading Days after the date the Limited Redemption Event occurs. For the avoidance of doubt, more than one
(1) Limited Redemption Window may be open at the same time.
A5.
“Major Trigger Event” means any Trigger Event occurring under Sections 5.1(a) - 5.1(h).
A6.
“Mandatory Default Amount” means the Outstanding Balance following the application of the Trigger Effect.
A7.
“Maximum Limited Redemption Amount” means an aggregate amount up to ten percent (10%) of the daily dollar trading
volume on the Trading Day that a Limited Redemption Event occurs; measured as the dollar trading volume on all exchanges beginning at
4:01 PM Eastern Time on the Trading Day before the occurrence of the Limited Redemption Event and ending at 4:00 PM Eastern Time on the
Trading Day during which the Limited Redemption Event occurs.
A8.
“Maximum Monthly Redemption Amount” means aggregate amount of $175,000.00.
A9.
“Minor Trigger Event” means any Trigger Event that is not a Major Trigger Event.
A10.
“Nasdaq Minimum Price” means the Minimum Price as defined under Nasdaq Rule 5635(d).
A11.
“Other Agreements” means, collectively, (a) all existing and future agreements and instruments between, among or by
Borrower (or an affiliate), on the one hand, and Lender (or an affiliate), on the other hand, and (b) any financing agreement or a material
agreement that affects Borrower’s ongoing business operations.
A12.
“Outstanding Balance” means as of any date of determination, the Purchase Price, as reduced or increased, as the case
may be, pursuant to the terms hereof for payment, offset, or otherwise, plus the OID, the Transaction Expense Amount, accrued but unpaid
interest (including Default Interest), collection and enforcements costs (including reasonable attorneys’ fees) incurred by Lender,
transfer, stamp, issuance and similar taxes and fees incurred under this Note.
A13.
“Purchase Price Date” means the date the Purchase Price is delivered by Lender to Borrower.
A14.
“Trading Day” means any day on which Borrower’s principal trading market (or such other principal market for
the Common Shares) is open for trading.
A15.
“Trigger Effect” means multiplying the Outstanding Balance as of the date the applicable Trigger Event occurred by
(a) fifteen percent (15%) for each occurrence of any Major Trigger Event, or (b) five percent (5%) for each occurrence of any Minor Trigger
Event, and then adding the resulting product to the Outstanding Balance as of the date the applicable Trigger Event occurred, with the
sum of the foregoing then becoming the Outstanding Balance under this Note as of the date the applicable Trigger Event occurred; provided
that the aggregate application of the Trigger Effect may not exceed twenty-five percent (25%).
EX-10.3
EX-10.3
Filename: ex10-3.htm · Sequence: 4
Exhibit 10.3
SECURED
PROMISSORY NOTE B
Effective Date: April 27, 2026
U.S. $3,000,000.00
FOR
VALUE RECEIVED, Scienture Holdings, Inc., a Delaware corporation (“Borrower”),
promises to pay to Streeterville Capital, LLC, a Utah limited liability company, or its
successors or assigns (“Lender”), $3,000,000.00 and any interest, fees, charges, and late fees accrued hereunder on
the date that is eighteen (18) months after the Purchase Price Date (the “Maturity Date”) in accordance with the terms
set forth herein and to pay interest on the Outstanding Balance at the rate of five percent (5%) per annum from the Purchase Price Date
until the same is paid in full. All interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve
(12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Note. This Secured Promissory
Note B (this “Note”) is issued and made effective as of April 27, 2026 (the “Effective Date”).
This Note is issued pursuant to that certain Note Purchase Agreement dated April 27, 2026, as the same may be amended from time to time,
by and between Borrower and Lender (the “Purchase Agreement”). Certain capitalized terms used herein are defined in
Attachment 1 attached hereto and incorporated herein by this reference. Any capitalized term referred to herein without definition
shall have the meaning ascribed to such term in the Purchase Agreement.
1. Payment;
Prepayment.
1.1. Payment.
All payments owing hereunder shall be in lawful money of the United States of America and delivered to Lender at the address or bank
account furnished by Lender to Borrower for that purpose. All payments shall be applied first to (a) Lender’s reasonable costs
of collection, if any, then to (b) fees and charges hereunder, if any, then to (c) accrued and unpaid interest hereunder, and thereafter,
to (d) principal hereunder.
1.2. Prepayment.
Borrower may pay all or any portion of the Outstanding Balance earlier than it is due. If Borrower exercises its right to prepay this
Note in full in connection with a third-party refinancing, Borrower shall make payment to Lender of an amount in cash equal to 115% multiplied
by the portion of the Outstanding Balance Borrower elects to prepay (the “Prepayment Premium”). Early payments of
less than all principal, fees and interest outstanding will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s
remaining obligations hereunder. Notwithstanding anything to the contrary contained herein, and for the avoidance of doubt, the Prepayment
Premium shall not apply to any prepayments of this Note that are made in connection with: (a) a Limited Redemption (as defined below)
as provided below; (b) a Trigger Event (as defined below); (c) an Event of Default (as defined below); (d) the application of all or
any portion of the funds held in the Deposit Account; or (e) a Note Exchange.
2. Security.
This Note is secured by the Security Agreement (as defined in the Purchase Agreement, the DACA (as defined in the Purchase Agreement),
the Deposit Account, the Guaranty (as defined in the Purchase Agreement), and the Pledge Agreement (as defined in the Purchase Agreement).
Borrower acknowledges and agrees that Lender is authorized to send a Lender Instruction Notice (as defined in the DACA) to the Bank (as
defined in the DACA) directing the disposition of the funds held in the Deposit Account: (a) upon the occurrence of a Trigger Event;
or (b) upon Lender’s receipt of a notice from Borrower pursuant to Section 4(viii) of the Purchase Agreement if Lender believes
in its sole discretion that the funds in the Deposit Account are threatened by the action described in the notice.
3. Limited
Redemptions. Beginning on the eight (8) month anniversary of the Purchase Price Date, if at any time thereafter a Limited Redemption
Event occurs, then Lender shall have the right to submit a Redemption Notice in an amount up to the Maximum Limited Redemption Amount
at any time during the Limited Redemption Window (“Limited Redemptions”). The Maximum Limited Redemption Amount will
be aggregated with Limited Redemptions made under all outstanding Notes (as defined in the Purchase Agreement). Borrower must pay the
applicable Limited Redemption amount to Lender in cash within four (4) Trading Days of delivery of the applicable Redemption Notice.
In addition, any Limited Redemption paid in cash will be subject to a Limited Redemption premium, also payable in cash, equal to ten
percent (10%) of the applicable Limited Redemption amount.
4. Trigger
Events; Defaults; Remedies.
4.1. Trigger
Events. The following are trigger events under this Note (each, a “Trigger Event”): (a) Borrower fails to pay
any principal, interest, fees, charges, or any other amount when due and payable hereunder; (b) a receiver, trustee or other similar
official shall be appointed over Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20)
days or shall not be dismissed or discharged within ninety (90) days; (c) Borrower becomes insolvent or generally fails to pay, or admits
in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; (d) Borrower makes a general
assignment for the benefit of creditors; (e) Borrower files a petition for relief under any bankruptcy, insolvency or similar law (domestic
or foreign); (f) an involuntary bankruptcy proceeding is commenced or filed against Borrower and shall not be dismissed or discharged
within ninety (90) days; (g) Borrower fails to observe or perform any covenant set forth in Section 4 of the Purchase Agreement; (h)
the occurrence of a Fundamental Transaction without Lender’s prior written consent; (i) Borrower defaults or otherwise fails to
observe or perform any covenant, obligation, condition or agreement of Borrower contained herein or in any other Transaction Document
(as defined in the Purchase Agreement), other than those specifically set forth in this Section 4.1 and Section 4 of the Purchase Agreement,
and such default or failure continues for fifteen (15) calendar days after Lender notifies Borrower of such default or failure; (j) any
representation, warranty or other statement made or furnished by or on behalf of Borrower to Lender herein, in any Transaction Document,
or otherwise in connection with the issuance of this Note is false, incorrect, incomplete or misleading in any material respect when
made or furnished; (k) Borrower effectuates a reverse split of its Common Shares without twenty (20) Trading Days prior written notice
to Lender; (l) any money judgment, writ or similar process is entered or filed against Borrower or any subsidiary of Borrower or any
of its property or other assets for more than $500,000.00, and shall remain unvacated, unbonded or unstayed for a period of thirty (30)
calendar days unless otherwise consented to by Lender; (m) Borrower fails to be DWAC Eligible; and (n) Borrower breaches any covenant
or other term or condition contained in any Other Agreements in any material respect beyond any applicable notice or cure period, resulting
in the acceleration of Borrower’s obligations under any such Other Agreements.
4.2. Trigger
Event Remedies. At any time following the occurrence of any Trigger Event which remains uncured by Borrower after the expiration
of any applicable notice and cure period, Lender may, at its option, increase the Outstanding Balance by applying the Trigger Effect
(subject to the limitation set forth below).
4.3. Defaults.
At any time following the occurrence of a Trigger Event, Lender may, at its option, send written notice to Borrower demanding that Borrower
cure such Trigger Event within five (5) Trading Days. If Borrower fails to cure the Trigger Event within the required five (5) Trading
Day cure period, the Trigger Event will automatically become an event of default hereunder (an “Event of Default”).
4.4. Default
Remedies. At any time and from time to time following the occurrence of any Event of Default, Lender may accelerate this Note by
written notice to Borrower, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default Amount.
Notwithstanding the foregoing, upon the occurrence of any Trigger Event described in clauses 4.1(b) - 4.1(f), an Event of Default will
be deemed to have occurred and the Outstanding Balance as of the date of the occurrence of such Trigger Event shall become immediately
and automatically due and payable in cash at the Mandatory Default Amount, without any written notice required by Lender for the Trigger
Event to become an Event of Default. At any time following the occurrence of any Event of Default, upon written notice given by Lender
to Borrower, interest shall accrue on the Outstanding Balance beginning on the date the applicable Event of Default occurred at an interest
rate equal to the lesser of eighteen percent (18%) per annum or the maximum rate permitted under applicable law (“Default Interest”).
In connection with acceleration described herein, Lender need not provide, and Borrower hereby waives, any presentment, demand, protest
or other notice of any kind, and Lender may immediately and without expiration of any grace period enforce any and all of its rights
and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by
Lender at any time prior to payment hereunder and Lender shall have all rights as a holder of the Note until such time, if any, as Lender
receives full payment pursuant to this Section 4.4. No such rescission or annulment shall affect any subsequent Trigger Event or Event
of Default or impair any right consequent thereon. Nothing herein shall limit Lender’s right to pursue any other remedies available
to it at law or in equity.
2
5. Unconditional
Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation of Borrower
not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has or may have hereafter
against Lender, its successors and assigns, and agrees to make the payments called for herein in accordance with the terms of this Note.
6. Waiver.
No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the party granting the waiver.
No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other
prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to
provide a waiver or consent in the future except to the extent specifically set forth in writing.
7. Opinion
of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the right to have any
such opinion provided by its counsel.
8. Governing
Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper
venue for any disputes are incorporated herein by this reference.
9. Arbitration
of Disputes. By its issuance or acceptance of this Note, each party agrees to be bound by the Arbitration Provisions (as defined
in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
10. Cancellation.
After repayment of the entire Outstanding Balance, this Note shall be deemed paid in full, shall automatically be deemed canceled, and
shall not be reissued.
11. Amendments.
The prior written consent of both parties hereto shall be required for any change or amendment to this Note.
12. Assignments.
Borrower may not assign this Note without the prior written consent of Lender. This Note may be offered, sold, assigned or transferred
by Lender to any of its affiliates without the consent of Borrower.
13. Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with
the subsection of the Purchase Agreement titled “Notices.”
14. Liquidated
Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions of this Note, Lender’s
damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’ inability to predict
future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Lender and Borrower agree
that any fees, balance adjustments, Default Interest or other charges assessed under this Note are not penalties but instead are intended
by the parties to be, and shall be deemed, liquidated damages.
15. Severability.
If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of Borrower
and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.
[Remainder
of page intentionally left blank; signature page follows]
3
IN
WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Effective Date.
BORROWER:
Scienture Holdings, Inc.
By:
/s/ Shankar
Hariharan
Shankar Hariharan, Executive Chairman and
Co-CEO
ACKNOWLEDGED,
ACCEPTED AND AGREED:
LENDER:
Streeterville Capital, LLC
By:
/s/ John Fife
John Fife, President
[Signature
Page to Secured Promissory Note B]
ATTACHMENT
1
DEFINITIONS
For
purposes of this Note, the following terms shall have the following meanings:
A1. “Common
Shares” means shares of Borrower’s common stock, par value $0.00001 per share.
A2. “Fundamental
Transaction” means that (a) (i) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions,
consolidate or merge with or into (whether or not Borrower or any of its subsidiaries is the surviving corporation) any other person
or entity, (ii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, sell, lease,
license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other
person or entity, (iii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, allow
any other person or entity to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding
shares of voting stock of Borrower (not including any shares of voting stock of Borrower held by the person or persons making or party
to, or associated or affiliated with the persons or entities making or party to, such purchase, tender or exchange offer), (iv) Borrower
or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with any other person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock
of Borrower (not including any shares of voting stock of Borrower held by the other persons or entities making or party to, or associated
or affiliated with the other persons or entities making or party to, such stock or share purchase agreement or other business combination),
(v) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize
or reclassify the Common Shares or preferred stock, other than an increase in the number of authorized Common Shares or preferred stock,
(vi) Borrower transfers any material asset to any subsidiary, affiliate, person or entity under common ownership or control with Borrower,
or (vii) Borrower pays or makes any monetary or non-monetary dividend or distribution to its shareholders; or (b) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act (as defined in the Purchase
Agreement) and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding
voting stock of Borrower. For the avoidance of doubt, Borrower or any of its subsidiaries entering into a definitive agreement that contemplates
a Fundamental Transaction will be deemed to be a Fundamental Transaction unless such agreement contains a closing condition that this
Note is repaid in full upon consummation of the transaction.
A3. “Limited
Redemption Event” means that on any given Trading Day the Common Shares trade at a price that is more than twenty (20%) greater
than the Nasdaq Minimum Price for such Trading Day.
A4. “Limited
Redemption Window” means the period beginning on the date a Limited Redemption Event occurs and ending on the date that is
five (5) Trading Days after the date the Limited Redemption Event occurs. For the avoidance of doubt, more than one (1) Limited Redemption
Window may be open at the same time.
A5. “Major
Trigger Event” means any Trigger Event occurring under Sections 4.1(a) - 4.1(h).
A6. “Mandatory
Default Amount” means the Outstanding Balance following the application of the Trigger Effect.
A7. “Maximum
Limited Redemption Amount” means an aggregate amount up to ten percent (10%) of the daily dollar trading volume on the Trading
Day that a Limited Redemption Event occurs; measured as the dollar trading volume on all exchanges beginning at 4:01 PM Eastern Time
on the Trading Day before the occurrence of the Limited Redemption Event and ending at 4:00 PM Eastern Time on the Trading Day during
which the Limited Redemption Event occurs.
A8. “Minor
Trigger Event” means any Trigger Event that is not a Major Trigger Event.
A9. “Nasdaq
Minimum Price” means the Minimum Price as defined under Nasdaq Rule 5635(d).
A10. “Other
Agreements” means, collectively, (a) all existing and future agreements and instruments between, among or by Borrower (or an
affiliate), on the one hand, and Lender (or an affiliate), on the other hand, and (b) any financing agreement or a material agreement
that affects Borrower’s ongoing business operations.
A11. “Outstanding
Balance” means as of any date of determination, the Purchase Price, as reduced or increased, as the case may be, pursuant to
the terms hereof for payment, offset, or otherwise, plus the accrued but unpaid interest (including Default Interest), collection and
enforcements costs (including reasonable attorneys’ fees) incurred by Lender, transfer, stamp, issuance and similar taxes and fees
incurred under this Note.
A12. “Purchase
Price” means $3,000,000.00.
A13. “Purchase
Price Date” means the date the Purchase Price is delivered by Lender to the Deposit Account.
A14. “Trading
Day” means any day on which Borrower’s principal trading market (or such other principal market for the Common Shares)
is open for trading.
A15. “Trigger
Effect” means multiplying the Outstanding Balance as of the date the applicable Trigger Event occurred by (a) fifteen percent
(15%) for each occurrence of any Major Trigger Event, or (b) five percent (5%) for each occurrence of any Minor Trigger Event, and then
adding the resulting product to the Outstanding Balance as of the date the applicable Trigger Event occurred, with the sum of the foregoing
then becoming the Outstanding Balance under this Note as of the date the applicable Trigger Event occurred; provided that the aggregate
application of the Trigger Effect may not exceed twenty-five percent (25%).
EX-10.4
EX-10.4
Filename: ex10-4.htm · Sequence: 5
Exhibit
10.4
Security
Agreement
This
Security Agreement (this “Agreement”),
dated as of April 27, 2026, is executed by Scienture Holdings, Inc., a Delaware corporation
(“Debtor”), in favor of Streeterville Capital, LLC, a Utah limited liability
company (“Secured Party”).
A.
Debtor issued to Secured Party: (i) that certain Secured Promissory Note A-1 of even date herewith in the original principal amount of
$8,420,000.00 (the “A-1 Note”); and (ii) that certain Secured Promissory Note B of even date herewith in the original
principal amount of $3,000,000.00 (the “B Note”, and together with the A-1 Note and any other notes that may be issued
pursuant to exchanges of the B Note, the “Notes”).
B.
In order to induce Secured Party to extend the credit evidenced by the Notes, Debtor has agreed to enter into this Agreement and grant
Secured Party a security interest in the Collateral (as defined below).
NOW,
THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Debtor hereby agrees with Secured Party as follows:
1.
Definitions and Interpretation. When used in this Agreement, the following terms have the following respective meanings:
“Intellectual
Property” means all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses (software or otherwise),
information, know-how, inventions, discoveries, published and unpublished works of authorship, processes, any and all other proprietary
rights, and all rights corresponding to all of the foregoing throughout the world, now owned and existing or hereafter arising, created
or acquired.
“Lien”
shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale
agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any
financing statement or similar instrument under the UCC or comparable law of any jurisdiction.
“Obligations”
means (a) all loans, advances, future advances, debts, liabilities and obligations, howsoever arising on or after the date hereof, owed
by Debtor to Secured Party or any affiliate of Secured Party of every kind and description, whether created by the Notes, this Agreement,
any other Transaction Documents (as defined in the Purchase Agreement), any future loan or other agreements between Debtor and Secured
Party (or any affiliate of Secured Party), any modification or amendment to any of the foregoing, guaranty of payment or other contract
or by a quasi-contract, tort, statute or other operation of law, whether incurred or owed directly to Secured Party or as an affiliate
of Secured Party or acquired by Secured Party or an affiliate of Secured Party by purchase, pledge or otherwise, (b) all costs and expenses,
including reasonable attorneys’ fees, incurred by Secured Party or any affiliate of Secured Party in connection with the Notes
or in connection with the collection or enforcement of any portion of the indebtedness, liabilities or obligations described in the foregoing
clause (a), (c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this
Agreement, and (d) the performance of the covenants and agreements of Debtor contained in this Agreement and all other Transaction Documents.
“Permitted
Liens” means (a) Liens for taxes not yet delinquent or Liens for taxes being contested in good faith and by appropriate proceedings
for which adequate reserves have been established; (b) Liens in favor of Secured Party under this Agreement or arising under the other
Transaction Documents or any prior agreements between Debtor and Secured Party; and (c) Liens consented to in writing by Secured Party.
“Purchase
Agreement” means that certain Note Purchase Agreement dated April 27, 2026 between Debtor and Secured Party, as may be amended
from time to time.
“UCC”
means the Uniform Commercial Code as in effect in the state whose laws would govern the security interest in, including without limitation
the perfection thereof, and foreclosure of the applicable Collateral.
Unless
otherwise defined herein, all terms defined in the UCC have the respective meanings given to those terms in the UCC.
2.
Grant of Security Interest. As security for the Obligations, Debtor hereby pledges to Secured Party and grants to Secured Party
a first-position security interest in all right, title, interest, claims and demands of Debtor in and to the property described in Schedule
A hereto, and to all replacements, proceeds, products, and accessories thereof (collectively, the “Collateral”).
3.
Authorization to File Financing Statements. Debtor hereby irrevocably authorizes Secured Party at any time and from time to time
to file in any filing office in any Uniform Commercial Code jurisdiction or other jurisdiction of Debtor or its subsidiaries any financing
statements or documents having a similar effect and amendments thereto that provide any other information required by the Uniform Commercial
Code (or similar law of any non-United States jurisdiction, if applicable) of such state or jurisdiction for the sufficiency or filing
office acceptance of any financing statement or amendment, including whether Debtor is an organization, the type of organization and
any organization identification number issued to Debtor. Debtor agrees to furnish any such information to Secured Party promptly upon
Secured Party’s request.
4.
General Representations and Warranties. Debtor represents and warrants to Secured Party that (a) Debtor is the owner of the Collateral
and that no other person has any right, title, claim or interest (by way of Lien or otherwise) in, against or to the Collateral, other
than Permitted Liens, (b) upon the filing of UCC-1 financing statements in any applicable jurisdiction, Secured Party shall have a perfected
security interest in the Collateral to the extent that a security interest in the Collateral can be perfected by such filing, except
for Permitted Liens; (c) Debtor has received fair and reasonably equivalent value in exchange for entering into this Agreement and granting
the security interests hereunder, (d) Debtor is not insolvent, as defined in any applicable state or federal statute including the United
States Bankruptcy Code and Utah Code § 25-6-202, nor will Debtor be rendered insolvent by the execution and delivery of this Agreement
to Secured Party; and (e) as such, this Agreement is a valid and binding obligation of Debtor. Notwithstanding the foregoing, any sale,
assignment, hypothecation or other transfer of the Notes or a portion of the Notes where in return Secured Party receives consideration,
the value of the consideration received by Secured Party will offset any amounts owed by Debtor as of the date the consideration is received
by Secured Party.
5.
Additional Covenants. Debtor hereby agrees:
5.1.
to perform all acts that may be necessary to maintain, preserve, protect and perfect in the Collateral, the Lien granted to Secured Party
therein, and the perfection and priority of such Lien;
5.2.
to procure, execute (including endorse, as applicable), and deliver from time to time any endorsements, assignments, financing statements,
certificates of title, and all other instruments, documents and/or writings reasonably deemed necessary or appropriate by Secured Party
to perfect, maintain and protect Secured Party’s Lien hereunder and the priority thereof;
5.3.
to provide at least fifteen (15) days’ prior written notice to Secured Party of any of the following events: (a) any changes or
alterations of Debtor’s name, (b) any changes with respect to Debtor’s address or principal place of business, and (c) the
formation of any subsidiaries of Debtor;
5.4.
upon the occurrence of an Event of Default (as defined in the Notes) under the either Note and, thereafter, at Secured Party’s
request, to endorse (up to the outstanding amount under such promissory notes at the time of Secured Party’s request), assign and
deliver any promissory notes included in the Collateral to Secured Party, accompanied by such instruments of transfer or assignment duly
executed in blank as Secured Party may from time to time specify;
5.5.
to the extent the Collateral is not delivered to Secured Party pursuant to this Agreement, to keep the Collateral at the principal office
of Debtor (unless otherwise agreed to by Secured Party in writing), and not to relocate the Collateral to any other locations without
the prior written consent of Secured Party except in the ordinary course of business;
5.6.
not to sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein (other than inventory
in the ordinary course of business);
5.7.
not to, directly or indirectly, allow, grant or suffer to exist any Lien upon any of the Collateral, other than Permitted Liens;
5.8.
not to grant any exclusive license or sublicense under any of its Intellectual Property, or enter into any other agreement that would
materially impair the value of any of its Intellectual Property, except in the ordinary course of Debtor’s business;
5.9.
to the extent commercially reasonable and in Debtor’s good faith business judgment: (a) to file and prosecute diligently any patent,
trademark or service mark applications pending as of the date hereof or hereafter until all Obligations shall have been paid in full,
(b) to make application on unpatented but patentable inventions and on trademarks and service marks, (c) to preserve and maintain all
rights in all of its Intellectual Property, and (d) to ensure that all of its Intellectual Property is and remains enforceable. Any and
all costs and expenses incurred in connection with each of Debtor’s obligations under this Section 5.9 shall be borne by Debtor.
Debtor shall not knowingly and unreasonably abandon any right to file a patent, trademark or service mark application, or abandon any
pending patent application, or any other of its Intellectual Property, without the prior written consent of Secured Party except for
Intellectual Property that Debtor determines, in the exercise of its good faith business judgment, is not or is no longer material to
its business;
5.10.
upon the request of Secured Party at any time or from time to time, and at the sole cost and expense (including, without limitation,
reasonable attorneys’ fees) of Debtor, Debtor shall take all actions and execute and deliver any and all instruments, agreements,
assignments, certificates and/or documents reasonably required by Secured Party to collaterally assign any and all of Debtor’s
foreign patent, copyright and trademark registrations and applications now owned or hereafter acquired to and in favor of Secured Party;
and
5.11.
at any time amounts paid by Secured Party under the Transaction Documents are used to purchase Collateral, Debtor shall perform all acts
that may be necessary, and otherwise fully cooperate with Secured Party, to cause (a) any such amounts paid by Secured Party to be disbursed
directly to the sellers of any such Collateral, (b) all certificates of title pertaining to such Collateral (as applicable) to be properly
filed and reissued to reflect Secured Party’s Lien on such Collateral, and (c) all such reissued certificates of title to be delivered
to and held by Secured Party.
6.
Authorized Action by Secured Party. Upon the occurrence of an Event of Default, Debtor hereby irrevocably appoints Secured Party
as its attorney-in-fact (which appointment is coupled with an interest) and agrees that Secured Party may perform (but Secured Party
shall not be obligated to and shall incur no liability to Debtor or any third party for failure so to do) any act which Debtor is obligated
by this Agreement to perform, and to exercise such rights and powers as Debtor might exercise with respect to the Collateral, including
the right to (a) collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments, proceeds
and other sums and property now or hereafter payable on or on account of the Collateral; (b) enter into any extension, reorganization,
deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange
for the Collateral; (c) make any compromise or settlement, and take any action Secured Party deems advisable, with respect to the Collateral,
including without limitation bringing a suit in Secured Party’s own name to enforce any Intellectual Property; (d) endorse Debtor’s
name on all applications, documents, papers and instruments necessary or desirable for Secured Party in the use of any Collateral; (e)
grant or issue any exclusive or non-exclusive license under any Intellectual Property to any person or entity; (f) assign, pledge, sell,
convey or otherwise transfer title in or dispose of any Intellectual Property to any person or entity; (g) cause the Commissioner of
Patents and Trademarks, United States Patent and Trademark Office (or as appropriate, such equivalent agency in foreign countries) to
issue any and all patents and related rights and applications to Secured Party as the assignee of Debtor’s entire interest therein;
(h) employ collections activities and remedies against Debtor’s account debtors including, without limitation, instructing such
debtors to make payments directly to Secured Creditor; (i) file a copy of this Agreement or the IP Security Agreement (as defined in
the Purchase Agreement) with any governmental agency, body or authority, including without limitation the United States Patent and Trademark
Office and, if applicable, the United States Copyright Office or Library of Congress, at the sole cost and expense of Debtor; (j) insure,
process and preserve the Collateral; (k) pay any indebtedness of Debtor relating to the Collateral; (l) execute and file UCC financing
statements and other documents, certificates, instruments and agreements with respect to the Collateral or as otherwise required or permitted
hereunder; and (m) take any and all appropriate action and execute any and all documents and instruments that may be necessary or useful
to accomplish the purposes of this Agreement; provided, however, that Secured Party shall not exercise any such powers granted
pursuant to clauses (a) through (j) above prior to the occurrence of an Event of Default. The powers conferred on Secured Party under
this Section 6 are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such powers.
Secured Party shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither
Secured Party nor any of its stockholders, directors, officers, managers, members, employees or agents shall be responsible to Debtor
for any act or failure to act, except with respect to Secured Party’s own gross negligence or willful misconduct. Nothing in this
Section 6 shall be deemed an authorization for Debtor to take any action that it is otherwise expressly prohibited from undertaking by
way of other provision of this Agreement.
7.
Default and Remedies.
7.1.
Default. Debtor shall be deemed in default under this Agreement upon the occurrence of an Event of Default.
7.2.
Remedies. Upon the occurrence of any such Event of Default, Secured Party shall have the rights of a secured creditor under the
UCC, all rights granted by this Agreement and by law, including, without limiting the foregoing, (a) the right to require Debtor to assemble
the Collateral and make it available to Secured Party at a place to be designated by Secured Party, and (b) the right to take possession
of the Collateral, and for that purpose Secured Party may enter upon premises on which the Collateral may be situated and remove the
Collateral therefrom. Debtor hereby agrees that ten (10) days’ notice of a public sale of any Collateral or notice of the date
after which a private sale of any Collateral may take place is reasonable, provided that any shorter notice period permitted under the
applicable UCC shall be deemed reasonable. In addition, Debtor waives any and all rights that it may have to a judicial hearing in advance
of the enforcement of any of Secured Party’s rights and remedies hereunder, including, without limitation, Secured Party’s
right following an Event of Default to take immediate possession of Collateral and to exercise Secured Party’s rights and remedies
with respect thereto. Secured Party may also have a receiver appointed to take charge of all or any portion of the Collateral and to
exercise all rights of Secured Party under this Agreement. Secured Party may exercise any of its rights under this Section 7.2 without
demand or notice of any kind. The remedies in this Agreement, including without limitation this Section 7.2, are in addition to, not
in limitation of, any other right, power, privilege, or remedy, either in law, in equity, or otherwise, to which Secured Party may be
entitled. No failure or delay on the part of Secured Party in exercising any right, power, or remedy will operate as a waiver thereof,
nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder.
All of Secured Party’s rights and remedies, whether evidenced by this Agreement or by any other agreement, instrument or document
shall be cumulative and may be exercised singularly or concurrently.
7.3.
Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on Secured Party to exercise remedies
in a commercially reasonable manner, Debtor acknowledges and agrees that it is not commercially unreasonable for Secured Party (a) to
fail to incur expenses reasonably deemed significant by Secured Party to prepare Collateral for disposition, (b) to fail to obtain third
party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental
or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse
claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly
or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications
or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not
in the same business as Debtor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that
have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather
than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure Secured Party
against risks of loss, collection or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection
or disposition of Collateral, or (l) to the extent deemed appropriate by Secured Party, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Secured Party in the collection or disposition of any of the Collateral. Debtor
acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Secured Party
would fulfill Secured Party’s duties under the UCC in Secured Party’s exercise of remedies against the Collateral and that
other actions or omissions by Secured Party shall not be deemed to fail to fulfill such duties solely on account of not being indicated
in this Section. Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to Debtor
or to impose any duties on Secured Party that would not have been granted or imposed by this Agreement or by applicable law in the absence
of this Section.
7.4.
Marshalling. Secured Party shall not be required to marshal any present or future Collateral for, or other assurances of payment
of, the Obligations or to resort to such Collateral or other assurances of payment in any particular order, and all of its rights and
remedies hereunder and in respect of such Collateral and other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully may, Debtor hereby agrees that it will not invoke any
law relating to the marshalling of Collateral which might cause delay in or impede the enforcement of Secured Party’s rights and
remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations
is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully
may, Debtor hereby irrevocably waives the benefits of all such laws.
7.5.
Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the
avails of any remedy hereunder (as well as any other amounts of any kind held by Secured Party at the time of, or received by Secured
Party after, the occurrence of an Event of Default) shall be paid to and applied as follows:
(a)
First, to the payment of reasonable costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure
or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances,
including reasonable legal expenses and reasonable attorneys’ fees, incurred or made hereunder by Secured Party;
(b)
Second, to the payment to Secured Party of the amount then owing or unpaid on the Notes (to be applied first to accrued interest and
second to outstanding principal) and all amounts owed under any of the other Transaction Documents or other documents included within
the Obligations; and
(c)
Third, to the payment of the surplus, if any, to Debtor, its successors and assigns, or to whosoever may be lawfully entitled to receive
the same.
In
the absence of final payment and satisfaction in full of all of the Obligations, Debtor shall remain liable for any deficiency.
8.
Miscellaneous.
8.1.
Notices. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled “Notices”
in the Purchase Agreement, the terms of which are incorporated herein by this reference.
8.2.
Non-waiver. No failure or delay on Secured Party’s part in exercising any right hereunder shall operate as a waiver thereof
or of any other right nor shall any single or partial exercise of any such right preclude any other further exercise thereof or of any
other right.
8.3.
Amendments and Waivers. This Agreement may not be amended or modified, nor may any of its terms be waived, except by written instruments
signed by Debtor and Secured Party. Each waiver or consent under any provision hereof shall be effective only in the specific instances
for the purpose for which given.
8.4.
Assignment. This Agreement shall be binding upon and inure to the benefit of Secured Party and Debtor and their respective successors
and assigns; provided, however, that Debtor may not sell, assign or delegate rights and obligations hereunder without the prior
written consent of Secured Party.
8.5.
Cumulative Rights, etc. The rights, powers and remedies of Secured Party under this Agreement shall be in addition to all rights,
powers and remedies given to Secured Party by virtue of any applicable law, rule or regulation of any governmental authority, or the
Notes, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently without impairing
Secured Party’s rights hereunder. Debtor waives any right to require Secured Party to proceed against any person or entity or to
exhaust any Collateral or to pursue any remedy in Secured Party’s power.
8.6.
Partial Invalidity. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve
the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.
8.7.
Expenses. Debtor shall pay on demand all reasonable fees and expenses, including reasonable attorneys’ fees and expenses,
incurred by Secured Party in connection with the custody, preservation or sale of, or other realization on, any of the Collateral or
the enforcement or attempt to enforce any of the Obligations which are not performed as and when required by this Agreement.
8.8.
Entire Agreement. This Agreement, the Notes and the other Transaction Documents, taken together, constitute and contain the entire
agreement of Debtor and Secured Party with respect to this particular matter and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.
8.9.
Governing Law; Venue. This Agreement shall be governed by the laws of the State of Utah, without giving effect to the principles
thereof regarding the conflict of laws; provided, however, that the perfection and priority of the security interests hereunder,
and the enforcement of Secured Party’s rights and remedies against the Collateral as provided herein, will be subject to the UCC
of the applicable jurisdiction(s) where such Collateral is located or where the relevant Debtor is organized, as applicable. The provisions
set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.
8.10.
Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED
BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW,
RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY
JURY.
8.11.
Purchase Agreement; Arbitration of Disputes. By executing this Agreement, each party agrees to be bound by the terms, conditions
and general provisions of the Purchase Agreement and the other Transaction Documents, including without limitation the Arbitration Provisions
(as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
8.12.
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which
together shall constitute one instrument. Any electronic copy of a party’s executed counterpart will be deemed to be an executed
original.
8.13.
Time of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement.
[Remainder
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, Secured Party and Debtor have caused this Agreement to be executed as of the day and year first above written.
SECURED
PARTY:
Streeterville
Capital, LLC
By:
s/
John M. Fife
John
M. Fife, President
DEBTOR:
Scienture
Holdings, Inc.
By:
s/
Shankar Hariharan
Shankar
Hariharan, Executive Chairman and Co- CEO
[Signature
Page to Security Agreement]
SCHEDULE
A
TO
SECURITY AGREEMENT
All
right, title, interest, claims and demands of Debtor in and to all of Debtor’s assets owned as of the date hereof and/or acquired
hereafter by Debtor, wherever located, at any time while the Obligations are still outstanding, including without limitation, the following
property:
1.
All equity interests in all wholly- or partially-owned subsidiaries of Debtor;
2.
All customer accounts, rights under insurance contracts, and rights relating to clients underlying such insurance contracts;
3.
All goods and equipment now owned or hereafter acquired, including, without limitation, all laboratory equipment, computer equipment,
office equipment, machinery, fixtures, vehicles, and any interest in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;
4.
All inventory now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products including such inventory as is temporarily out of Debtor’s custody
or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from
the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Debtor’s books relating
to any of the foregoing;
5.
All accounts receivable, contract rights, general intangibles, healthcare insurance receivables, payment intangibles and commercial tort
claims, now owned or hereafter acquired, including, without limitation, all patents, patent rights and patent applications (including
without limitation, the inventions and improvements described and claimed therein, and (a) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, (b) all income, royalties, damages, proceeds and payments now and hereafter due or payable
under or with respect thereto, including, without limitation, damages and payments for past or future infringements thereof, (c) the
right to sue for past, present and future infringements thereof, and (d) all rights corresponding thereto throughout the world), trademarks
and service marks (and applications and registrations therefor), inventions, discoveries, copyrights and mask works (and applications
and registrations therefor), trade names, trade styles, software and computer programs including source code, trade secrets, methods,
published and unpublished works of authorship, processes, know how, drawings, specifications, descriptions, and all memoranda, notes,
and records with respect to any research and development, goodwill, license agreements, information, any and all other proprietary rights,
franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer
disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment
of any kind and whether in tangible or intangible form or contained on magnetic media readable by machine together with all such magnetic
media, and all rights corresponding to all of the foregoing throughout the world, now owned and existing or hereafter arising, created
or acquired;
6.
All now existing and hereafter arising accounts, contract rights, royalties, license rights and all other forms of obligations owing
to Debtor arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Debtor (subject, in
each case, to the contractual rights of third parties to require funds received by Debtor to be expended in a particular manner), whether
or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned
to or reclaimed by Debtor and Debtor’s books relating to any of the foregoing;
7.
All documents, cash, deposit accounts (including account numbers and financial institutions where maintained), letters of credit, letter
of credit rights, supporting obligations, certificates of deposit, instruments, chattel paper, electronic chattel paper, tangible chattel
paper and investment property, including, without limitation, all securities, whether certificated or uncertificated, security entitlements,
securities accounts, commodity contracts and commodity accounts, and all financial assets held in any securities account or otherwise,
wherever located, now owned or hereafter acquired and Debtor’s books relating to the foregoing;
8.
All other assets, goods and personal property of Debtor, wherever located, whether tangible or intangible, and whether now owned or hereafter
acquired; and
9.
Any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds and
products thereof, including, without limitation, insurance, condemnation, requisition or similar payments and the proceeds thereof.
EX-10.5
EX-10.5
Filename: ex10-5.htm · Sequence: 6
Exhibit
10.5
Security
Agreement
This
Security Agreement (this “Agreement”),
dated as of April 27, 2026, is executed by Scienture, LLC, a Delaware limited liability
company (“Guarantor”), in favor of Streeterville Capital, LLC, a Utah
limited liability company (“Secured Party”).
A.
Scienture Holdings, Inc., a Delaware corporation and parent company of Guarantor (“Debtor”), issued to Secured Party:
(i) that certain Secured Promissory Note A-1 of even date herewith in the original principal amount of $8,420,000.00 (the “A-1
Note”); and (ii) that certain Secured Promissory Note B of even date herewith in the original principal amount of $3,000,000.00
(the “B Note”, and together with the A-1 Note and any other notes that may be issued pursuant to exchanges of the
B Note, the “Notes”).
B.
In order to induce Secured Party to extend the credit evidenced by the Notes, Guarantor has agreed to enter into: (i) that certain Guaranty
of even date herewith between Guarantor and Secured Party (the “Guaranty”), and (ii) this Agreement to grant Secured
Party a security interest in the Collateral (as defined below).
NOW,
THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Debtor hereby agrees with Secured Party as follows:
1.
Definitions and Interpretation. When used in this Agreement, the following terms have the following respective meanings:
“Intellectual
Property” means all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses (software or otherwise),
information, know-how, inventions, discoveries, published and unpublished works of authorship, processes, any and all other proprietary
rights, and all rights corresponding to all of the foregoing throughout the world, now owned and existing or hereafter arising, created
or acquired.
“Lien”
shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale
agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any
financing statement or similar instrument under the UCC or comparable law of any jurisdiction.
“Obligations”
means (a) all loans, advances, future advances, debts, liabilities and obligations, howsoever arising on or after the date hereof, owed
by Debtor or Guarantor to Secured Party or any affiliate of Secured Party of every kind and description, whether created by the Notes,
the Guaranty, this Agreement, any other Transaction Documents (as defined in the Purchase Agreement), any future loan or other agreements
between Debtor or Guarantor and Secured Party (or any affiliate of Secured Party), any modification or amendment to any of the foregoing,
guaranty of payment or other contract or by a quasi-contract, tort, statute or other operation of law, whether incurred or owed directly
to Secured Party or as an affiliate of Secured Party or acquired by Secured Party or an affiliate of Secured Party by purchase, pledge
or otherwise, (b) all costs and expenses, including reasonable attorneys’ fees, incurred by Secured Party or any affiliate of Secured
Party in connection with the Notes or the Guaranty or in connection with the collection or enforcement of any portion of the indebtedness,
liabilities or obligations described in the foregoing clause (a), (c) the payment of all other sums, with interest thereon, advanced
in accordance herewith to protect the security of this Agreement, and (d) the performance of the covenants and agreements of Guarantor
contained in this Agreement and all other Transaction Documents.
“Permitted
Liens” means (a) Liens for taxes not yet delinquent or Liens for taxes being contested in good faith and by appropriate proceedings
for which adequate reserves have been established; (b) Liens in favor of Secured Party under this Agreement or arising under the other
Transaction Documents or any prior agreements between Guarantor and Secured Party; and (c) Liens consented to in writing by Secured Party.
“Purchase
Agreement” means that certain Securities Purchase Agreement dated April 27, 2026 between Debtor and Secured Party, as may be
amended from time to time.
“UCC”
means the Uniform Commercial Code as in effect in the state whose laws would govern the security interest in, including without limitation
the perfection thereof, and foreclosure of the applicable Collateral.
Unless
otherwise defined herein, all terms defined in the UCC have the respective meanings given to those terms in the UCC.
2.
Grant of Security Interest. As security for the Obligations, Guarantor hereby pledges to Secured Party and grants to Secured Party
a first-position security interest in all right, title, interest, claims and demands of Guarantor in and to the property described in
Schedule A hereto, and to all replacements, proceeds, products, and accessories thereof (collectively, the “Collateral”).
3.
Authorization to File Financing Statements. Guarantor hereby irrevocably authorizes Secured Party at any time and from time to
time to file in any filing office in any Uniform Commercial Code jurisdiction or other jurisdiction of Guarantor or its subsidiaries
any financing statements or documents having a similar effect and amendments thereto that provide any other information required by the
Uniform Commercial Code (or similar law of any non-United States jurisdiction, if applicable) of such state or jurisdiction for the sufficiency
or filing office acceptance of any financing statement or amendment, including whether Guarantor is an organization, the type of organization
and any organization identification number issued to Guarantor. Guarantor agrees to furnish any such information to Secured Party promptly
upon Secured Party’s request.
4.
General Representations and Warranties. Guarantor represents and warrants to Secured Party that (a) Guarantor is the owner of
the Collateral and that no other person has any right, title, claim or interest (by way of Lien or otherwise) in, against or to the Collateral,
other than Permitted Liens, (b) upon the filing of UCC-1 financing statements in any applicable jurisdiction, Secured Party shall have
a perfected security interest in the Collateral to the extent that a security interest in the Collateral can be perfected by such filing,
except for Permitted Liens; (c) Guarantor has received fair and reasonably equivalent value in exchange for entering into this Agreement
and granting the security interests hereunder, (d) Guarantor is not insolvent, as defined in any applicable state or federal statute
including the United States Bankruptcy Code and Utah Code § 25-6-202, nor will Guarantor be rendered insolvent by the execution
and delivery of this Agreement to Secured Party; and (e) as such, this Agreement is a valid and binding obligation of Guarantor. Notwithstanding
the foregoing, any sale, assignment, hypothecation or other transfer of the Notes or a portion of the Notes where in return Secured Party
receives consideration, the value of the consideration received by Secured Party will offset any amounts owed by Guarantor as of the
date the consideration is received by Secured Party.
5.
Additional Covenants. Guarantor hereby agrees:
5.1.
to perform all acts that may be necessary to maintain, preserve, protect and perfect in the Collateral, the Lien granted to Secured Party
therein, and the perfection and priority of such Lien;
5.2.
to procure, execute (including endorse, as applicable), and deliver from time to time any endorsements, assignments, financing statements,
certificates of title, and all other instruments, documents and/or writings reasonably deemed necessary or appropriate by Secured Party
to perfect, maintain and protect Secured Party’s Lien hereunder and the priority thereof;
5.3.
to provide at least fifteen (15) days’ prior written notice to Secured Party of any of the following events: (a) any changes or
alterations of Guarantor’s name, (b) any changes with respect to Guarantor’s address or principal place of business, and
(c) the formation of any subsidiaries of Guarantor;
5.4.
upon the occurrence of an Event of Default (as defined in the Notes) under either Note and, thereafter, at Secured Party’s request,
to endorse (up to the outstanding amount under such promissory notes at the time of Secured Party’s request), assign and deliver
any promissory notes included in the Collateral to Secured Party, accompanied by such instruments of transfer or assignment duly executed
in blank as Secured Party may from time to time specify;
5.5.
to the extent the Collateral is not delivered to Secured Party pursuant to this Agreement, to keep the Collateral at the principal office
of Guarantor (unless otherwise agreed to by Secured Party in writing), and not to relocate the Collateral to any other locations without
the prior written consent of Secured Party except in the ordinary course of business;
5.6.
not to sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein (other than inventory
in the ordinary course of business);
5.7.
not to, directly or indirectly, allow, grant or suffer to exist any Lien upon any of the Collateral, other than Permitted Liens;
5.8.
not to grant any exclusive license or sublicense under any of its Intellectual Property, or enter into any other agreement that would
materially impair the value of any of its Intellectual Property, except in the ordinary course of Guarantor’s business;
5.9.
to the extent commercially reasonable and in Guarantor’s good faith business judgment: (a) to file and prosecute diligently any
patent, trademark or service mark applications pending as of the date hereof or hereafter until all Obligations shall have been paid
in full, (b) to make application on unpatented but patentable inventions and on trademarks and service marks, (c) to preserve and maintain
all rights in all of its Intellectual Property, and (d) to ensure that all of its Intellectual Property is and remains enforceable. Any
and all costs and expenses incurred in connection with each of Guarantor’s obligations under this Section 5.9 shall be borne by
Guarantor. Guarantor shall not knowingly and unreasonably abandon any right to file a patent, trademark or service mark application,
or abandon any pending patent application, or any other of its Intellectual Property, without the prior written consent of Secured Party
except for Intellectual Property that Guarantor determines, in the exercise of its good faith business judgment, is not or is no longer
material to its business;
5.10.
upon the request of Secured Party at any time or from time to time, and at the sole cost and expense (including, without limitation,
reasonable attorneys’ fees) of Guarantor, Guarantor shall take all actions and execute and deliver any and all instruments, agreements,
assignments, certificates and/or documents reasonably required by Secured Party to collaterally assign any and all of Guarantor’s
foreign patent, copyright and trademark registrations and applications now owned or hereafter acquired to and in favor of Secured Party;
and
5.11.
at any time amounts paid by Secured Party under the Transaction Documents are used to purchase Collateral, Guarantor shall perform all
acts that may be necessary, and otherwise fully cooperate with Secured Party, to cause (a) any such amounts paid by Secured Party to
be disbursed directly to the sellers of any such Collateral, (b) all certificates of title pertaining to such Collateral (as applicable)
to be properly filed and reissued to reflect Secured Party’s Lien on such Collateral, and (c) all such reissued certificates of
title to be delivered to and held by Secured Party.
6.
Authorized Action by Secured Party. Upon the occurrence of an Event of Default, Guarantor hereby irrevocably appoints Secured
Party as its attorney-in-fact (which appointment is coupled with an interest) and agrees that Secured Party may perform (but Secured
Party shall not be obligated to and shall incur no liability to Guarantor or any third party for failure so to do) any act which Guarantor
is obligated by this Agreement to perform, and to exercise such rights and powers as Guarantor might exercise with respect to the Collateral,
including the right to (a) collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments,
proceeds and other sums and property now or hereafter payable on or on account of the Collateral; (b) enter into any extension, reorganization,
deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange
for the Collateral; (c) make any compromise or settlement, and take any action Secured Party deems advisable, with respect to the Collateral,
including without limitation bringing a suit in Secured Party’s own name to enforce any Intellectual Property; (d) endorse Guarantor’s
name on all applications, documents, papers and instruments necessary or desirable for Secured Party in the use of any Collateral; (e)
grant or issue any exclusive or non-exclusive license under any Intellectual Property to any person or entity; (f) assign, pledge, sell,
convey or otherwise transfer title in or dispose of any Intellectual Property to any person or entity; (g) cause the Commissioner of
Patents and Trademarks, United States Patent and Trademark Office (or as appropriate, such equivalent agency in foreign countries) to
issue any and all patents and related rights and applications to Secured Party as the assignee of Guarantor’s entire interest therein;
(h) employ collections activities and remedies against Guarantor’s account debtors including, without limitation, instructing such
debtors to make payments directly to Secured Creditor; (i) file a copy of this Agreement or the IP Security Agreement (as defined in
the Purchase Agreement) with any governmental agency, body or authority, including without limitation the United States Patent and Trademark
Office and, if applicable, the United States Copyright Office or Library of Congress, at the sole cost and expense of Guarantor; (j)
insure, process and preserve the Collateral; (k) pay any indebtedness of Guarantor relating to the Collateral; (l) execute and file UCC
financing statements and other documents, certificates, instruments and agreements with respect to the Collateral or as otherwise required
or permitted hereunder; and (m) take any and all appropriate action and execute any and all documents and instruments that may be necessary
or useful to accomplish the purposes of this Agreement; provided, however, that Secured Party shall not exercise any such powers
granted pursuant to clauses (a) through (j) above prior to the occurrence of an Event of Default. The powers conferred on Secured Party
under this Section 6 are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such
powers. Secured Party shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers,
and neither Secured Party nor any of its stockholders, directors, officers, managers, members, employees or agents shall be responsible
to Guarantor for any act or failure to act, except with respect to Secured Party’s own gross negligence or willful misconduct.
Nothing in this Section 6 shall be deemed an authorization for Guarantor to take any action that it is otherwise expressly prohibited
from undertaking by way of other provision of this Agreement.
7.
Default and Remedies.
7.1.
Default. Guarantor shall be deemed in default under this Agreement upon the occurrence of an Event of Default.
7.2.
Remedies. Upon the occurrence of any such Event of Default, Secured Party shall have the rights of a secured creditor under the
UCC, all rights granted by this Agreement and by law, including, without limiting the foregoing, (a) the right to require Guarantor to
assemble the Collateral and make it available to Secured Party at a place to be designated by Secured Party, and (b) the right to take
possession of the Collateral, and for that purpose Secured Party may enter upon premises on which the Collateral may be situated and
remove the Collateral therefrom. Guarantor hereby agrees that ten (10) days’ notice of a public sale of any Collateral or notice
of the date after which a private sale of any Collateral may take place is reasonable, provided that any shorter notice period permitted
under the applicable UCC shall be deemed reasonable. In addition, Guarantor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of Secured Party’s rights and remedies hereunder, including, without limitation, Secured
Party’s right following an Event of Default to take immediate possession of Collateral and to exercise Secured Party’s rights
and remedies with respect thereto. Secured Party may also have a receiver appointed to take charge of all or any portion of the Collateral
and to exercise all rights of Secured Party under this Agreement. Secured Party may exercise any of its rights under this Section 7.2
without demand or notice of any kind. The remedies in this Agreement, including without limitation this Section 7.2, are in addition
to, not in limitation of, any other right, power, privilege, or remedy, either in law, in equity, or otherwise, to which Secured Party
may be entitled. No failure or delay on the part of Secured Party in exercising any right, power, or remedy will operate as a waiver
thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other
right hereunder. All of Secured Party’s rights and remedies, whether evidenced by this Agreement or by any other agreement, instrument
or document shall be cumulative and may be exercised singularly or concurrently.
7.3.
Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on Secured Party to exercise remedies
in a commercially reasonable manner, Guarantor acknowledges and agrees that it is not commercially unreasonable for Secured Party (a)
to fail to incur expenses reasonably deemed significant by Secured Party to prepare Collateral for disposition, (b) to fail to obtain
third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental
or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse
claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly
or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications
or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not
in the same business as Guarantor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h)
to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or
that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather
than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure Secured Party
against risks of loss, collection or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection
or disposition of Collateral, or (l) to the extent deemed appropriate by Secured Party, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Secured Party in the collection or disposition of any of the Collateral. Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Secured Party
would fulfill Secured Party’s duties under the UCC in Secured Party’s exercise of remedies against the Collateral and that
other actions or omissions by Secured Party shall not be deemed to fail to fulfill such duties solely on account of not being indicated
in this Section. Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to Guarantor
or to impose any duties on Secured Party that would not have been granted or imposed by this Agreement or by applicable law in the absence
of this Section.
7.4.
Marshalling. Secured Party shall not be required to marshal any present or future Collateral for, or other assurances of payment
of, the Obligations or to resort to such Collateral or other assurances of payment in any particular order, and all of its rights and
remedies hereunder and in respect of such Collateral and other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully may, Guarantor hereby agrees that it will not invoke
any law relating to the marshalling of Collateral which might cause delay in or impede the enforcement of Secured Party’s rights
and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent
that it lawfully may, Guarantor hereby irrevocably waives the benefits of all such laws.
7.5.
Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the
avails of any remedy hereunder (as well as any other amounts of any kind held by Secured Party at the time of, or received by Secured
Party after, the occurrence of an Event of Default) shall be paid to and applied as follows:
(a)
First, to the payment of reasonable costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure
or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances,
including reasonable legal expenses and reasonable attorneys’ fees, incurred or made hereunder by Secured Party;
(b)
Second, to the payment to Secured Party of the amount then owing or unpaid on the Note (to be applied first to accrued interest and second
to outstanding principal) and all amounts owed under any of the other Transaction Documents or other documents included within the Obligations;
and
(c)
Third, to the payment of the surplus, if any, to Guarantor, its successors and assigns, or to whosoever may be lawfully entitled to receive
the same.
In
the absence of final payment and satisfaction in full of all of the Obligations, Guarantor shall remain liable for any deficiency.
8.
Miscellaneous.
8.1.
Notices. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled “Notices”
in the Purchase Agreement, the terms of which are incorporated herein by this reference.
8.2.
Non-waiver. No failure or delay on Secured Party’s part in exercising any right hereunder shall operate as a waiver thereof
or of any other right nor shall any single or partial exercise of any such right preclude any other further exercise thereof or of any
other right.
8.3.
Amendments and Waivers. This Agreement may not be amended or modified, nor may any of its terms be waived, except by written instruments
signed by Guarantor and Secured Party. Each waiver or consent under any provision hereof shall be effective only in the specific instances
for the purpose for which given.
8.4.
Assignment. This Agreement shall be binding upon and inure to the benefit of Secured Party and Guarantor and their respective
successors and assigns; provided, however, that Guarantor may not sell, assign or delegate rights and obligations hereunder without
the prior written consent of Secured Party.
8.5.
Cumulative Rights, etc. The rights, powers and remedies of Secured Party under this Agreement shall be in addition to all rights,
powers and remedies given to Secured Party by virtue of any applicable law, rule or regulation of any governmental authority, or the
Note, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently without impairing
Secured Party’s rights hereunder. Guarantor waives any right to require Secured Party to proceed against any person or entity or
to exhaust any Collateral or to pursue any remedy in Secured Party’s power.
8.6.
Partial Invalidity. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve
the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.
8.7.
Expenses. Guarantor shall pay on demand all reasonable fees and expenses, including reasonable attorneys’ fees and expenses,
incurred by Secured Party in connection with the custody, preservation or sale of, or other realization on, any of the Collateral or
the enforcement or attempt to enforce any of the Obligations which are not performed as and when required by this Agreement.
8.8.
Entire Agreement. This Agreement, the Note, the Guaranty, and the other Transaction Documents, taken together, constitute and
contain the entire agreement of Guarantor and Secured Party with respect to this particular matter and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject
matter hereof.
8.9.
Governing Law; Venue. This Agreement shall be governed by the laws of the State of Utah, without giving effect to the principles
thereof regarding the conflict of laws; provided, however, that the perfection and priority of the security interests hereunder,
and the enforcement of Secured Party’s rights and remedies against the Collateral as provided herein, will be subject to the UCC
of the applicable jurisdiction(s) where such Collateral is located or where the relevant Guarantor is organized, as applicable. The provisions
set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.
8.10.
Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED
BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW,
RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY
JURY.
8.11.
Purchase Agreement; Arbitration of Disputes. By executing this Agreement, each party agrees to be bound by the terms, conditions
and general provisions of the Purchase Agreement and the other Transaction Documents, including without limitation the Arbitration Provisions
(as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
8.12.
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which
together shall constitute one instrument. Any electronic copy of a party’s executed counterpart will be deemed to be an executed
original.
8.13.
Time of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement.
[Remainder
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF, Secured Party and Guarantor have caused this Agreement to be executed as of the day and year first above written.
SECURED
PARTY:
Streeterville
Capital, LLC
By:
s/
John M. Fife
John
M. Fife, President
GUARANTOR:
Scienture,
LLC
By:
s/
Shankar Hariharan
Shankar
Hariharan, Executive Chairman and Co-
CEO
[Signature
Page to Security Agreement]
SCHEDULE
A
TO
SECURITY AGREEMENT
All
right, title, interest, claims and demands of Guarantor in and to all of Guarantor’s assets owned as of the date hereof and/or
acquired hereafter by Guarantor, wherever located, at any time while the Obligations are still outstanding, including without limitation,
the following property:
1.
All equity interests in all wholly- or partially-owned subsidiaries of Guarantor;
2.
All customer accounts, rights under insurance contracts, and rights relating to clients underlying such insurance contracts;
3.
All goods and equipment now owned or hereafter acquired, including, without limitation, all laboratory equipment, computer equipment,
office equipment, machinery, fixtures, vehicles, and any interest in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;
4.
All inventory now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products including such inventory as is temporarily out of Guarantor’s custody
or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from
the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Guarantor’s books
relating to any of the foregoing;
5.
All accounts receivable, contract rights, general intangibles, healthcare insurance receivables, payment intangibles and commercial tort
claims, now owned or hereafter acquired, including, without limitation, all patents, patent rights and patent applications (including
without limitation, the inventions and improvements described and claimed therein, and (a) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, (b) all income, royalties, damages, proceeds and payments now and hereafter due or payable
under or with respect thereto, including, without limitation, damages and payments for past or future infringements thereof, (c) the
right to sue for past, present and future infringements thereof, and (d) all rights corresponding thereto throughout the world), trademarks
and service marks (and applications and registrations therefor), inventions, discoveries, copyrights and mask works (and applications
and registrations therefor), trade names, trade styles, software and computer programs including source code, trade secrets, methods,
published and unpublished works of authorship, processes, know how, drawings, specifications, descriptions, and all memoranda, notes,
and records with respect to any research and development, goodwill, license agreements, information, any and all other proprietary rights,
franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer
disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment
of any kind and whether in tangible or intangible form or contained on magnetic media readable by machine together with all such magnetic
media, and all rights corresponding to all of the foregoing throughout the world, now owned and existing or hereafter arising, created
or acquired;
6.
All now existing and hereafter arising accounts, contract rights, royalties, license rights and all other forms of obligations owing
to Guarantor arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Guarantor (subject,
in each case, to the contractual rights of third parties to require funds received by Guarantor to be expended in a particular manner),
whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Guarantor and Guarantor’s books relating to any of the foregoing;
7.
All documents, cash, deposit accounts (including account numbers and financial institutions where maintained), letters of credit, letter
of credit rights, supporting obligations, certificates of deposit, instruments, chattel paper, electronic chattel paper, tangible chattel
paper and investment property, including, without limitation, all securities, whether certificated or uncertificated, security entitlements,
securities accounts, commodity contracts and commodity accounts, and all financial assets held in any securities account or otherwise,
wherever located, now owned or hereafter acquired and Guarantor’s books relating to the foregoing;
8.
All other assets, goods and personal property of Guarantor, wherever located, whether tangible or intangible, and whether now owned or
hereafter acquired; and
9.
Any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds and
products thereof, including, without limitation, insurance, condemnation, requisition or similar payments and the proceeds thereof.
EX-10.6
EX-10.6
Filename: ex10-6.htm · Sequence: 7
Exhibit
10.6
INTELLECTUAL
PROPERTY SECURITY AGREEMENT
This
INTELLECTUAL PROPERTY SECURITY AGREEMENT (“IP Security Agreement”), dated as of April 27, 2026, is made by SCIENTURE,
LLC, a Delaware limited liability company (“Guarantor”), in favor of STREETERVILLE CAPITAL, LLC, a Utah limited liability
company (the “Secured Party”).
A. Scienture
Holdings, Inc., a Delaware corporation and parent company of Guarantor (“Debtor”),
issued to Secured Party: (i) that certain Secured Promissory Note A-1 of even date herewith
in the original principal amount of $8,420,000.00 (the “A-1 Note”); and
(ii) that certain Secured Promissory Note B of even date herewith in the original principal
amount of $3,000,000.00 (the “B Note”, and together with the A-1 Note
and any other notes that may be issued pursuant to exchanges of the B Note, the “Notes”).
B. In
order to induce Secured Party to purchase the Notes, Guarantor has agreed to enter into that
certain Guaranty of even date herewith by and between Guarantor and Secured Party (the “Guaranty”)
and that certain Security Agreement of even date herewith by and between Guarantor and Secured
Party (the “Security Agreement”) and to grant Secured Party a security
interest in certain “Collateral” as defined in the Security Agreement.
C. Under
the terms of the Security Agreement, Guarantor has granted to Secured Party a security interest
in, among other property, certain intellectual property of Guarantor, and has agreed to execute
and deliver this IP Security Agreement for recording with governmental authorities, including,
but not limited to, the United States Patent and Trademark Office.
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.
Grant of Security.
Guarantor hereby pledges and grants to Secured Party a security interest in and to all of the right, title, and interest of such Guarantor
in, to, and under the following (the “IP Collateral”):
(a)
the patents, patent applications and trademarks set forth on Schedule 1 hereto and all reissues, divisions, continuations, continuations-in-part,
renewals, extensions, and reexaminations thereof, and amendments thereto;
(b)
all rights of any kind whatsoever of Guarantor accruing under any of the foregoing provided by applicable law of any jurisdiction, by
international treaties and conventions and otherwise throughout the world;
(c)
any and all royalties, fees, income, payments, and other proceeds now or hereafter due or payable with respect to any and all of the
foregoing; and
(d)
any and all claims and causes of action with respect to any of the foregoing, whether occurring before, on, or after the date hereof,
including all rights to and claims for damages, restitution, and injunctive and other legal and equitable relief for past, present, and
future infringement, dilution, misappropriation, violation, misuse, breach, or default, with the right but no obligation to sue for such
legal and equitable relief and to collect, or otherwise recover, any such damages.
2.
Recordation. Guarantor authorizes
the Commissioner for Patents and the Commissioner for Trademarks in the United States Patent and Trademark Office and the officials of
corresponding entities or agencies in any applicable jurisdictions to record and register this IP Security Agreement upon request by
Secured Party.
3.
Loan Documents.
This IP Security Agreement has been entered into pursuant to and in conjunction with the Security Agreement, the Purchase Agreement,
and the Notes, which are hereby incorporated by reference. The provisions of the Security Agreement, the Purchase Agreement, and the
Notes shall supersede and control over any conflicting or inconsistent provision herein. The rights and remedies of Secured Party with
respect to the IP Collateral are as provided by the Security Agreement, the Purchase Agreement, and the Notes, and related documents,
and nothing in this IP Security Agreement shall be deemed to limit such rights and remedies.
4.
General Representations and Warranties. In addition to those representations and warranties made in the Security Agreement, Guarantor
hereby represents and warrants to Secured Party that:
(a)
Guarantor owns, has independently developed, and has
the valid right to encumber use, possess, develop, sell, license, copy, distribute, market, advertise and/or dispose of all IP Collateral.
(b)
The IP Collateral does not infringe, whether indirectly (e.g., contributorily
or by induced infringement) or directly, upon any copyright, trademark, trade dress, trade secret or patent or other proprietary or intellectual
property right of any third party in the United States or in any country or jurisdiction worldwide, and that no third party in the United
States or in any country or jurisdiction worldwide has made any infringement or misappropriation claims against Guarantor regarding the
IP Collateral.
(c)
The IP Collateral is free and clear of any liens or
other encumbrances.
(d)
Unless otherwise specified in Schedule 1, all applications and registrations related to the IP Collateral are valid, enforceable, subsisting,
and have not expired, been revoked or cancelled for failure to prosecute, and all issuance, renewal, maintenance and other payments that
are or have become due with respect thereto have been timely paid by or on behalf of the Guarantor.
(e)
Guarantor has not assigned any right, title or interest in the IP Collateral to any third party.
(f)
There is no pending or, to Guarantor’s knowledge, threatened claim or litigation contesting the validity or ownership of the IP
Collateral. There is no legitimate basis for any such claim, nor has Guarantor received any notice asserting that any IP Collateral or
the proposed encumbrance, use, sale, license or disposition thereof conflicts or shall conflict with the rights of any other party, nor
is there any legitimate basis for any such assertion.
2
(g)
Guarantor represents and warrants to Secured Party that
Schedule 1 attached hereto is a true, complete and accurate list of all patents, patent applications, trademarks and trademark
applications owned by Guarantor.
5.
Execution in Counterparts. This IP
Security Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute
an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature
page to this IP Security Agreement by electronic signature shall be effective as delivery of a manually executed counterpart of this
IP Security Agreement.
6.
Successors and Assigns.
This IP Security Agreement will be binding on and shall inure to the benefit of the parties hereto and their respective successors and
assigns.
7.
Governing Law;
Arbitration. This IP Security Agreement and any
claim, controversy, dispute, or cause of action (whether in contract or tort or otherwise) based upon, arising out of, or relating to
this IP Security Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with,
the laws of the United States and the State of Utah, without giving effect to any choice or conflict of law provision or rule (whether
of the State of Utah or any other jurisdiction), and will be subject to the Arbitration
Provisions (as defined in the Purchase Agreement) attached as an exhibit to the Purchase Agreement.
[Signature
Page Follows]
3
IN
WITNESS WHEREOF, Guarantor has caused this IP Security Agreement to be duly executed and delivered by its officer thereunto duly authorized
as of the date first above written.
SCIENTURE, LLC
By:
/s/
Shankar Hariharan
Shankar
Hariharan, Executive Chairman and Co-CEO
Address for Notices:
20 Austin Blvd.
Commack, New York 11725
AGREED
TO AND ACCEPTED:
STREETERVILLE CAPITAL, LLC
By:
/s/
John M. Fife
John
M. Fife, President
Address for Notices:
297 Auto Mall Drive #4
St. George, Utah 84770
[Signature
Page for Intellectual Property Security Agreement]
SCHEDULE
1
PATENTS
Patents
Title
Patent
No.
Issue
Date
Record
Owner
Losartan
liquid formulations and methods of use
US-11890273-B2
2/6/2024
Scienture,
LLC (f/k/a Scienture, Inc.)
Losartan
liquid formulations and methods of use
US-12156869-B2
12/3/2024
Scienture,
LLC (f/k/a Scienture, Inc.)
Patent
Applications
Title
Application/
Publication
Number
Filing
Date
Record
Owner
Dihydroergotamine
mesylate formulations and pre-filled injectors for therapeutic delivery of the same
*PCT/US2020/066482
/ WO 2021/133744A1
12/21/2020
Scienture,
Inc.
Dihydroergotamine
mesylate formulations and pre-filled injectors for therapeutic delivery of the same
*JP2022-530190
/2023-507890
5/23/2022
Scienture,
Inc.
Dihydroergotamine
mesylate formulations and pre-filled injectors for therapeutic delivery of the same
*EP20905918.7
/ EP4004138A1
2/25/2022
Scienture,
Inc.
Dihydroergotamine
mesylate formulations and pre-filled injectors for therapeutic delivery of the same
US-20230043204-A1
12/21/2020
Scienture,
LLC (f/k/a Scienture, Inc.)
Dihydroergotamine
mesylate formulations and pre-filled injectors for therapeutic delivery of the same
*US
62/952,925
12/23/2019
Scienture,
Inc.
Losartan
liquid formulations and methods of use
US-20240293371-A9
12/5/2022
Scienture,
LLC (f/k/a Scienture, Inc.)
Losartan
liquid formulations and methods of use
*US
63/089,950
10/9/2020
Scienture,
LLC (f/k/a Scienture, Inc.)
Long-acting
apomorphine formulations and injectors for therapeutic delivery of the same
U.S.
17/995,888
*US-2023037010-A1
4/12/2021
Scienture,
Inc.
Long-acting
bupivacaine microsphere formulations
*US
63/013,736
4/22/2020
Scienture,
Inc.
Long-acting
bupivacaine microsphere formulations
U.S.
17/996,995 / US-20240033221-A1
4/22/2021
Scienture,
LLC (f/k/a Scienture, Inc.)
Losartan
liquid formulations and methods of use
*PCT/US2021/054054
/ WO 2022/076746A1
10/7/2021
Scienture,
Inc.
Losartan
liquid formulations and methods of use
*63/089,950
10/9/2020
Scienture,
LLC (f/k/a Scienture, Inc.)
Losartan
liquid formulations and methods of use
19/080,602
US-2025-0319070-A1
3/14/25
Scienture,
LLC (f/k/a Scienture, Inc.)
Dihydroergotamine
mesylate formulations and pre-filled injectors for therapeutic delivery of the same
*CA
3151950
2/18/2022
Scienture,
LLC (f/k/a Scienture, Inc.)
Long-acting
apomorphine formulations and injectors for therapeutic delivery of the same
*PCT/US2021/026904
/ WO 2021/207737A1
4/12/2021
Scienture,
Inc. and Innocore Technologies B.V.
Long-acting
apomorphine formulations and injectors for therapeutic delivery of the same
*JP2023-505811
/ JP2023-522134
10/11/2022
Scienture,
Inc. and Innocore Technologies B.V.
Long-acting
apomorphine formulations and injectors for therapeutic delivery of the same
*EP
21785544.4 / EP 4132475A2
4/12/2021
Scienture,
Inc. and Innocore Technologies Holding B.V.
Long-acting
apomorphine formulations and injectors for therapeutic delivery of the same
*CA
3179866
4/12/2021
Scienture,
LLC (f/k/a Scienture, Inc.) and Innocore Technologies B.V.
Long-acting
bupivacaine microsphere formulations
*PCT/US2021/028718
/ WO 2021/216928
4/22/2021
Scienture,
LLC (f/k/a Scienture, Inc.) and Innocore Technologies B.V.
Long-acting
bupivacaine microsphere formulations
CA
3180971
4/22/2021
Scienture,
LLC (f/k/a Scienture, Inc.)
Long-acting
bupivacaine microsphere formulations
EP21793476.9
4/22/2021
Scienture,
LLC (f/k/a Scienture, Inc.) and Innocore Technologies B.V.
Long-acting
bupivacaine microsphere formulations
*JP2022-564247
/ JP2023-522987
10/21/2022
Scienture,
Inc. and Innocore Technologies B.V.
Long-acting
bupivacaine microsphere formulations
*JP2024-068119
/ JP2024-091835
4/19/2024
Scienture,
Inc. and Innocore Technologies B.V.
*Application
expired or intentionally abandoned, or instructions sent to abandon application
Trademarks
Title
Trademark
No.
Registration
Date
Record
Owner
SCIENTURE
PRIORITIZING PATIENTS. IMPROVING OUTCOMES
88873539
1/11/2022
Scienture,
LLC (f/k/a Scienture, Inc.)
ARBLI
97721921
2/24/2026
Scienture,
LLC (f/k/a Scienture, Inc.)
TRULFO
Abandoned
Abandoned
SCIENTURE,
LLC (F/K/A SCIENTURE, INC.)
EX-10.7
EX-10.7
Filename: ex10-7.htm · Sequence: 8
Exhibit
10.7
PLEDGE
AGREEMENT
This
Pledge Agreement (this “Agreement”) is entered into as of April 27, 2026 by and between Streeterville Capital, LLC,
a Utah limited liability company (“Secured Party”), and Scienture Holdings, Inc., a Delaware corporation (“Pledgor”).
A.
Effective as of the date hereof, Secured Party purchased from Pledgor that certain Secured Promissory Note B of even date herewith in
the original principal amount of $3,000,000.00 (the “Note”). The Note was issued pursuant to a certain Note Purchase
Agreement of even date herewith between Secured Party and Pledgor (the “Purchase Agreement”). Any capitalized term
referred to herein without definition shall have the meaning ascribed to such term in the Purchase Agreement.
B.
Pledgor has agreed to pledge all of the membership interests it owns in SCNX Holdings, LLC, a Utah limited liability company and a subsidiary
of Pledgor (“SCNX Holdings”), to secure performance of Pledgor’s obligations under the Note and related documents.
C.
Secured Party purchased the Note in reliance on Pledgor’s agreement to provide this pledge of the SCNX Holdings membership interests
as set forth in this Agreement.
NOW,
THEREFORE, in consideration of $10.00, the premises, the mutual covenants and conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Grant of Security Interest. Pledgor hereby pledges to Secured Party as collateral and security for the Secured Obligations (as
defined in Section 2) and grants Secured Party a first-position security interest in the membership interests of SCNX Holdings
held by Pledgor (the “Pledged Equity”). Secured Party shall have the right to exercise the rights and remedies set
forth herein and in the Transaction Documents if an Event of Default (as defined in the Note) has occurred. Such Pledged Equity, together
with any additions, replacements, accessions or substitutes therefor or proceeds thereof, are hereinafter referred to collectively as
the “Collateral.”
2.
Secured Obligations. During the term hereof, the Collateral shall secure the performance by Pledgor of all of its obligations
under the Note and the other Transaction Documents (the “Secured Obligations”).
3.
Perfection of Security Interest.
(a)
Pledgor will, at Pledgor’s own expense, cause to be searched the public records with respect to the Collateral and will execute,
deliver, file and record (in such manner and form as Secured Party may require), or permit Secured Party to file and record, as Pledgor’s
attorney-in-fact, any financing statements, any carbon, photographic or other reproduction of a financing statement or this Agreement
(which shall be sufficient as a financing statement hereunder), and any specific assignments or other paper that may be reasonably necessary
or reasonably requested to exercise, enforce, create, preserve, perfect or validate any security interest granted hereby. Pledgor hereby
appoints Secured Party as Pledgor’s attorney-in-fact to execute in the name and on behalf of Pledgor such additional financing
statements as Secured Party may request.
(b)
Pledgor hereby authorizes Secured Party to file one or more UCC-1 financing statements or other appropriate documents with applicable
governmental agencies to evidence, perfect, and/or protect Secured Party’s security interest in the Collateral.
4.
Assignment. In connection with the transfer of the Note made in accordance with the terms of the Transaction Documents, Secured
Party may assign or transfer the whole or any part of Secured Party’s security interest granted hereunder. Any such assignee or
transferee of Secured Party shall be vested with all of the rights and powers of Secured Party hereunder with respect to the Collateral.
Any assignee or transferee of Secured Party shall, as a condition to such assignment, expressly assume in writing all obligations of
Secured Party under this Agreement, including all limitations on remedies and enforcement hereunder. Any assignee or transferee of Secured
Party shall, as a condition to such assignment, expressly assume in writing all obligations of Secured Party under this Agreement, including
all limitations on remedies and enforcement hereunder.
5.
Representations, Warranties and Covenants of Pledgor.
(a)
Title. Pledgor hereby represents and warrants to Secured Party as follows with respect to the Collateral:
(i)
The Pledged Equity has been duly authorized and validly issued by SCNX Holdings and is duly and validly owned by Pledgor;
(ii)
The Pledged Equity represents 100% of the outstanding equity interests in SCNX Holdings;
(iii)
The Pledged Equity is free from all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances
of any kind, nature or description, and will not subject Secured Party to personal liability by reason of being the holder thereof;
(iv)
Pledgor has fully performed under all agreements between it and SCNX Holdings pursuant to which the Pledged Equity was issued and SCNX
Holdings has no claims, defenses or rights of offset against Pledgor or the Pledged Equity pursuant to the terms of any such agreements;
(v)
Pledgor is the sole owner of the Collateral;
(vi)
Pledgor further agrees not to grant or create any security interest, claim, transfer restriction, lien, pledge or other encumbrance with
respect to such Collateral or attempt to or actually sell, transfer or otherwise dispose of the Collateral, until the Secured Obligations
have been paid and performed in full, except as expressly permitted under the Note or with the prior written consent of Secured Party;
and
(vii)
This Agreement constitutes a legal, valid and binding obligation of Pledgor enforceable in accordance with its terms (except as the enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws now or hereafter
in effect).
2
(b)
Other.
(i)
Pledgor fully intends to fulfill and has the capability of fulfilling the Secured Obligations to be performed by Pledgor in accordance
with the terms of the Note.
(ii)
Pledgor is not acting, and has not agreed to act, in any plan to sell or dispose of any Pledged Equity in a manner intended to circumvent
the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), or any applicable
state law.
(iii)
Pledgor has been advised by counsel of the elements of a bona-fide pledge for purposes of determining the holding period for restricted
securities under Rule 144(d)(3)(iv) under the Securities Act, including the relevant U.S. Securities and Exchange Commission interpretations,
and affirms that the pledge of the Pledged Equity by Pledgor pursuant to this Agreement will constitute a bona-fide pledge of such Pledged
Equity for purposes of such Rule.
(iv)
Pledgor will not consent to or otherwise approve of, or cause SCNX Holdings to consent to or otherwise approve of or take any action
that amends or alters the rights of the Pledged Equity to the detriment of Secured Party without the written consent of Secured Party
to such amendment. Pledgor further covenants and agrees not to take any action that would impair Secured Party’s rights hereunder
or as a holder of the Pledged Equity without the written consent of Secured Party.
6.
Collection of Dividends and Interest. After the occurrence of any Event of Default, Secured Party shall be authorized to collect
as additional Collateral all dividends, distributions, interest payments, and other amounts that may be, or may become, due on any of
the Collateral, to be held under the terms hereof in the same manner as the Collateral.
7.
Voting Rights. During the term of this Agreement and until such time as this Agreement has terminated or Secured Party has exercised
Secured Party’s rights under this Agreement to foreclose Secured Party’s interest in the Collateral, Pledgor shall have the
right to exercise any voting rights evidenced by, or relating to, the Collateral, provided that such voting rights shall not be exercised
in any manner that would materially impair the value of the Collateral in a manner inconsistent with this Agreement or the Note.
8.
Warrants and Options. In the event that, during the term of this Agreement, subscription, spin-off, warrants, dividends, or any
other rights or option shall be issued in connection with the Collateral, such warrants, dividends, rights and options shall immediately
be deemed to have become part of the Collateral and, to the extent such items of Collateral are certificated, shall promptly be delivered
to Secured Party to be held under the terms hereof in the same manner as the Collateral.
3
9.
Preservation of the Value of the Collateral. Pledgor shall pay all taxes, charges, and assessments against the Collateral and
do all acts necessary to preserve and maintain the value thereof.
10.
Secured Party as Pledgor’s Attorney-in-Fact.
(a)
Pledgor hereby irrevocably appoints Secured Party as Pledgor’s attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor, Secured Party or otherwise, only after the occurrence of an Event of Default, from time to time at
Secured Party’s discretion, to take any action and to execute any instrument, that Secured Party may reasonably deem necessary
or advisable to accomplish the purposes of this Agreement, including: (i), to receive, endorse, and collect all instruments made payable
to Pledgor representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof to the
extent permitted hereunder and to give full discharge for the same and to execute and file governmental notifications and reporting forms;
and (ii) to arrange for the transfer of the Collateral on the books of SCNX Holdings or any other person to the name of Secured Party
or to the name of Secured Party’s nominee.
(b)
In addition to the designation of Secured Party as Pledgor’s attorney-in-fact in subsection (a), Pledgor hereby irrevocably appoints
Secured Party as Pledgor’s agent and attorney-in-fact, only after the occurrence of an Event of Default, to make, execute and deliver
any and all documents and writings which may be necessary or appropriate for approval of, or be required by, any regulatory authority
located in any city, county, state or country where Pledgor or SCNX Holdings engages in business, in order to transfer or to more effectively
transfer any of the Pledged Equity or otherwise enforce Secured Party’s rights hereunder.
11.
Remedies upon Default. After the occurrence of any Event of Default:
(a)
Secured Party may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available
to Secured Party, all the rights and remedies of a secured party on default under applicable law, including without limitation the Utah
Uniform Commercial Code (irrespective of whether such applies to the affected items of Collateral), and Secured Party may also without
notice (except as specified below) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange,
broker’s board or at any of Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Secured Party may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Collateral; provided that Secured Party shall give Pledgor at least ten (10) calendar
days’ prior written notice of any such sale, which notice shall briefly describe the Event of Default and the proposed time and
manner of sale, and during such notice period Pledgor may cure the Event of Default to prevent such sale. To the maximum extent permitted
by applicable law, Secured Party may be the purchaser of any or all of the Collateral at any such sale and shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply all or any part of the Secured Obligations as a credit on account of the purchase price of any Collateral payable
at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay, or appraisal that Pledgor now has or may at
any time in the future have under any rule of law or statute now existing or hereafter enacted. Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten (10) calendar days’ notice to Pledgor of the time and place of any public sale or
the time after which a private sale is to be made shall constitute reasonable notification. Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place
to which it was so adjourned. To the maximum extent permitted by law, Pledgor hereby waives any claims against Secured Party arising
because the price at which any Collateral may have been sold at such a private sale was less than the price that might have been obtained
at a public sale, even if Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree.
4
(b)
Pledgor hereby agrees that any sale or other disposition of the Collateral conducted in conformity with reasonable commercial practices
of banks, insurance companies, or other financial institutions in the city and state where Secured Party is located in disposing of property
similar to the Collateral shall be deemed to be commercially reasonable.
(c)
Pledgor hereby acknowledges that the sale by Secured Party of any Collateral pursuant to the terms hereof in compliance with the Securities
Act, as well as applicable “Blue Sky” or other state securities laws, may require strict limitations as to the manner in
which Secured Party, or any subsequent transferee of the Collateral, may dispose thereof. Pledgor acknowledges and agrees that in order
to protect Secured Party’s interest it may be necessary to sell the Collateral at a price less than the maximum price attainable
if a sale were delayed or were made in another manner, such as a public offering under the Securities Act. Pledgor has no objection to
a sale in such a manner and agrees that Secured Party shall have no obligation to obtain the maximum possible price for the Collateral,
provided that all dispositions shall be commercially reasonable under applicable law. Without limiting the generality of the foregoing,
Pledgor agrees that, after the occurrence of an Event of Default, Secured Party may, subject to applicable law, from time to time attempt
to sell all or any part of the Collateral by a private placement, restricting the bidders and prospective purchasers to those who will
represent and agree that they are purchasing for investment only and not for distribution. In so doing, Secured Party may solicit offers
to buy the Collateral or any part thereof for cash, from a limited number of investors reasonably believed by Secured Party to be institutional
investors or other accredited investors who might be interested in purchasing the Collateral. If Secured Party shall solicit such offers,
then the acceptance by Secured Party of one of the offers shall be deemed to be a commercially reasonable method of disposition of the
Collateral.
(d)
If Secured Party shall determine to exercise Secured Party’s right to sell all or any portion of the Collateral pursuant to this
Section, then Pledgor agrees that, upon request of Secured Party, Pledgor, at Pledgor’s own expense, shall:
(i)
execute and deliver, or cause the officers and directors of SCNX Holdings to execute and deliver, to any person, entity or governmental
authority as Secured Party may choose, any and all documents and writings which, in Secured Party’s reasonable judgment, may be
necessary or appropriate for approval, or be required by, any regulatory authority located in any city, county, state or country where
Pledgor or SCNX Holdings engage in business, in order to transfer or to more effectively transfer the Collateral or otherwise enforce
Secured Party’s rights hereunder; and
5
(ii)
do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
Pledgor
acknowledges that there is no adequate remedy at law for failure by Pledgor to comply with the provisions of this Section 11 and
that such failure would not be adequately compensable in damages and therefore agrees that Pledgor’s agreements contained in this
Section 11 may be specifically enforced.
(e)
PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO
THE TIME SECURED PARTY DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY,
OR APPRAISAL THAT PLEDGOR NOW HAS OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED;
AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS SECTION 11, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE,
TO THE EXTEND PERMITTED BY APPLICABLE LAW.
12.
Application of Proceeds. After the occurrence of an Event of Default, any cash held by Secured Party as Collateral and all cash
proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral
pursuant to the exercise by Secured Party of Secured Party’s remedies as a secured creditor as provided in Section 11 shall
be applied from time to time by Secured Party as follows:
(a)
First, to the payment of reasonable costs and expenses, including all amounts expended to preserve the value of the Collateral,
of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses,
liability and advances, including reasonable legal expenses and attorneys’ fees and brokerage commissions related to selling any
Collateral, incurred or made hereunder by Secured Party;
(b)
Second, to the payment to Secured Party of the amount then owing or unpaid on the Note (to be applied first to any charges, fees
and other expenses incurred thereunder, then to accrued interest and finally to outstanding principal) and under any of the other Transaction
Documents; and
(c)
Third, to the payment of the surplus, if any, to Pledgor, Pledgor’s assigns, or to whosoever may be lawfully entitled to
receive the same, including the transfer to Pledgor of any remaining Collateral that has not been converted to cash proceeds. For the
avoidance of doubt, any Pledged Equity that are not sold to satisfy Pledgor’s Secured Obligations shall be returned to Pledgor
following the satisfaction of all of the Secured Obligations. Except as expressly provided in Section 12(c) above, Secured Party shall
have no obligation to return any cash proceeds applied in accordance with this Section 12.
6
In
the absence of final payment and satisfaction in full of all of the Secured Obligations, Pledgor shall remain liable for any deficiency
in accordance with the terms of the Transaction Documents.
13.
Indemnity and Expenses. Pledgor agrees:
(a)
To indemnify and hold harmless Secured Party and each of Secured Party’s agents and affiliates from and against any and all claims,
damages, demands, losses, obligations, judgments and liabilities (including, without limitation, reasonable attorneys’ fees and
expenses) in any way arising out of or in connection with this Agreement or the Secured Obligations, except to the extent the same shall
arise as a result of the gross negligence or willful misconduct or breach of this Agreement or the Note of the party seeking to be indemnified;
and
(b)
To pay and reimburse Secured Party upon demand for all reasonable and documented costs and expenses (including, without limitation, reasonable
attorneys’ fees and expenses) that Secured Party may incur in connection with (i) the custody, use or preservation of, or the sale
of, collection from or other realization upon, any of the Collateral, including the reasonable expenses of re-taking, holding, preparing
for sale or lease, selling or otherwise disposing of or realizing on the Collateral, (ii) the exercise or enforcement of any rights or
remedies granted hereunder, under the Note or otherwise available to Secured Party (whether at law, in equity or otherwise), or (iii)
the failure by Pledgor to perform or observe any of the provisions hereof. The provisions of this Section 13 shall survive the
execution and delivery of this Agreement, the repayment of any of the Secured Obligations, the termination of the commitments of Secured
Party under the Note and the termination of this Agreement.
14.
Duties of Secured Party. The powers conferred upon Secured Party hereunder are solely to protect Secured Party’s interests
in the Collateral and shall not impose on Secured Party any duty to exercise such powers. Except as provided in Section 9-207 of the
Uniform Commercial Code of the State of Utah, Secured Party shall have no duty with respect to the Collateral or any responsibility for
taking any necessary steps to preserve rights against any persons with respect to any Collateral.
15.
Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement
to determine the proper venue for any disputes are incorporated herein by this reference.
7
16.
Arbitration of Claims. Each party agrees to be bound by the Arbitration Provisions set forth as an exhibit to the Purchase Agreement.
For clarity, such arbitration shall be conducted in Salt Lake City, Utah.
17.
Amendments; etc. No amendment of any provision of this Agreement shall in any event be effective unless the same shall be in writing
signed by the parties hereto. Further, no waiver of any provision of this Agreement nor consent to any departure by Pledgor herefrom
shall in any event be effective unless the same shall be in writing and signed by Secured Party, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for which given. No failure on the part of Secured Party to exercise,
and no delay in exercising any right under this Agreement, any other document or documents delivered in connection with the transactions
contemplated by the Note, this Agreement or any other agreement entered into in conjunction herewith or therewith, or otherwise with
respect to any of the Secured Obligations, shall operate as a waiver thereof; nor shall any single or partial exercise of any right under
this Agreement, any other Transaction Document, or otherwise with respect to any of the Secured Obligations preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided for in this Agreement or otherwise with respect to any of
the Secured Obligations are cumulative and not exclusive of any remedies provided by other agreement or applicable law.
18.
Notices. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be
deemed effectively given on the earliest of: (a) the date delivered, if delivered by personal delivery as against written receipt therefor
or by e-mail to an executive officer, or by facsimile (with successful transmission confirmation), (b) the earlier of the date delivered
or the third business day after deposit, postage prepaid, in the United States Postal Service by certified mail, or (c) the earlier of
the date delivered or the third business day after mailing by express courier, with delivery costs and fees prepaid, in each case, addressed
to each of the other parties thereunto entitled at the addresses set forth in the Purchase Agreement in the “Notices” section
(or at such other addresses as such party may designate by five (5) calendar days’ advance written notice similarly given to each
of the other parties hereto).
19.
Continuing Security Interest; Term. This Agreement shall create a continuing security interest in the Collateral and shall: (a)
remain in full force and effect until the indefeasible payment and performance in full of all the Secured Obligations; (b) be binding
upon Pledgor and Pledgor’s successors and assigns; and (c) inure to the benefit of Secured Party and Secured Party’s successors,
transferees, and assigns. Upon the indefeasible payment and performance in full of all of the Secured Obligations, the security interests
granted herein shall automatically, and without further action of Pledgor or Secured Party required, terminate, all rights to the Collateral
shall revert to Pledgor and the term of this Agreement shall end. Upon any such termination, Secured Party, at its own expense, shall
promptly execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination. Such documents
shall be prepared by Pledgor and shall be in form and substance reasonably satisfactory to Secured Party. Notwithstanding any other provision
contained herein, all provisions of this Agreement that by their nature are intended to survive the termination of this Agreement shall
so survive such termination.
8
20.
Security Interest Absolute. To the maximum extent permitted by law, all rights of Secured Party, all security interests hereunder,
and all obligations of Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a)
any lack of validity or enforceability of any of the Secured Obligations or any other agreement or instrument relating thereto, including
any of the Transaction Documents;
(b)
any change in the time, manner, or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any of the Transaction Documents, or any other agreement or instrument relating
thereto;
(c)
any exchange, release, or non-perfection of any other collateral, or any release or amendment or waiver of or consent to departure from
any guaranty for all or any of the Secured Obligations; or
(d)
any other circumstances that might otherwise constitute a defense available to, or a discharge of, Pledgor.
Notwithstanding
the foregoing, nothing herein shall be deemed to waive any defense arising from the failure of Secured Party to apply or dispose of the
Collateral in accordance with this Agreement or applicable law.
21.
Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement or be given any substantive effect.
22.
Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve
the objective of the parties to the fullest extent permitted by law and the balance of this Agreement shall remain in full force and
effect.
23.
Counterparts; Electronic Execution. This Agreement may be executed electronically in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the same agreement. Delivery of an executed counterpart of this
Agreement by facsimile or email shall be equally as effective as delivery of an original executed counterpart of this Agreement.
24.
Waiver of Marshaling. Each of Pledgor and Secured Party acknowledges and agrees that in exercising any rights under or with respect
to the Collateral Secured Party: (a) is under no obligation to marshal any Collateral; (b) may, in Secured Party’s absolute discretion,
realize upon the Collateral in any order and in any manner Secured Party so elects; and (c) may, in Secured Party’s sole and absolute
discretion, apply the proceeds of any or all of the Collateral to the Secured Obligations in any order and in any manner Secured Party
so elects, without any duty to maximize recovery or minimize losses. Pledgor and Secured Party waive any right to require the marshaling
of any of the Collateral.
9
25.
Waiver of Jury Trial. PLEDGOR AND SECURED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. PLEDGOR AND SECURED PARTY REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
26.
Attorneys’ Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement, the
parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore
be entitled to an additional award of the full amount of the reasonable attorneys’ fees and expenses paid by such prevailing party
in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving
rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous
or bad faith pleading.
27.
Recitals. The recitals of this Agreement are contractual in nature and are hereby agreed to and incorporated into this Agreement.
28.
Further Assurances. At any time and from time to time, upon the written request of Secured Party, Pledgor will promptly (and in
any event within 5 business days) execute and deliver any and all such further instruments and documents as Secured Party may reasonably
deem necessary to obtain the full benefits and security of this Agreement, including, without limitation, executing and filing such financing
or continuation statements, securities account control agreements or amendments thereto, as may be reasonably necessary or desirable
or that Secured Party may reasonably request in order to perfect, preserve and enforce the security interest created hereby.
THE
PROXIES AND POWERS GRANTED BY PLEDGOR PURSUANT TO THIS AGREEMENT ARE COUPLED WITH AN INTEREST AND ARE GIVEN TO SECURE THE PERFORMANCE
OF PLEDGOR’S OBLIGATIONS UNDER THIS AGREEMENT.
[Remainder
of page intentionally left blank; signature page to follow]
10
IN
WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to be duly executed and delivered (by their duly authorized officers,
as applicable), as of the date first written above.
PLEDGOR:
SCIENTURE HOLDINGS, INC.
By:
/s/ Shankar Hariharan
Shankar Hariharan, Executive Chairman and Co-CEO
SECURED PARTY:
STREETERVLLE CAPITAL, LLC
By:
/s/ John M. Fife
John M. Fife, President
[Signature
Page to Pledge Agreement]
EX-10.8
EX-10.8
Filename: ex10-8.htm · Sequence: 9
Exhibit
10.8
GUARANTY
This
GUARANTY, made effective as of April 27, 2026, is given by Scienture LLC, a Delaware limited liability company (“Scienture LLC”),
and SCNX Holdings, LLC, a Utah limited liability company (“SCNX Holdings”, and together with Scienture LLC, “Guarantors”,
and each individually, a “Guarantor”) for the benefit of Streeterville Capital, LLC, a Utah limited liability company
(“Investor”).
PURPOSE
A.
Scienture Holdings, Inc., a Delaware corporation and parent of Guarantors (“Company”), has issued to Investor: (i)
that certain Secured Promissory Note A-1 of even date herewith in the original principal amount of $8,420,000.00 (the “A-1 Note”);
and (ii) that certain Secured Promissory Note B of even date herewith in the original principal amount of $3,000,000.00 (the “B
Note”, and together with the A-1 Note and any other notes that may be issued pursuant to exchanges of the B Note, the “Notes”).
B.
The A-1 Note and the B Note were issued pursuant to the terms of a Note Purchase Agreement of even date herewith between Company and
Investor (the “Purchase Agreement”).
C.
Investor agreed to provide the financing to Company evidenced by the Notes only upon the inducement and representation of Guarantors
that they would guaranty certain indebtedness, liabilities and obligations of Company owed to Investor under the Notes, as provided herein.
NOW,
THEREFORE, in consideration of $10.00 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
and in order to induce Investor to purchase the A-1 Note and the B Note and provide the financing contemplated therein, each Guarantor
hereby agrees for the benefit of Investor as follows:
GUARANTY
1.
Indebtedness Guaranteed. Each Guarantor hereby absolutely and unconditionally guarantees the prompt payment in full of the Obligations
(as defined below), as and when the same (including without limitation portions thereof) become due and payable. Each Guarantor acknowledges
that the amount of the Obligations may exceed the principal amount of the Notes. Each Guarantor further acknowledges that the foregoing
guarantee is made for the timely payment and performance of each of the Obligations and is not merely a guaranty of collection. For purposes
of this Guaranty, “Obligations” means (a) all loans, advances, debts, liabilities and obligations, arising on or after
the date of this Guaranty, owed by Company or Guarantors to Investor, whether created by the Notes, the Purchase Agreement, or any other
Transaction Documents, including any modification or amendment to any of the foregoing, and (b) all costs and expenses, including reasonable
attorneys’ fees incurred in connection with enforcement or collection actions incurred by Investor in connection with the Notes
or in connection with the collection or enforcement of any portion of the Obligations.
2.
DACA. The Obligations shall be secured by a Deposit Account Control Agreement of even date herewith among SCNX Holdings, the Bank
(as defined in the DACA), and Investor (the “DACA”), the Deposit Account (as defined in the DACA), and the funds held
therein pursuant to the DACA. SCNX Holdings hereby grants to Investor a first-position security interest in and lien on the Deposit Account
and the funds held in the Deposit Account and acknowledges and agrees that Investor will have the right to file a UCC-1 Financing Statement
with respect to the Deposit Account. SCNX Holdings acknowledges and agrees that Investor will have control over the Deposit Account within
the meaning of Section 9-104 of the Uniform Commercial Code pursuant to the terms of the DACA. SCNX Holdings covenants and agrees that
Investor is authorized to deliver a Lender Instruction Notice (as defined in the DACA) to the Bank directing the disposition of the funds
held in the Deposit Account: (a) upon the occurrence of a Trigger Event (as defined in the Notes); or (b) upon Investor’s receipt
of a notice from Company pursuant to Section 4(viii) of the Purchase Agreement (or otherwise becoming aware of an action described therein).
Upon sending a Lender Instruction Notice, Investor will have the right without further notice or demand, to apply all or any portion
of the funds held in the Deposit Account to the Obligations.
3.
Representations and Warranties. Each Guarantor hereby represents and warrants to Investor that:
(a)
Guarantor is a limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of
its formation and has the power and authority and the legal right to own and operate its properties and to conduct the business in which
it is currently engaged.
(b)
Guarantor has the power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guaranty
and has taken all necessary action required by its form of organization to authorize such execution, delivery and performance.
(c)
This Guaranty constitutes Guarantor’s legal, valid and binding obligation enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
(d)
The execution, delivery and performance of this Guaranty will not (i) violate any provision of any law, statute, rule or regulation or
any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect
having applicability to Guarantor, (ii) violate or contravene any provision of Guarantor’s organizational documents, or (iii) result
in a breach of or constitute a default under any indenture, loan or credit agreement or any other material agreement, lease or instrument
to which Guarantor is a party or by which it or any of its properties may be bound or result in the creation of any lien thereunder.
Guarantor is not in default under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, loan or credit agreement or other material agreement, lease or instrument in any case in
which the consequences of such default or violation could have a material adverse effect on its business, operations, properties, assets
or condition (financial or otherwise).
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(e)
No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority is required on Guarantor’s part to authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or enforceability of, this Guaranty.
(f)
There are no actions, suits or proceedings pending or, to Guarantor’s knowledge, threatened against or affecting Guarantor or any
of its properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which, if determined
adversely to Guarantor, would have a material adverse effect on its business, operations, property or condition (financial or otherwise)
or on its ability to perform its obligations hereunder.
(g)
(i) This Guaranty is not given with actual intent to hinder, delay or defraud any entity to which Guarantor is, or will become on or
after the date of this Guaranty, indebted, (ii) Guarantor has received at least a reasonably equivalent value in exchange for the giving
of this Guaranty, (iii) Guarantor is not insolvent, as defined in any applicable state or federal statute, nor will Guarantor be rendered
insolvent by the execution and delivery of this Guaranty to Investor, and (iv) Guarantor does not intend to incur debts that will be
beyond Guarantor’s ability to pay as such debts become due.
(h)
Guarantor has examined or has had the full opportunity to examine the A-1 Note and the B Note and all the other Transaction Documents,
all the terms of which are acceptable to Guarantor.
(i)
This Guaranty is given in consideration of Investor entering into the A-1 Note and the B Note and providing financing thereunder.
(j)
Guarantor has received adequate consideration and at least a reasonably equivalent value in exchange for the giving of this Guaranty,
which Guarantor hereby acknowledges having received, and thereby will materially benefit from the financial accommodations granted to
Company by Investor pursuant to the Notes. Investor may rely conclusively on the continuing warranty, hereby made, that Guarantor continues
to be benefitted by Investor’s extension of credit accommodations to Company and Investor shall have no duty to inquire into or
confirm the receipt of any such benefits, and this Guaranty shall be effective and enforceable by Investor without regard to the receipt,
nature or value of any such benefits. As such, this Guaranty is a valid and binding obligation of Guarantor. Guarantor further covenants
and agrees that it will not use lack of consideration as a defense to its performance of its obligations under this Guaranty.
4.
Alteration of Obligations. In such manner, upon such terms and at such times as Investor and Company deem best and without notice
to Guarantor, Investor and Company may alter, compromise, accelerate, extend, renew or change the time or manner for the payment of any
Obligation, increase or reduce the rate of interest on the Notes, release Company, as to all or any portion of the Obligations, release,
substitute or add any one or more guarantors or endorsers, accept additional or substituted security therefor, or release or subordinate
any security therefor. No exercise or non-exercise by Investor of any right available to Investor, no dealing by Investor with Guarantors
or any other guarantor, endorser of the Notes or any other person, and no change, impairment or release of all or a portion of the obligations
of Company under any of the Transaction Documents or suspension of any right or remedy of Investor against any person, including, without
limitation, Company and any other such guarantor, endorser or other person, shall in any way affect any of the obligations of Guarantors
hereunder or any security furnished by Guarantors or give Guarantors any recourse against Investor. Guarantors acknowledges that its
obligations hereunder are independent of the obligations of Company.
3
5.
Waiver. To the extent permitted by law, each Guarantor hereby waives and relinquishes all rights and remedies accorded by applicable
law to guarantors and agrees not to assert or take advantage of any such rights or remedies, including (without limitation) (a) any right
to require Investor to proceed against Company or any other person or to pursue any other remedy in Investor’s power before proceeding
against Guarantor; (b) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person
or persons or the failure of Investor to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding)
of any other person or persons; (c) demand, protest and notice of any kind, including, without limitation, notice of the existence, creation
or incurring of any new or additional indebtedness, liability or obligation or of any action or non-action on the part of Company, Investor,
any endorser or creditor of Company or Guarantor or on the part of any other person whomsoever under this or any other instrument in
connection with any obligation or liability or evidence of indebtedness held by Investor as collateral or in connection with any Obligation
hereby guaranteed; (d) any defense based upon an election of remedies by Investor which may destroy or otherwise impair the subrogation
rights of Guarantor or the right of Guarantor to proceed against Company for reimbursement, or both; (e) any defense based upon any statute
or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome
than that of the principal; (f) any duty on the part of Investor to disclose to Guarantor any facts Investor may now or hereafter know
about Company, regardless of whether Investor has reason to believe that any such facts materially increase the risk beyond that which
Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor or has a reasonable opportunity to communicate
such facts to Guarantor, since Guarantor acknowledges that it is fully responsible for being and keeping informed of the financial condition
of Company and of all circumstances bearing on the risk of non-payment of any Obligation; (g) any defense arising because of Investor’s
election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy
Code; (h) any defense based on any borrowing or grant of a security interest under Section 364 of the Federal Bankruptcy Code; (i) any
claim, right or remedy which Guarantor may now have or hereafter acquire against Company that arises hereunder and/or from the performance
by Guarantor hereunder, including, without limitation, any claim, right or remedy of Investor against Company or any security which Investor
now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common
law or otherwise; and (j) any obligation of Investor to pursue any other guarantor or any other person, or to foreclose on any collateral.
6.
Bankruptcy. So long as any Obligation shall be owing to Investor, Guarantors shall not, without the prior written consent of Investor,
commence or join with any other person in commencing any bankruptcy, reorganization, or insolvency proceeding against Company. The obligations
of Guarantors under this Guaranty shall not be altered, limited or affected by any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Company, or by any defense which Company may have
by reason of any order, decree or decision of any court or administrative body resulting from any such proceeding.
4
7.
Claims in Bankruptcy. Guarantors shall file in any bankruptcy or other proceeding in which the filing of claims is required or
permitted by law all claims that Guarantors may have against Company relating to any indebtedness, liability or obligation of Company
owed to Guarantors and will assign to Investor all rights of Guarantors thereunder. If Guarantors do not file any such claim, Investor,
as attorney-in-fact for Guarantors, is hereby authorized to do so in the name of Guarantors or, in Investor’s discretion, to assign
the claim to a nominee and to cause proof of claim to be filed in the name of Investor’s nominee. The foregoing power of attorney
is coupled with an interest and cannot be revoked. Investor or Investor’s nominee shall have the sole right to accept or reject
any plan proposed in such proceeding and to take any other action that a party filing a claim is entitled to do. In all such cases, whether
in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Investor the amount payable
on such claim and, to the full extent necessary for that purpose, Each Guarantor hereby assigns to Investor all of Guarantor’s
rights to any such payments or distributions to which Guarantor would otherwise be entitled; provided, however, that Guarantor’s
obligations hereunder shall not be deemed satisfied except to the extent that Investor receives cash by reason of any such payment or
distribution. If Investor receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this
Guaranty. If at any time the holder of any of the Notes is required to refund to Company any payments made by Company under the Notes
because such payments have been held by a bankruptcy court having jurisdiction over Company to constitute a preference under any bankruptcy,
insolvency or similar law then in effect, or for any other reason, then in addition to Guarantor’s other obligation under this
Guaranty, Guarantor shall reimburse the holder in the aggregate amount of such refund payments.
8.
Costs and Attorneys’ Fees. If Company or any Guarantor fails to pay all or any portion of any Obligation, or any Guarantor
otherwise breaches any provision hereof or otherwise defaults hereunder, Guarantors shall pay reasonable attorneys’ fees incurred
by Investor in connection with the enforcement of any obligations of Guarantors hereunder, including, without limitation, any reasonable
attorneys’ fees incurred in any negotiation, alternative dispute resolution proceeding subsequently agreed to by the parties, if
any, litigation, or bankruptcy proceeding or any appeals from any of such proceedings.
9.
Cumulative Rights. The amount of Guarantors’ liability and all rights, powers and remedies of Investor hereunder and under
any other agreement now or at any time hereafter in force between Investor and Guarantors, including, without limitation, any other guaranty
executed by Guarantors relating to any indebtedness, liability or obligation of Company owed to Investor, shall be cumulative and not
alternative and such rights, powers and remedies shall be in addition to all rights, powers and remedies given to Investor by law. This
Guaranty is in addition to and exclusive of the guaranty of any other guarantor of any indebtedness, liability or obligation of Company
owed to Investor.
5
10.
Independent Obligations. The obligations of Guarantors hereunder are independent of the obligations of Company and, to the extent
permitted by law, in the event of any breach or default hereunder, a separate action or actions may be brought and prosecuted against
any Guarantor whether or not Company or the other Guarantors are joined therein or a separate action or actions are brought against Company,
and Investor shall have no obligation to separately pursue an action against Company with respect to the Obligations. Investor may maintain
successive actions for other breaches or defaults. Investor’s rights hereunder shall not be exhausted by Investor’s exercise
of any of Investor’s rights or remedies or by any such action or by any number of successive actions until and unless all Obligations
have been paid and fully performed.
11.
Severability. If any part of this Guaranty is construed to be in violation of any law, such part shall be modified to achieve
the objective of the parties to the fullest extent permitted and the balance of this Guaranty shall remain in full force and effect.
12.
Successors and Assigns. This Guaranty shall inure to the benefit of Investor, Investor’s successors and assigns, including
the assignees of any Obligation, and shall bind the heirs, executors, administrators, personal representatives, successors and assigns
of Guarantors. This Guaranty may be assigned by Investor with respect to all or any portion of the Obligations, and when so assigned,
Guarantors shall be liable to the assignees under this Guaranty without in any manner affecting the liability of Guarantors hereunder
with respect to any Obligations retained by Investor.
13.
Notices. Whenever Guarantors or Investor shall desire to give or serve any notice, demand, request or other communication with
respect to this Guaranty, each such notice shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of:
(a)
the date delivered, if delivered by personal delivery as against written receipt therefor or by email to an executive officer, or by
confirmed facsimile,
(b)
the fifth business day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or
(c)
the third business day after mailing by domestic or international express courier, with delivery costs and fees prepaid, in each case,
addressed to each of the other parties thereunto entitled at the address for such party (or Company, in respect of notices delivered
to the Guarantors) set forth in the Purchase Agreement (or at such other addresses as such party may designate by ten (10) calendar days’
advance written notice similarly given to each of the other parties hereto).
14.
Application of Payments or Recoveries. With or without notice to Guarantors, Investor, in Investor’s sole discretion and
at any time and from time to time and in such manner and upon such terms as Investor deems fit, may (a) apply any or all payments or
recoveries from Company or from any other guarantor or endorser under any other instrument or realized from any security, in such manner
and order of priority as Investor may determine, to any indebtedness, liability or obligation of Company owed to Investor, whether or
not such indebtedness, liability or obligation is guaranteed hereby or is otherwise secured or is due at the time of such application;
and (b) refund to Company any payment received by Investor in connection with any Obligation and payment of the amount refunded shall
be fully guaranteed hereby.
6
15.
Setoff. Investor shall have a right of setoff against the Deposit Account. Such right is in addition to any right of setoff Investor
may have by law. All rights of setoff may be exercised without notice or demand to Guarantors. No right of setoff shall be deemed to
have been waived by any act or conduct on the part of Investor, or by any neglect to exercise such right of setoff, or by any delay in
doing so. Every right of setoff shall continue in full force and effect until specifically waived or released by an instrument in writing
executed by Investor.
16.
Miscellaneous.
16.1
Governing Law and Venue. This Guaranty shall be governed by and interpreted in accordance with the laws of the State of Utah for
contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Without
modifying Guarantors’ obligations to resolve disputes hereunder pursuant to the Arbitration Provisions (as defined below), each
Guarantor consents to and expressly agrees that exclusive venue for the arbitration of any dispute arising out of or relating to this
Guaranty or the relationship of the parties or their affiliates shall be in Salt Lake County, Utah. Without modifying the parties obligations
to resolve disputes hereunder pursuant to the Arbitration Provisions (as defined below), for any litigation arising in connection with
this Agreement, each Guarantor hereby (a) consents to and expressly submits to the exclusive personal jurisdiction of any state court
sitting in Salt Lake County, Utah, (b) expressly submits to the exclusive venue of any such court for the purposes hereof, and (c) waives
any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim or objection to
the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper.
16.2
Arbitration of Claims. The parties hereto hereby incorporate by this reference the arbitration provisions set forth as an exhibit
to the Purchase Agreement (“Arbitration Provisions”). The parties shall submit all Claims (as defined in the Arbitration
Provisions) arising under this Guaranty or other agreements between the parties and their affiliates to binding arbitration pursuant
to the Arbitration Provisions. The parties hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on
the parties hereto and are severable from all other provisions of this Guaranty. Any capitalized term not defined in the Arbitration
Provisions shall have the meaning set forth in the Purchase Agreement. By executing this Guaranty, each Guarantor represents, warrants
and covenants that such Guarantor has reviewed the Arbitration Provisions carefully, has had the opportunity to consult with legal counsel
about such provisions and either has done so or knowingly and voluntarily waived such right, understands that the Arbitration Provisions
are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set
forth in the Arbitration Provisions, and that Guarantor will not take a position contrary to the foregoing representations. Each Guarantor
acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Guarantor regarding the Arbitration
Provisions.
7
16.3
Entire Agreement. Except as provided in any other written agreement now or at any time hereafter in force between Investor and
Guarantors, this Guaranty shall constitute the entire agreement of Guarantors with Investor with respect to the subject matter hereof,
and no representation, understanding, promise or condition concerning the subject matter hereof shall be binding upon Investor unless
expressed herein.
16.4
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 electronic signature (including PDF
or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com), 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.
16.5
Construction. When the context and construction so require, all words used in the singular herein shall be deemed to have been
used in the plural and the masculine shall include the feminine and neuter and vice versa. The word “person” as used herein
shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.
The headings of this Guaranty are inserted for convenience only and shall have no effect upon the construction or interpretation hereof.
16.6
Waiver. No provision of this Guaranty or right granted to Investor hereunder can be waived in whole or in part nor can Guarantors
be released from Guarantors’ obligations hereunder except by a writing duly executed by an authorized officer of Investor. Any
such waiver shall be effective only for the specific instance and purpose for which it is given.
16.7
No Subrogation. Until all indebtedness, liabilities and obligations of Company owed to Investor have been paid in full, Guarantors
shall not have any right of subrogation, contribution, or reimbursement against Company or any other guarantor.
16.8
Survival. All representations and warranties contained in this Guaranty shall survive the execution, delivery and performance
of this Guaranty and the creation and payment of the Obligations.
16.9
Joint and Several Liability. Each Guarantor’s covenants, obligations and agreements set forth herein are joint and several
liabilities and obligations of Guarantor together with every other guarantor of the Obligations, whether now existing or hereafter arising,
and whether or not such other guarantors are named in this Guaranty.
[Remainder
of page intentionally left blank; signature page to follow]
8
IN
WITNESS WHEREOF, Guarantor has executed this Guaranty to be effective as of the date first set forth above.
SCIENTURE LLC
By:
/s/ Shankar Hariharan
Shankar Hariharan, Manager
SCNX HOLDINGS, LLC
By:
/s/ Shankar Hariharan
Shankar Hariharan, Manager
[Signature
Page to Guaranty]
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