Exhibit 10.2


 


FORM OF SECURITY AGREEMENT





 


THIS SECURITY AGREEMENT (as
amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) dated as of ___________, 2022,
between Atlis Motor Vehicles, Inc. , a Delaware corporation (the “Company”), with corporate headquarters at 1828 North Higley
Road, Suite 116, Mesa, Arizona 85205 (the Company, each Subsidiary, and each other Person who becomes a party to this Agreement by execution
of a joinder in the form of Exhibit A attached hereto, which shall include all Subsidiaries of the Company formed or acquired after
the date hereof are hereinafter sometimes referred to individually as a “Debtor” and, collectively, as the “Debtors”)
and _____________, in its capacity as a Purchaser (as defined in the Purchase Agreement (as hereinafter defined)) and as Collateral Agent
for the benefit of itself and each of the other Purchasers (together with their respective successors and permitted assigns, each a “Secured
Party” and collectively, the “Secured Parties”) who execute this Agreement.


 


WHEREAS, the Secured Parties
are purchasing from the Company certain Notes (as defined in the Purchase Agreement) in an original aggregate principal amount of up to
$30,000,000 (all such Notes, as any of the same may be amended, supplemented, restated or modified and in effect from time to time), and
receive certain Warrants (as defined in the Purchase Agreement) (all such Warrants as any of the same may be amended, supplemented, restated
or modified and in effect from time to time);


 


WHEREAS, the Notes are being
acquired by the Secured Parties, and the Secured Parties have made certain financial accommodations to the Company pursuant to the Securities
Purchase Agreement, dated as of the dated the date of this Agreement, by and among the Company and the Secured Parties (as the same may
be amended, restated, supplemented or otherwise modified from time-to-time, the “Purchase Agreement”). Capitalized words and
terms used herein but not otherwise defined shall have the meanings set forth in the Purchase Agreement;


 


WHEREAS, each Debtor will
derive substantial direct or indirect benefit and advantage from the financial accommodations to the Company set forth in the Purchase
Agreement and the Notes, and it will be to each such Debtor’s direct or indirect interest and economic benefit to assist the Company
in procuring said financial accommodations from the Secured Parties;


 


NOW, THEREFORE, in consideration
of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:


 


Section 1.     Definitions. Capitalized terms used herein without definition and defined in the Purchase Agreement are used herein
as defined therein. In addition, as used herein:


 


“Accounts” means
any “account,” as such term is defined in the UCC, and, in any event, shall include, without limitation, “supporting
obligations” as defined in the UCC.


 


“Chattel Paper”
means any “chattel paper,” as such term is defined in the UCC.


 


“Collateral” shall
have the meaning ascribed thereto in Section 3 hereof.


 



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“Collateral Agent”
shall mean _____________, in its capacity as Collateral Agent.


 


“Commercial Tort Claims”
means “commercial tort claims”, as such term is defined in the UCC.


 


“Contracts” means
all contracts, undertakings, or other agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which a Debtor may now or hereafter have any right, title or interest, including, without limitation, with respect to an Account, any
agreement relating to the terms of payment or the terms of performance thereof.


 


“Copyrights” means
any copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and copyright applications,
including, without limitation, the copyright registrations and applications listed on Schedule III attached hereto (if any), and
all renewals of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or payable under or with respect
to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements of any of the
foregoing and the right to sue for past, present and future infringements of any of the foregoing.


 


“Deposit Accounts”
means all “deposit accounts” as such term is defined in the UCC, now or hereafter held in the name of a Debtor.


 


“Documents” means
any “documents,” as such term is defined in the UCC, and shall include, without limitation, all documents of title (as defined
in the UCC), bills of lading or other receipts evidencing or representing Inventory or Equipment.


 


“Equipment” means
any “equipment,” as such term is defined in the UCC and, in any event, shall include, Motor Vehicles.


 


“Event of Default”
shall have the meaning set forth in the Notes.


 


“Excluded Assets”
means any lease, license or other agreement or any property subject to a capital lease, purchase money security interest or similar arrangement,
to the extent that a grant of a Lien thereon in favor of the Collateral Agent would violate or invalidate such lease, license, agreement
or capital lease, purchase money security interest or similar arrangement or create a right of termination in favor of any other party
thereto (other than the Debtors), so long as such provision exists and so long as such lease, license or agreement was not entered into
in contemplation of circumventing the obligation to provide Collateral hereunder or in violation of the Purchase Agreement, other than
to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor
provision or provisions) of any relevant jurisdiction or any other applicable law including the bankruptcy code, or principles of equity.


 


“General Intangibles”
means any “general intangibles,” as such term is defined in the UCC, and, in any event, shall include, without limitation,
all right, title and interest in or under any Contract, models, drawings, materials and records, claims, literary rights, goodwill, rights
of performance, Copyrights, Trademarks, Patents, warranties, rights under insurance policies and rights of indemnification.


 



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“Goods” means any
“goods”, as such term is defined in the UCC, including, without limitation, fixtures and embedded Software to the extent included
in “goods” as defined in the UCC.


 


“Governmental Authority”
means the government of the United States of America or any other nation, or any political subdivision thereof, whether state or local,
or any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administration powers or functions of or pertaining to government over any Debtor or any of its subsidiaries, or
any of their respective properties, assets or undertakings.


 


“Instruments” means
any “instrument,” as such term is defined in the UCC, and shall include, without limitation, promissory notes, drafts, bills
of exchange, trade acceptances, letters of credit, letter of credit rights (as defined in the UCC), and Chattel Paper.


 


“Inventory” means
any “inventory,” as such term is defined in the UCC.


 


“Investment Property”
means any “investment property”, as such term is defined in the UCC.


 


“Motor Vehicles”
shall mean motor vehicles, tractors, trailers and other like property, whether or not the title thereto is governed by a certificate of
title or ownership.


 


“Obligations” means
the full amount due under each Note, as it may change from time-to-time, and the cash payment obligations of the Company under the Transaction
Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and
all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from time to
time hereafter owing, due or payable whether before or after the filing of a bankruptcy, insolvency or similar proceeding under applicable
federal, state, foreign or other law and whether or not an allowed claim in any such proceeding.


 


“Patents” means
any patents and patent applications, including, without limitation, the inventions and improvements described and claimed therein, all
patentable inventions and those patents and patent applications listed on Schedule IV attached hereto (if any), and the reissues,
divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing, and all income, royalties, damages and
payments now or hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the foregoing and the right to sue for past, present and future infringements
of any of the foregoing.


 


“Permitted Indebtedness”
has the meaning set forth in the Notes.


 


“Permitted Lien”
has the meaning set forth in the Notes.


 



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“Proceeds” means
“proceeds,” as such term is defined in the UCC and, in any event, includes, without limitation, (a) any and all proceeds of
any insurance, indemnity, warranty or guaranty payable with respect to any of the Collateral, (b) any and all payments (in any form whatsoever)
made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any Governmental Authority (or any person acting under color of Governmental Authority), and (c) any
and all other amounts from time to time paid or payable under, in respect of or in connection with any of the Collateral.


 


“Representative”
means any Person acting as agent, representative or trustee on behalf of the Collateral Agent from time-to-time.


 


“Software” means
all “software” as such term is defined in the UCC, now owned or hereafter acquired by a Debtor, other than software embedded
in any category of Goods, including, without limitation, all computer programs and all supporting information provided in connection with
a transaction related to any program.


 


“Trademarks” means
any trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos,
other business identifiers, prints and labels on which any of the foregoing have appeared or appear, all registrations and recordings
thereof, and all applications in connection therewith, including, without limitation, the trademarks and applications listed in Schedule
V attached hereto (if any) and renewals thereof, and all income, royalties, damages and payments now or hereafter due and/or payable
under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements
of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing.


 


“UCC” shall mean
the Uniform Commercial Code as in effect from time to time in the State of Arizona; provided, that to the extent that the
Uniform Commercial Code is used to define any term herein and such term is defined differently in different Articles of the Uniform Commercial
Code, the definition of such term contained in Article 9 shall govern.


 


Section 2.     Representations, Warranties and Covenants of the Debtors. Each Debtor represents and warrants to, and covenants with,
the Collateral Agent and each Secured Party as follows:


 


(a)       Subject
to the Permitted Liens, such Debtor has rights in and the power to transfer the Collateral in which it purports to grant a security interest
pursuant to Section 3 hereof (subject, with respect to after acquired Collateral, to such Debtor acquiring the same) and no Lien other
than a Permitted Lien exists upon such Collateral.


 


(b)       Subject
to the Permitted Liens, this Agreement is effective to create in favor of the Collateral Agent a valid security interest in and Lien upon
all of such Debtor’s right, title and interest in and to the Collateral pursuant to which a security interest may be perfected by
the following actions, and upon (i) the filing of appropriate UCC financing statements in the jurisdictions listed on Schedule I
attached hereto, (ii) filings in the United States Patent and Trademark Office, or United States Copyright Office with respect to Collateral
that constitutes Patents and Trademarks, or Copyrights, as the case may be, (iii) the delivery to the Collateral Agent of the Pledged
Collateral together with assignments in blank, (iv) delivery to the Collateral Agent or its Representative of Instruments duly endorsed
by such Debtor or accompanied by appropriate instruments of transfer duly executed by such Debtor with respect to Instruments not constituting
Chattel Paper, and (v) the execution and delivery of control agreements with the depository or other institution with which the applicable
Deposit Accounts are maintained, such security interest will be a duly perfected first priority perfected security interest (subject to
Permitted Indebtedness) in all of such Collateral in which such a security interest may be perfected by such action.


 



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(c)       All
of the Equipment, Inventory and Goods owned by such Debtor is located at the places as specified on Schedule I attached hereto.
Except as disclosed on Schedule I, none of the Collateral is in the possession of any bailee, warehousemen, processor or consignee.
Schedule I discloses such Debtor’s name as of the date hereof as it appears in official filings in the state or province,
as applicable, of its incorporation, formation or organization, the type of entity of such Debtor (including corporation, partnership,
limited partnership or limited liability company), organizational identification number issued by such Debtor’s state of incorporation,
formation or organization (or a statement that no such number has been issued), such Debtor’s state or province, as applicable,
of incorporation, formation or organization and the chief place of business, chief executive office and the office where such Debtor keeps
its books and records and the states in which such Debtor conducts its business. Such Debtor has only one state or province, as applicable,
of incorporation, formation or organization. Such Debtor does not do business and has not done business during the past five years under
any trade name or fictitious business name except as disclosed on Schedule II attached hereto.


 


(d)       No
Copyrights, Patents or Trademarks listed on Schedules III, IV and V, respectively, if any, have been adjudged invalid or unenforceable
or have been canceled, in whole or in part, or are not presently subsisting. Each of such Copyrights, Patents and Trademarks (if any)
is valid and enforceable. Subject to the Permitted Lien, such Debtor is the sole and exclusive owner of the entire and unencumbered right,
title and interest in and to each of such Copyrights, Patents and Trademarks, identified on Schedules III, IV and V, as applicable,
as being owned by such Debtor, free and clear of any liens (subject to the Permitted Lien), charges and encumbrances, including without
limitation licenses, shop rights and covenants by such Debtor not to sue third persons. Such Debtor has adopted, used and is currently
using, or has a current bona fide intention to use, all of such Trademarks and Copyrights. Such Debtor has no notice of any suits or actions
commenced or threatened with reference to the Copyrights, Patents or Trademarks owned by it.


 


(e)       Each
Debtor agrees to deliver to the Collateral Agent an updated Schedule I, II, III, IV and/or V within
five Trading Days of any change thereto which, if omitted, would make such Schedules materially misleading, taken as a whole. Notwithstanding
anything to the contrary in this Agreement, for the avoidance of doubt, any representation or warranty made by Debtors with respect to
such Schedules during such five Trading Day period shall be deemed true and correct, and any covenant of the Debtors with respect to such
Schedules during such five Trading Day period shall be deemed complied with until the earlier of (a) the expiration of such five Trading
Day period and (b) the delivery of such updated Schedule(s).


 


(f)       Such
Debtor does not own any Commercial Tort Claim except for those disclosed on Schedule VII hereto (if any) as of the date hereof.


 



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(g)       Such
Debtor does not have any interest in owned real property with respect to real property except as disclosed on Schedule VIII (if
any). Each Debtor shall deliver to the Collateral Agent a revised version of Schedule VIII within 10 Trading Days of any change
thereto which, if omitted, would make such Schedule VIII materially misleading, taken as a whole. Notwithstanding anything to the
contrary in this Agreement, for the avoidance of doubt, any representation or warranty made by Debtors with respect to such Schedule
VIII during such 10 Trading Day period shall be deemed true and correct, and any covenant of the Debtors with respect to such Schedules
during such 10 Trading Day period shall be deemed complied with until the earlier of (a) the expiration of such 10 Trading Day period
and (b) the delivery of such updated Schedule VIII.


 


(h)       All
Equipment (including, without limitation, Motor Vehicles) owned by a Debtor and subject to a certificate of title or ownership statute
is described on Schedule IX hereto as of the date hereof.


 


Section 3.     Collateral. As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the Obligations, each Debtor hereby pledges and grants to the Collateral Agent, for the benefit of itself and each other
Secured Party, a Lien on and security interest in and to all of such Debtor’s right, title and interest all of the properties and
assets of such Debtor, whether now owned by such Debtor or hereafter acquired and whether now existing or hereafter coming into existence
and wherever located and of every kind, nature and description, whether tangible or intangible, including, but not limited to, the following
(all being collectively referred to herein as “Collateral”):


 


(a)       all
Instruments, together with all payments thereon or thereunder:


 


(b)       all
Accounts;


 


(c)       all
Inventory;


 


(d)       all
General Intangibles (including payment intangibles (as defined in the UCC) and Software);


 


(e)       all
Equipment;


 


(f)       all
Documents;


 


(g)       all
Contracts;


 


(h)       all
Goods;


 


(i)       all
Investment Property, including without limitation all equity interests now owned or hereafter acquired by such Debtor;


 


(j)       all
Deposit Accounts, including, without limitation, the balance from time to time in all bank accounts maintained by such Debtor;


 


(k)       all
Commercial Tort Claims specified on Schedule VII;


 



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(l)       all
Trademarks, Patents, Copyrights and licenses related to such Trademarks, Patents and Copyrights; and


 


(m)       all
other tangible and intangible property of such Debtor, including, without limitation, all interests in real property, Proceeds, tort claims,
products, accessions, rents, profits, income, benefits, substitutions, additions and replacements of and to any of the property of such
Debtor described in the preceding clauses of this Section 3 (including, without limitation, any proceeds of insurance thereon, insurance
claims and all rights, claims and benefits against any Person relating thereto), other rights to payments not otherwise included in the
foregoing, and all books, correspondence, files, records, invoices and other papers, including without limitation all tapes, cards, computer
runs, computer programs, computer files and other papers, documents and records in the possession or under the control of such Debtor,
or any computer bureau or service company from time to time acting for such Debtor.


 


Notwithstanding anything to the contrary contained
herein or in any Transaction Document, in no event shall the security interest granted herein or therein attach to any Excluded Assets.


 


Section 4.     Covenants; Remedies. In furtherance of the grant of the pledge and security interest pursuant to Section 3 hereof,
each Debtor hereby agrees as follows:


 


4.1       Delivery
and Other Perfection; Maintenance, etc.  


 


(a)       Delivery
of Instruments, Documents, Etc. Each Debtor shall deliver and pledge to the Collateral Agent or its Representative any and all Instruments,
negotiable Documents, Chattel Paper and certificated securities (accompanied by stock powers executed in blank, which stock powers may
be filled in and completed at any time upon the occurrence of any Event of Default) duly endorsed and/or accompanied by such instruments
of assignment and transfer executed by such Debtor in such form and substance as the Collateral Agent or its Representative may request;
provided, that so long as no Event of Default shall have occurred and be continuing, each Debtor may retain for collection
in the ordinary course of business any Instruments, negotiable Documents and Chattel Paper received by such Debtor in the ordinary course
of business, and the Collateral Agent or its Representative shall, promptly upon request of a Debtor, make appropriate arrangements for
making any other Instruments, negotiable Documents and Chattel Paper pledged by such Debtor available to such Debtor for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent deemed appropriate by the Collateral Agent or its Representative,
against a trust receipt or like document). If a Debtor retains possession of any Chattel Paper, negotiable Documents or Instruments pursuant
to the terms hereof, such Chattel Paper, negotiable Documents and Instruments shall be marked with the following legend: “This writing
and the obligations evidenced or secured hereby are subject to the security interest of ____________, in its capacity as Collateral Agent
for the benefit of the Secured Parties.” Within 30 days after the Closing Date (or such later date as may be permitted by the Collateral
Agent in its sole discretion), the Collateral Agent shall have received a control agreement in form and substance reasonably satisfactory
to it with respect to the Debtor’s deposit account maintained at ____________, account number __________. The control agreement
shall provide that upon receipt of notice of an Event of Default under the Purchase Agreement and the lapse of any time to cure (to the
extent that the Purchase Agreement provides for a time to cure), the banking institution shall no longer permit funds to leave the deposit
accounts subject to the control agreement and shall not comply with any instructions, directions or orders of any form with respect to
such deposit accounts other than instructions, directions or orders originated by the Collateral Agent.


 



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(b)       Other
Documents and Actions. Each Debtor shall, upon the reasonable request of the Collateral Agent, give, execute, deliver, file and/or
record any financing statement, registration, notice, instrument, document, agreement, Mortgage or other papers that may be necessary
to create, preserve, perfect or validate the security interest granted pursuant hereto (or any security interest or mortgage contemplated
or required hereunder, including with respect to Section 2(h) of this Agreement) or to enable the Collateral Agent or its Representative
to exercise and enforce the rights of the Secured Parties hereunder with respect to such pledge and security interest, provided that
notices to account debtors in respect of any Accounts or Instruments shall be subject to the provisions of clause (e) below. Notwithstanding
the foregoing each Debtor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any filing office
in any jurisdiction any initial financing statements (and other similar filings or registrations under other applicable laws and regulations
pertaining to the creation, attachment, or perfection of security interests) and amendments thereto that (a) indicate the Collateral (i)
as all assets of such Debtor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other
information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether such Debtor is an organization, the type of organization and any organization identification number issued to such
Debtor, and (ii) in the case of a financing statement filed as a fixture filing, a sufficient description of real property to which the
Collateral relates. Each Debtor agrees to furnish any such information to the Collateral Agent promptly upon reasonable request. Each
Debtor also ratifies its authorization for the Collateral Agent to have filed in any jurisdiction any like initial financing statements
or amendments thereto if filed prior to the date hereof.


 


(c)       Books
and Records. Each Debtor shall maintain at its own cost and expense reasonably complete and accurate books and records of the Collateral,
including, without limitation, a record of payments received and credits granted with respect to the Collateral. Upon the occurrence and
during the continuation of any Event of Default, each Debtor shall deliver and turn over any such books and records (or true and correct
copies thereof) to the Collateral Agent or its Representative at any time on demand. Each Debtor shall permit the Collateral Agent or
any Representative of the Collateral Agent to inspect such books and records at any time during reasonable business hours and upon reasonable
notice; provided that a representative of such Debtor may attend such inspection, if desired by such Debtor, and will provide photocopies
thereof at such Debtor’s expense to the Collateral Agent or its Representative upon reasonable request of the Collateral Agent or
its Representative.


 


(d)       Notice
to Account Debtors; Verification. Upon the occurrence and during the continuance of any Event of Default, (i) upon request of the
Collateral Agent or its Representative, each Debtor shall promptly notify (and each Debtor hereby authorizes the Collateral Agent and
its Representative so to notify) each account debtor in respect of any Accounts or Instruments or other Persons obligated on the Collateral
that such Collateral has been assigned to the Collateral Agent hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Collateral Agent, and (ii) the Collateral Agent and its Representative shall have the right
at any time or times to make direct verification with the account debtors or other Persons obligated on the Collateral of any and all
of the Accounts or other such Collateral.


 



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(e)       Intellectual
Property. Each Debtor represents and warrants that the Copyrights, Patents and Trademarks listed on Schedules III, IV and V,
respectively (if any), constitute all of the registered Copyrights and all of the Patents and Trademarks now owned by such Debtor. If
such Debtor shall (i) obtain rights to any new patentable inventions, any registered Copyrights or any Patents or Trademarks, or (ii)
become entitled to the benefit of any registered Copyrights or any Patents or Trademarks or any improvement on any Patent, the provisions
of this Agreement above shall automatically apply thereto and such Debtor shall give to the Collateral Agent prompt written notice thereof.
Each Debtor hereby authorizes the Collateral Agent to modify this Agreement by amending Schedules III, IV and V, as applicable,
to include any such registered Copyrights or any such Patents and Trademarks. Each Debtor shall have the duty (i) to prosecute diligently
any patent, trademark, or service mark applications pending as of the date hereof or hereafter, (ii) to preserve and maintain all rights
in the Copyrights, Patents and Trademarks, to the extent material to the operations of the business of such Debtor and (iii) to ensure
that the Copyrights, Patents and Trademarks are and remain enforceable, to the extent material to the operations of the business of such
Debtor. Any expenses incurred in connection with such Debtor’s obligations under this Section 4.1(f) shall be borne by such Debtor.
Except for any such items that a Debtor reasonably believes (using prudent industry customs and practices) are no longer necessary for
the on-going operations of its business, no Debtor shall abandon any material right to file a patent, trademark or service mark application,
or abandon any pending patent, trademark or service mark application or any other Copyright, Patent or Trademark without the prior written
consent of the Collateral Agent.


 


(f)       Further
Identification of Collateral. Each Debtor will, when and as often as reasonably requested by the Collateral Agent or its Representative,
furnish to the Collateral Agent or such Representative, statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent or its Representative may reasonably request, all in reasonable
detail.


 


(g)       Investment
Property. Each Debtor will take any and all actions reasonably required or requested by the Collateral Agent or its Representative,
from time to time, to (i) cause the Collateral Agent to obtain exclusive control of any Investment Property owned by such Debtor in a
manner acceptable to the Collateral Agent and (ii) use its commercially reasonable efforts to obtain from any issuers of Investment Property
and such other Persons written confirmation of the Collateral Agent’s control over such Investment Property. For purposes of this
Section 4.1(g), the Collateral Agent shall have exclusive control of Investment Property if (i) such Investment Property consists of certificated
securities and a Debtor delivers such certificated securities to the Collateral Agent (with appropriate endorsements if such certificated
securities are in registered form); (ii) such Investment Property consists of uncertificated securities and either (x) a Debtor delivers
such uncertificated securities to the Collateral Agent or (y) the issuer thereof agrees, pursuant to documentation in form and substance
satisfactory to the Collateral Agent, that it will comply with instructions originated by the Collateral Agent without further consent
by such Debtor, and (iii) such Investment Property consists of security entitlements and either (x) the Collateral Agent becomes the entitlement
holder thereof or (y) the appropriate securities intermediary agrees, pursuant to the documentation in form and substance satisfactory
to the Collateral Agent, that it will comply with entitlement orders originated by the Collateral Agent without further consent by any
Debtor.


 



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(h)       Commercial
Tort Claims. Each Debtor shall promptly notify the Collateral Agent of any Commercial Tort Claim acquired by it that concerns a claim
in excess of $50,000 and if requested by the Collateral Agent, such Debtor shall enter into a supplement to this Agreement granting to
the Secured Parties a Lien on and security interest in such Commercial Tort Claim.


 


4.2       Other
Liens. Other than Permitted Liens as defined in the Notes, Debtors will not create, permit or suffer to exist, and will defend the
Collateral against and take such other action as is necessary to remove, any Lien on the Collateral except Permitted Indebtedness, and
will defend the right, title and interest of the Secured Parties in and to the Collateral and in and to all Proceeds thereof against the
claims and demands of all Persons whatsoever.


 


4.3       Preservation
of Rights. Whether or not an Event of Default has occurred or is continuing, and subject to a minimum of 5 business days’ notice
to the Debtor when an Event of Default has not occurred and is not continuing, the Collateral Agent and its Representative may, but shall
not be required to, take any steps the Collateral Agent or its Representative reasonably deems reasonably necessary or reasonably appropriate
to preserve any Collateral or any rights against third parties to any of the Collateral, including obtaining insurance for the Collateral
at any time when such Debtor has failed to do so, and Debtors shall promptly pay, or reimburse the Collateral Agent for, all reasonable
and documented out of pocket expenses incurred in connection therewith.


 


4.4       Formation
of Subsidiaries; Name Change; Location; Bailees.


 


(a)       No
Debtor shall form or acquire any Subsidiary unless (i) within ten days (or such longer period as the Collateral Agent may agree) of such
formation or acquisition, (A) such Debtor pledges all of the stock or equity interests of such Subsidiary to the Collateral Agent for
the benefit of the Secured Parties pursuant to an agreement in a form agreed to by the Collateral Agent, (B) such Subsidiary becomes a
party to this Agreement by execution of a joinder in the form of Exhibit A attached hereto and (ii) the formation or acquisition
of such Subsidiary is not prohibited by the terms of the Transaction Documents.


 


(b)       Except
for transactions not prohibited by the terms of the Transaction Documents, no Debtor shall (i) reincorporate or reorganize itself under
the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the date hereof, or (ii) otherwise
change its name, identity or corporate structure, in each case, without the prior written consent of the Collateral Agent, which consent
shall not be unreasonably withheld, conditioned or delayed. Each Debtor will notify the Collateral Agent promptly in writing prior to
any such change in the proposed use by such Debtor of any tradename or fictitious business name other than any such name set forth on
Schedule II attached hereto.


 



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(c)       Except
for the sale of Inventory in the ordinary course of business and other sales of assets not prohibited by the terms of the Transaction
Documents, each Debtor will keep the Collateral at the locations specified in Schedule I. Each Debtor will give the Collateral
Agent written notice within five (5) Trading Days after any change in such Debtor’s chief place of business or of any new location
for any of the Collateral.


 


(d)       If
any Collateral is at any time in the possession or control of any warehousemen, bailee, consignee or processor, such Debtor shall, upon
the reasonable request of the Collateral Agent or its Representative, notify such warehousemen, bailee, consignee or processor of the
Lien and security interest created hereby.


 


(e)       Each
Debtor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any
financing statement without the prior written consent of the Collateral Agent and agrees that it will not do so without the prior written
consent of the Collateral Agent, subject to such Debtor’s rights under Section 9-509(d)(2) to the UCC.


 


(f)       No
Debtor shall enter into any Contract that restricts or prohibits the grant to any Secured Party of a security interest in favor of the
Collateral Agent in Accounts, Chattel Paper, Instruments or payment intangibles or the proceeds of the foregoing.


 


4.5       Events
of Default, Etc. During the period during which an Event of Default shall have occurred and be continuing subject to Permitted Liens:


 


(a)       each
Debtor shall, at the request of the Collateral Agent or its Representative, assemble the Collateral and make it available to the Collateral
Agent or its Representative at a place or places designated by the Collateral Agent or its Representative which are reasonably convenient
to the Collateral Agent or its Representative, as applicable, and such Debtor;


 


(b)       the
Collateral Agent or its Representative may make any reasonable compromise or settlement deemed desirable with respect to any of the Collateral
and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, any of the Collateral;


 


(c)       the
Collateral Agent shall have all of the rights and remedies with respect to the Collateral of a secured party under the UCC (whether or
not said UCC is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which
a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted, including,
without limitation, the right, to the maximum extent permitted by law, to: (i) upon one (1) Trading Day’s prior written notice to
each Debtor, exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if the Collateral Agent were
the sole and absolute owner thereof (and each Debtor agrees to take all such action as may be appropriate to give effect to such right)
and (ii) the appointment of a receiver or receivers for all or any part of the Collateral or business of a Debtor, whether such receivership
be incident to a proposed sale or sales of such Collateral or otherwise and without regard to the value of the Collateral or the solvency
of any person or persons liable for the payment of the Obligations secured by such Collateral. Each Debtor hereby consents to the appointment
of such receiver or receivers, waives any and all defenses to such appointment and agrees that such appointment shall in no manner impair,
prejudice or otherwise affect the rights of the Collateral Agent or any Secured Party under this Agreement. Each Debtor hereby expressly
waives notice of a hearing for appointment of a receiver and the necessity for bond or an accounting by the receiver;


 



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(d)       the
Collateral Agent or its Representative in its discretion may, in the name of the Collateral Agent or in the name of a Debtor or otherwise,
demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so;


 


(e)       the
Collateral Agent or its Representative may take immediate possession and occupancy of any premises owned, used or leased by a Debtor and
exercise all other rights and remedies which may be available to the Collateral Agent or a Secured Party;


 


(f)       the
Collateral Agent may, upon reasonable notice (such reasonable notice to be determined by the Collateral Agent in its sole and absolute
discretion, which shall not be less than 10 days), with respect to the Collateral or any part thereof which shall then be or shall thereafter
come into the possession, custody or control of the Collateral Agent or its Representative, sell, lease, license, assign or otherwise
dispose of all or any part of such Collateral, at such place or places as the Collateral Agent deems best, and for cash or for credit
or for future delivery (without thereby assuming any credit risk), at public or private sale, without demand of performance or notice
of intention to effect any such disposition or of the time or place thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Collateral Agent or anyone else may be the purchaser, lessee, licensee, assignee or recipient of
any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale) and thereafter
hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise),
of Debtors, any such demand, notice and right or equity being hereby expressly waived and released. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time
and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned;


 


(g)       the
Collateral Agent, shall, upon one (1) Trading Day’s prior written notice to each Debtor, have the right (in its sole and absolute
discretion) to cause each of the pledged securities to be transferred of record into the name of the Collateral Agent or into the name
of its nominee (as pledgee or as sub-agent) or the name of the applicable Debtor, endorsed or assigned in blank or in favor of the Collateral
Agent and to the extent permitted by the documentation governing such pledged securities and applicable law, the Collateral Agent shall
have the right to exchange the certificates representing pledged securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement. Each Debtor shall will take any and all actions reasonably requested by the Collateral Agent to
facilitate compliance with this Section 4.5(g);


 


(h)       all
rights of any Debtor to dividends, interest, principal or other distributions that such Debtor is entitled to receive shall cease, and
all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to
receive and retain such dividends, interest, principal or other distributions as part of the pledged Collateral hereunder. All dividends,
interest, principal or other distributions received by any Debtor contrary to the provisions of Section 4.5(g) or this Section
4.5(h) shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent upon
demand in the same form as so received (with any necessary endorsement reasonably requested by the Collateral Agent); and


 



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(i)       the
rights, remedies and powers conferred by this Section 4.5 are in addition to, and not in substitution for, any other rights, remedies
or powers that the Collateral Agent or any Secured Party may have under any Transaction Document, at law, in equity or by or under the
UCC or any other statute or agreement. The Collateral Agent may proceed by way of any action, suit or other proceeding at law or in equity
and no right, remedy or power of the Collateral Agent will be exclusive of or dependent on any other. The Collateral Agent may exercise
any of its rights, remedies or powers separately or in combination and at any time.


 


The proceeds of each collection, sale or other
disposition under this Section 4.5 shall be applied in accordance with Section 4.8 hereof.


 


4.6       Deficiency.
If the proceeds of sale, collection or other realization of or upon the Collateral are insufficient to cover the reasonable and documented
costs and expenses of such realization and the payment in full of the Obligations, Debtors shall remain jointly and severally liable for
any deficiency.


 


4.7       Private
Sale. Each Debtor recognizes that the Collateral Agent may be unable to effect a public sale of any or all of the Collateral consisting
of securities by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “Act”), and applicable
state securities laws, but may be compelled to resort to one or more private sales thereof to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire such Collateral for their own account for investment and not with a view to the distribution
or resale thereof. Each Debtor acknowledges and agrees that any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale and each Debtor agrees that it is not commercially unreasonable for the Collateral
Agent to engage in any such private sales or dispositions under such circumstances. The Collateral Agent shall be under no obligation
to delay a sale of any of the Collateral to permit a Debtor to register such Collateral for public sale under the Act, or under applicable
state securities laws, even if Debtors would agree to do so. The Collateral Agent shall not incur any liability as a result of the sale
of any such Collateral, or any part thereof, at any private sale provided for in this Agreement conducted in a commercially reasonable
manner, and so long as the Collateral Agent conducts such sale in a commercially reasonable manner each Debtor hereby waives any claims
against the Collateral Agent or any Secured Party arising by reason of the fact that the price at which the Collateral may have been sold
at such a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of
the Obligations, even if the Collateral Agent accepts the first offer received and does not offer the Collateral to more than one offeree.


 



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Each Debtor further agrees to
do or cause to be done all such other acts and things as may be necessary to make such sale or sales of any portion or all of any such
Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales,
all at such Debtor’s expense. Each Debtor further agrees that a breach of any of the covenants contained in this Section 4.8 will
cause irreparable injury to the Secured Parties, that the Secured Parties have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this Section 4.8 shall be specifically enforceable against Debtors
by Collateral Agent of behalf of each Secured Party, and each Debtor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing.


 


4.8       Application
of Proceeds. The proceeds of any collection, sale or other realization of all or any part of the Collateral, and any other cash at
the time held by the Collateral Agent under this Agreement, shall be applied to the Obligations in accordance with the Pro Rata Portion
of each Secured Party. “Pro Rata Portion” shall mean the ratio of (x) the subscription amount of the Notes purchased by a
Secured Party participating under this Section 4.8 and (y) the sum of the aggregate subscription amounts of the Notes purchased by all
Secured Parties participating under this Section 4.8.


 


4.9       Attorney-in-Fact.
Each Debtor hereby irrevocably constitutes and appoints the Collateral Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of such Debtor and in the name of such Debtor or in
its own name, upon the occurrence and during the continuation of an Event of Default (except in connection with the perfection of the
security interest granted to the Collateral Agent hereunder), from time to time in the discretion of the Collateral Agent, for the purpose
of carrying out the terms of this Agreement, to take any and all appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to perfect or protect any security interest granted hereunder, to maintain the perfection
or priority of any security interest granted hereunder, or to otherwise accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, hereby gives the Collateral Agent the power and right, on behalf of such Debtor, without notice to or
assent by such Debtor (to the extent permitted by applicable law), to do the following upon the occurrence and during the continuation
of an Event of Default:


 


(a)       to
take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable
to accomplish the purposes of this Agreement;


 


(b)       to
ask, demand, collect, receive and give acquittance and receipts for any and all moneys due and to become due under any Collateral and,
in the name of such Debtor or its own name or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances
or other Instruments for the payment of moneys due under any Collateral and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting any and all such moneys
due under any Collateral whenever payable and to file any claim or to take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting any and all such moneys due under any Collateral
whenever payable;


 



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(c)       to
pay or discharge charges or liens levied or placed on or threatened against the Collateral, to effect any insurance called for by the
terms of this Agreement and to pay all or any part of the premiums therefor;


 


(d)       to
direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due, and to become due thereunder,
directly to the Collateral Agent or as the Collateral Agent shall direct, and to receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any time, in respect of or arising out of any Collateral;


 


(e)       to
sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other Documents constituting or relating to the Collateral;


 


(f)       to
commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral
or any part thereof and to enforce any other right in respect of any Collateral;


 


(g)       to
defend any suit, action or proceeding brought against a Debtor with respect to any Collateral;


 


(h)       to
settle, compromise or adjust any suit, action or proceeding described above and, in connection therewith, to give such discharges or releases
as the Collateral Agent may deem appropriate;


 


(i)       to
the extent that a Debtor’s authorization given in Section 4.1(b) of this Agreement is not sufficient to file such financing statements
with respect to this Agreement, with or without such Debtor’s signature, or to file a photocopy of this Agreement in substitution
for a financing statement, as the Collateral Agent may deem appropriate and to execute in such Debtor’s name such financing statements
and amendments thereto and continuation statements which may require such Debtor’s signature;


 


(j)       generally
to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as
though the Collateral Agent were the absolute owners thereof for all purposes; and


 


(k)       to
do, at the Collateral Agent’s option and at such Debtor’s expense, at any time, or from time to time, all acts and things
which the Collateral Agent reasonably deems necessary to protect or preserve or realize upon the Collateral and the Secured Parties’
Liens therein, in order to effect the intent of this Agreement, all as fully and effectively as such Debtor might do.


 


Each Debtor hereby ratifies,
to the extent permitted by law, all that such attorneys lawfully do or cause to be done by virtue hereof provided the same is performed
in a commercially reasonable manner. The power of attorney granted hereunder is a power coupled with an interest and shall be irrevocable
until the Obligations are indefeasibly paid in full in cash (other than Obligations which expressly survive by their terms and contingent
indemnification Obligations) and this Agreement is terminated in accordance with Section 4.11 hereof.


 



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Each Debtor also authorizes
the Collateral Agent, at any time from and after the occurrence and during the continuation of any Event of Default, (x) to communicate
in its own name with any party to any Contract with regard to the assignment of the right, title and interest of such Debtor in and under
the Contracts hereunder and other matters relating thereto and (y) to execute, in connection with any sale of Collateral provided for
in Section 4.5 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.


 


4.10       Perfection.
Prior to or concurrently with the execution and delivery of this Agreement, each Debtor shall:


 


(a)       file
such financing statements, assignments for security and other documents in such offices as may be necessary or as the Collateral Agent
or the Representative may request to perfect the security interests granted by Section 3 of this Agreement;


 


(b)       at
the Collateral Agent’s request, deliver to the Collateral Agent or its Representative the originals of all Instruments together
with, in the case of Instruments constituting promissory notes, allonges attached thereto showing such promissory notes to be payable
to the order of a blank payee;


 


(c)       If
the Debtor has not done so, the Collateral Agent may do the actions set forth in clauses (a) and (b) above at any later time at the sole
cost of the Debtors.


 


4.11       Termination;
Partial Release of Collateral. This Agreement and the Liens and security interests granted hereunder shall not terminate until the
full and complete performance and indefeasible satisfaction of all of the Obligations (other than Obligations which expressly survive
by their terms and contingent indemnification Obligations), whereupon the Collateral Agent shall forthwith cause to be assigned, transferred
and delivered, against receipt but without any recourse, warranty or representation whatsoever, any remaining Collateral to or on the
order of Debtors. The Collateral Agent shall also execute and deliver to Debtors upon such termination and at Debtors’ expense such
UCC termination statements, certificates for terminating the liens on the Motor Vehicles (if any) and such other documentation as shall
be reasonably requested by Debtors or otherwise necessary to effect the termination and release of all Liens and security interests in
favor of the Collateral Agent affecting the Collateral. Notwithstanding anything to the contrary in this Agreement, upon full and complete
satisfaction of the Obligations (other than Obligations which expressly survive by their terms and contingent indemnification Obligations),
Debtors obligations under this Agreement shall immediately terminate and any Liens shall thereupon be void. If any of the Collateral shall
be sold, transferred to or otherwise disposed of by any Debtor in a transaction permitted by and in compliance with all applicable provisions
of the applicable Transaction Document, then the Liens granted hereunder with respect to such Collateral shall be automatically released
(unless otherwise specified herein or in the other Transaction Documents), all without delivery of any instrument or performance of any
act by any party, and Collateral Agent shall, at the written request and sole expense of such Debtor, execute and deliver to such Debtor
all releases or other documents reasonably necessary or reasonably desirable for the release of the Liens created hereby on such Collateral.


 



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4.12       Further
Assurances. At any time and from time to time, upon the written reasonable request of the Collateral Agent or its Representative,
and at the sole expense of Debtors, Debtors will promptly and duly execute and deliver any and all such further instruments, documents
and agreements and take such further actions as the Collateral Agent or its Representative may reasonably require in order for the Collateral
Agent to obtain the full benefits of this Agreement and of the rights and powers herein granted in favor of the Collateral Agent, including,
without limitation, using Debtors’ commercially reasonable efforts to secure all consents and approvals necessary or appropriate
for the assignment to the Collateral Agent of any Collateral held by Debtors or in which a Debtor has any rights not heretofore assigned,
the filing of any financing or continuation statements under the UCC with respect to the liens and security interests granted hereby,
transferring Collateral to the Collateral Agent’s possession (if a security interest in such Collateral can be perfected by possession),
placing the interest of the Collateral Agent as lienholder on the certificate of title of any Motor Vehicle, and obtaining waivers of
liens from landlords and mortgagees. Each Debtor also hereby authorizes the Collateral Agent and its Representative to file any such financing
or continuation statement without the signature of such Debtor to the extent permitted by applicable law.


 


4.13       Limitation
on Duty of Secured Party. The powers conferred on the Collateral Agent under this Agreement are solely to protect the Collateral Agent’s
interest on behalf of itself and the other Secured Parties in the Collateral and shall not impose any duty upon it to exercise any such
powers. The Collateral Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers
and neither the Collateral Agent nor its Representative nor any of their respective officers, directors, employees or agents shall be
responsible to Debtors for any act or failure to act, except for gross negligence, bad faith or willful misconduct. Without limiting the
foregoing, the Collateral Agent and any Representative shall be deemed to have exercised reasonable care in the custody and preservation
of the Collateral in their possession if such Collateral is accorded treatment substantially equivalent to that which the Collateral Agent
or any Representative, in its individual capacity, accords its own property consisting of the type of Collateral involved, it being understood
and agreed that neither the Collateral Agent nor any Representative shall have any responsibility for taking any necessary steps (other
than steps taken in accordance with the standard of care set forth above) to preserve rights against any Person with respect to any Collateral.


 


Also without limiting the
generality of the foregoing, neither the Collateral Agent nor any Representative shall have any obligation or liability under any Contract
or license by reason of or arising out of this Agreement or the granting to the Collateral Agent of a security interest therein or assignment
thereof or the receipt by the Collateral Agent or any Representative of any payment relating to any Contract or license pursuant hereto,
nor shall the Collateral Agent or any Representative be required or obligated in any manner to perform or fulfill any of the obligations
of Debtors under or pursuant to any Contract or license, or to make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance by any party under any Contract or license, or to present or file
any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.


 



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Section 5.     Miscellaneous.


 


5.1       No
Waiver. No failure on the part of the Collateral Agent or any of its Representatives to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by the Collateral Agent or any of its Representatives of any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The rights and remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and remedies provided by law.


 


5.2       Governing
Law. This Agreement shall be governed by and construed in accordance with the Purchase Agreement.


 


5.3       Notices.
All notices, approvals, requests, demands and other communications hereunder shall be delivered or made in the manner set forth in, and
shall be effective in accordance with the terms of, the Purchase Agreement. Debtors and Collateral Agent may change their respective notice
addresses by written notice given to each other party five days prior to the effectiveness of such change.


 


5.4       Amendments,
Etc. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by the Debtor sought
to be charged or benefited thereby and the Secured Parties holding a majority of the outstanding principal of the Notes. Any such amendment
or waiver shall be binding upon all the Secured Parties (including the Collateral Agent in its capacity as a Secured Party) and the Debtor(s)
sought to be charged or benefited thereby and their respective successors and assigns.


 


5.5       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of each of the
parties hereto, provided, that no Debtor shall assign or transfer its rights hereunder without the prior written consent
of each Secured Party. Any Secured Party, including the Collateral Agent in its capacity as a Secured Party, may assign its rights hereunder
without the consent of Debtors, in which event such assignee shall be deemed to be a Secured Party and/or Collateral Agent, as applicable,
hereunder with respect to such assigned rights.


 


5.6       Counterparts;
Headings. This Agreement may be authenticated in any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may authenticate this Agreement by signing any such counterpart. This Agreement may
be authenticated by manual signature or facsimile, .pdf or similar electronic signature, all of which shall be equally valid. The headings
in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof.


 


5.7       Severability.
If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Collateral
Agent, its Representative and each other Secured Party (and all of their respective successors and assigns) in order to carry out the
intentions of the parties hereto as nearly as may be possible and (b) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.


 



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5.8       Exclusive
Jurisdiction. Any action, proceeding or claim arising out of, or relating in any way to, this Agreement shall be brought and enforced
only as provided in the Purchase Agreement.


 


5.9       Waiver
of Right to Trial by Jury. Each Debtor and each Secured Party waive their respective rights to a trial by jury of any claim or cause
of action based upon or arising out of or related to this Agreement or the transactions contemplated hereby, in any action, proceeding
or other litigation of any type brought by any of the parties against any other party or parties, whether with respect to contract claims,
tort claims, or otherwise. Each Debtor and each Secured Party agree that any such claim or cause of action shall be tried by a court trial
without a jury. Without limiting the foregoing, the parties further agree that their respective right to a trial by jury is waived by
operation of this Section 5.9 as to any action, counterclaim or other proceeding which seeks, in whole or in part, to challenge the validity
or enforceability of this agreement or any provision hereof. This waiver shall apply to any subsequent amendments, renewals, supplements
or modifications to this Agreement.


 


5.10       Joint
and Several. The obligations, covenants and agreements of Debtors hereunder shall be the joint and several obligations, covenants
and agreements of each Debtor, whether or not specifically stated herein without preferences or distinction among them.


 


5.11       Collateral
Agent and Secured Parties Indemnification.


 


(a)       Each
Secured Party has, pursuant to the Purchase Agreement, designated and appointed the Collateral Agent as the administrative agent of such
Secured Party under this Agreement and the related agreements.


 


(b)       Nothing
in this Section 5.11 shall be deemed to limit or otherwise affect the rights of the Collateral Agent to exercise any remedy provided in
this Agreement or any other Transaction Document.


 


(c)       If
pursuant to any Transaction Document a Secured Party (including the Collateral Agent) is given the discretion to allocate proceeds received
by such Secured Party (including the Collateral Agent) pursuant to the exercise of remedies under the Transaction Documents or at law
or in equity (including without limitation with respect to any secured creditor remedies exercised against the Collateral and any other
collateral security provided for under any Transaction Document), the Collateral Agent shall apply such proceeds to the then outstanding
Obligations in the following order of priority (with amounts received being applied in the numerical order set forth below until exhausted
prior to the application to the next succeeding category and each Secured Party entitled to payment shall receive an amount equal to its
Pro Rata Portion of amounts available to be applied pursuant to clauses second, third and fourth below):


 


first, to
payment of fees, costs and expenses (including reasonable attorney’s fees) owing to the Collateral Agent;


 


second, to
payment of all accrued unpaid interest and fees (other than fees owing to Collateral Agent) on the Obligations;


 



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third, to
payment of principal of the Obligations;


 


fourth, to
payment of any other amounts owing constituting Obligations; and


 


fifth, any
remainder shall be for the account of and paid to whoever may be lawfully entitled thereto.


 


(d)       Each
Debtor agrees, jointly and severally, to indemnify, defend and hold harmless the Collateral Agent (both in its capacity as collateral
agent hereunder and as a Secured Party), every other Secured Party, their respective successors and assigns and all of their respective
officers, directors, shareholders, members, managers, partners, employees, attorneys and agents, and any Person in control of any thereof
(collectively, the “Indemnitees”), from and against any claims, debts, liabilities, losses, demands, obligations, actions,
causes of action, fines, penalties, reasonable and documented out of pocket costs and expenses (including attorneys’ fees and consultants’
fees), of every nature, character and description (each, an “Indemnified Liability” and collectively the “Indemnified
Liabilities”), under federal and state securities laws or otherwise insofar as such Indemnified Liability arises out of or is based
upon any of the transactions contemplated by this Agreement, any other Transaction Document, any of the Obligations, or any other cause
or thing whatsoever occurred, done, omitted or suffered to be done by a Debtor relating to any Secured Party or the Obligations (except
any such amounts sustained or incurred solely as the result of the gross negligence, bad faith or willful misconduct of such Indemnitees,
as finally determined by a court of competent jurisdiction); but limited, in the case of legal fees and expenses, to one counsel to all
such Indemnitees, taken as a whole and, solely in the case of an actual or potential conflict of interest, one additional counsel to all
affected Indemnitees, taken as a whole (and, if reasonably necessary, one local counsel in any relevant jurisdiction to all such Persons,
taken as a whole and, solely in the case of any such an actual or potential conflict of interest, one additional local counsel to all
affected Indemnitees taken as a whole, in each such relevant jurisdiction)). If and to the extent that the foregoing undertakings in this
paragraph may be unenforceable for any reason, each Debtor agrees to jointly and severally make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The obligations of each Debtor under
this Section 5.11(d) shall survive any termination of this Agreement or any other Transaction Document.


 


5.12       No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any party.


 



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5.13       Entire
Agreement; Amendment. This Agreement, together with the other transaction documents, supersedes all other prior oral or written agreements
between the Secured Parties, the Collateral Agent, the Debtors, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, together with the other transaction documents and the other instruments referenced herein
and therein, contain 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 the secured party nor any Debtor makes any representation, warranty, covenant or undertaking with
respect to such matters. As of the date of this Agreement, there are no unwritten agreements between the parties with respect to the matters
discussed herein. No provision of this Agreement may be amended, modified or supplemented other than by an instrument in writing signed
by the Debtors and the Secured Party.


 


- Remainder
of Page Intentionally Left Blank; Signature Page Follows -


 



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


 


DEBTORS:


 


Atlis Motor Vehicles, Inc., a Delaware corporation


 


 


	By:	 	 
	 	Name: 	 
	 	Title: 	 



 



    		Signature Page to Security Agreement	



    	 



    







 


	 	COLLATERAL AGENT:
	 	 	 
	 	_______________________, in its capacity as Collateral Agent for the Secured Parties
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name: 
	 	 	Title:  



 



    		Collateral Agent Signature Page to Security Agreement	



    	 



    




 


EXHIBIT A


Form of Joinder


Joinder to Security Agreement


 


The undersigned, ______________________________,
hereby joins in the execution of that certain Security Agreement dated as of __________________, 2022 (as amended, restated, supplemented
or otherwise modified from time to time, the “Security Agreement”) by the Debtors (as defined therein), the Secured Parties
(as defined therein), and each other Person that becomes a Debtor or a Secured Party thereunder after the date thereof and hereof and
pursuant to the terms thereof, to and in favor of _________________, in its capacity as Collateral Agent for the Secured Parties. By executing
this Joinder, the undersigned hereby agrees that it is a Debtor thereunder and agrees to be bound by all of the terms and provisions of
the Security Agreement. The undersigned represents and warrants that the representations and warranties set forth in the Security Agreement
are, with respect to the undersigned, true and correct as of the date hereof.


 


The undersigned represents
and warrants to Secured Party that, as of the date hereof:


 


(a)       all
of the Equipment, Inventory and Goods owned by such Debtor is located at the places as specified on Schedule I and such Debtor
conducts business in the jurisdiction set forth on Schedule I;


 


(b)       except
as disclosed on Schedule I, none of such Collateral is in the possession of any bailee, warehousemen, processor or consignee;


 


(c)       the
chief place of business, chief executive office and the office where such Debtor keeps its books and records are located at the place
specified on Schedule I;


 


(d)       such
Debtor (including any Person acquired by such Debtor) does not do business or has not done business during the past five years under any
tradename or fictitious business name, except as disclosed on Schedule II;


 


(e)       all
Copyrights, Patents and Trademarks owned or licensed by the undersigned are listed in Schedules III, IV and V, respectively;


 


(f)       all
Deposit Accounts, securities accounts, brokerage accounts and other similar accounts maintained by such Debtor, and the financial institutions
at which such accounts are maintained, are listed on Schedule VI;


 


(g)       all
Commercial Tort Claims of such Debtor are listed on Schedule VII;


 


(h)       all
interests in real property and mining rights held by such Debtor are listed on Schedule VIII;


 


(i)       all
Equipment (including Motor Vehicles) owned by such debtor that is subject to a certificate of title or ownership statute is listed on
Schedule IX.


 



    		Exhibit A-1	



    	 



    




 


	 	________________, a ________
	 	By:
	 	 
	 	Title:

FEIN: _____________


 



    		Exhibit A-2	



    	 



    




 


SCHEDULE I


Jurisdictions and Debtor’s
Information


 


 


 


 



    		Schedule I	



    	 



    




 


SCHEDULE II


Trade Names


 


 


 


 



    		Schedule II	



    	 



    




 


SCHEDULE III


Copyrights


 


 


 


 



    		Schedule III	



    	 



    




 


SCHEDULE IV


Patents


 


 


 


 



    		Schedule IV	



    	 



    

 


SCHEDULE V


Trademarks


 


	Trademark	Country	Filed	Serial 

No.	Reg. 

Date	Reg. 

No.	Status	Owner
	 	 	 	 	 	 	 	 


 



    		Schedule V	



    	 



    




 


SCHEDULE VI


Depository and Other Accounts


 


 


 


 



    		Schedule VI	



    	 



    




 





SCHEDULE VII


Commercial Tort Claim


 


 


 


 



    		Schedule VII	



    	 



    




 


SCHEDULE VIII


Real Property Interests


 


 


 


 



    		Schedule VIII	



    	 



    




 


SCHEDULE IX


Debtor’s Equipment


 


 


 


Schedule IX