Document:

Exhibit 10.2

 

Execution Version

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT
(as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) dated as
of December 31, 2018 among Workhorse Group Inc., a Nevada corporation, Workhorse Technologies Inc., an Ohio corporation, Workhorse
Properties Inc., an Ohio corporation, Workhorse Motor Works Inc, an Indiana corporation, and Surefly, Inc., a Delaware corporation
(each a “Grantor” and, collectively, the “Grantors”) and Wilmington Trust, National Association,
in its capacity as agent for the benefit of the Lenders (together with its successors and assigns in such capacity, the “Secured
Party”).

 

W I T N E S S E T H:

 

WHEREAS, Workhorse
Group Inc. will enter into a Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”) with the Agent and the financial institutions from time to time party
thereto as lenders (collectively, with their permitted successors and assignees, the “Lenders”) pursuant to
which the Lender will extend to Workhorse Group Inc. a credit facility in an aggregate amount of $35,000,000;

 

AND WHEREAS,
each Grantor will derive substantial benefit and advantage from the financial accommodations to Workhorse Group Inc. set forth
in the Credit Agreement;

 

AND WHEREAS,
it is a condition precedent to the effectiveness of the Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Agent for its benefit and the benefit of the Lenders.

 

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 Credit Agreement are used herein as defined therein. In addition,
as used herein:

 

“Accounts”
means any “account”, as such term is 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.

 

“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 Grantor 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.

 

“Control Agreement”
has the meaning set forth in Section 4.5 hereof.

 

     

     

    

 

“Copyrights”
means any copyrights and rights, title and interests (and all related IP Ancillary Rights) in copyrights, works protectable by
copyrights, mask works, database and design rights, copyright registrations and copyright applications, including, without limitation,
the copyright registrations and copyright applications listed on Schedule III attached hereto (if any), and all renewals
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 Grantor.

 

“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.

 

“General Intangibles”
means any “general intangibles”, as such term is defined in the UCC, and, in any event, shall include, without limitation,
payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things
in action, goodwill (including the goodwill associated with any Trademark), Patents, Trademarks, Copyrights, URLs and domain names,
industrial designs and other Intellectual Property or rights therein or applications therefor, whether under license or otherwise,
programs, programming materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension
funds, rights to payment and other rights under any royalty or licensing agreements, including Intellectual Property Licenses,
infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs,
pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, interests in a
partnership or limited liability company which do not constitute a security under Article 8 of the UCC.

 

“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.

 

“Instruments”
means any “instrument,” as such term is defined in the UCC, and shall include, without limitation, promissory notes,
drafts, bills of exchange and trade acceptances.

 

“Intellectual
Property” means all rights, title and interests in intellectual property arising under any Applicable Law and all IP
Ancillary Rights relating thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names, Trade Secrets, industrial
designs, integrated circuit topographies, confidential proprietary information and rights under Intellectual Property Licenses.

 

“Intellectual
Property Licenses” means rights under or interests in any agreement, whether written or oral, including all contractual
obligations (and all related IP Ancillary Rights), granting any right, title and interest in any Intellectual Property, including
software license agreements, whether a Grantor is a licensee or licensor under any such license agreement, and including the license
agreements listed on Schedule IV attached hereto.

 

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“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.

 

“Letter-of-Credit
Right” means any “letter-of-credit right”, 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.

 

“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 V attached hereto (if any),
and the reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing, all rights
corresponding thereto throughout the world, and all proceeds, income, licenses, royalties, damages, proceeds of suit 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, and without duplication, all IP Ancillary Rights in respect of any of the foregoing.

 

“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 Secured Party from time to time.

 

“Security Documents”
means this Agreement, the Control Agreements, the Mortgage, and any and all other Collateral Documents.

 

“Software”
means all “software”, as such term is defined in the UCC, now owned or hereafter acquired by a Grantor, 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.

 

“Supporting
Obligation” means any “supporting obligation”, as such term is defined in the UCC.

 

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“Trademarks”
means all rights, title and interests (and all related IP Ancillary Rights) arising under any Applicable Law in any trademarks,
trade names, internet domain names, URLs, all websites, corporate names, company names, business names, fictitious business names,
trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have
appeared or appear, all goodwill associated therewith, all registrations and recordings thereof and all applications in connection
therewith, including, without limitation, the trademarks, trademark applications, internet domain names and URLs listed in Schedule
VI attached hereto (if any) and renewals thereof, and all related IP Ancillary Rights with respect to any of the foregoing.

 

“UCC”
shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; 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 Grantors. Each Grantor represents and warrants to, and covenants with, the Secured Party as follows:

 

(a) Such Grantor has
or will have 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 Grantor acquiring the same) and no Lien other than Permitted
Liens exists or will exist upon such Collateral at any time.

 

(b) This Agreement
is effective to create in favor of the Secured Party a valid security interest in and Lien upon all of such Grantor’s right,
title and interest in and to the Collateral, and upon (i) the filing of appropriate UCC financing statements in the jurisdictions
listed on Schedule I attached hereto, (ii) each Deposit Account being subject to a Control Agreement (as hereinafter defined)
among the applicable Grantor, depository institution and the Secured Party on behalf of the Lenders, (iii) filings in the United
States Patent and Trademark Office or United States Copyright Office with respect to Collateral that is Patents, Trademarks or
Copyrights, as the case may be, (iv) the filing of the Mortgages in the jurisdictions listed on Schedule I hereto, (v) the
delivery to the Secured Party of the Pledged Collateral together with assignments in blank, (vi) the security interest created
hereby being noted on each certificate of title evidencing the ownership of any Motor Vehicle in accordance with Section 4.1(d)
hereof, (vii) delivery to the Secured Party or its Representative of Instruments duly endorsed by such Grantor or accompanied by
appropriate instruments of transfer duly executed by such Grantor with respect to Instruments not constituting Chattel Paper and
(viii) the consent of the issuer and any confirmer of any letter of credit to an assignment to the Secured Party of the proceeds
of any drawing thereunder, such security interest will be a duly perfected first priority security interest (subject only to Permitted
Liens) in all of the Collateral.

 

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(c) All of the Equipment,
Inventory and Goods with a value in excess of $100,000 individually or in the aggregate owned by such Grantor is located at the
places as specified on Schedule I attached hereto other than locations where such Equipment, Inventory and Goods is temporarily
located for maintenance or repair and locations in transit. 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 Grantor’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 Grantor (including corporation, partnership, limited partnership or limited liability
company), organizational identification number issued by such Grantor’s state of incorporation, formation or organization
(or a statement that no such number has been issued), such Grantor’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 Grantor keeps its books
and records and the states in which such Grantor conducts its business. Such Grantor has only one state or province, as applicable,
of incorporation, formation or organization. Such Grantor 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) To such Grantor’s
knowledge, no Copyrights, Patents, Intellectual Property Licenses or Trademarks listed on Schedules III, IV, V
and VI, respectively, if any, have been adjudged invalid or unenforceable or have been canceled, in whole or in part, or
are not presently subsisting. To such Grantor’s knowledge, each of such Copyrights, Patents, Intellectual Property Licenses
and Trademarks (if any) is valid and enforceable. To such Grantor’s knowledge and as of the date hereof, such Grantor is
the sole and exclusive owner of the entire and unencumbered right, title and interest in and to each of such Copyrights, Patents,
Intellectual Property Licenses and Trademarks, identified on Schedules III, IV, V and VI, as applicable,
as being owned by such Grantor, free and clear of any liens, charges and encumbrances, including without limitation licenses, shop
rights and covenants by such Grantor not to sue third persons, other than Permitted Liens. Such Grantor has adopted, used and is
currently using, or has a current bona fide intention to use, all of such Trademarks and Copyrights. As of the date hereof, such
Grantor has not received written notice of any suits or actions commenced or threatened with reference to the Copyrights, Patents
or Trademarks owned by it.

 

(e) Without duplication
of any information required to be delivered by such Grantor to the Secured Party under and in accordance with the terms of the
Credit Agreement, each Grantor agrees to deliver to the Secured Party (x) an updated Schedule I, II, VII and/or
VIII within 10 Business Days of any change thereto and (y) an updated Schedule III, IV, V and/or VI
in the case of any change thereto on the date the Borrower’s quarterly Compliance Certificate is due pursuant to Section
6.1.4 of the Credit Agreement.

 

(f) All depositary
and other accounts including, without limitation, Deposit Accounts, securities accounts, brokerage accounts and other similar accounts,
maintained by each Grantor (other than Excluded Accounts) are described on Schedule VII hereto, which description includes
for each such account the name of the Grantor maintaining such account, the name and address of the financial institution at which
such account is maintained and the account number of such account. No Grantor shall open any new Deposit Accounts, securities accounts,
brokerage accounts or other accounts unless such Grantor shall have given the Secured Party prior written notice of its intention
to open any such new accounts. Each Grantor shall deliver to the Secured Party a revised version of Schedule VII showing
any changes thereto promptly following, but in any event within 10 Business Days of, any such change. Each Grantor hereby authorizes
the financial institutions at which such Grantor maintains an account to provide Secured Party with such information with respect
to such account as the Secured Party from time to time reasonably may request, and each Grantor hereby consents to such information
being provided to the Secured Party. In addition, all of such Grantor’s depositary, security, brokerage and other accounts
including, without limitation, Deposit Accounts (other than Excluded Accounts) shall be subject to the provisions of Section
4.5 hereof.

 

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(g) Such Grantor does
not own any Commercial Tort Claims having a value in excess of $100,000 individually or in the aggregate except for those disclosed
on Schedule VIII hereto (if any).

 

(h) Such Grantor does
not have any interest in real property except as disclosed on Schedule IX (if any). Each Grantor shall deliver to the Secured
Party a revised version of Schedule IX showing any changes thereto within 20 days of any such change. Except as otherwise
agreed to by the Required Lenders, all such interests in real property with respect to such real property are subject to a Mortgage
in favor of the Secured Party.

 

(i) Each Grantor shall
duly and properly record each interest in real property held by such Grantor that is required to be subject to a Mortgage, except
with respect to easements, rights of way, access agreements, surface damage agreements, surface use agreements or similar agreements
that such Grantor, in good faith, using prudent customs and practices in the industry in which it operates, does not believe are
of material value or material to the operation of such Grantor’s business or, with respect to state and federal rights of
way, are not capable of being recorded as a matter of state and federal law.

 

(j) All Equipment (including,
without limitation, Motor Vehicles) owned by such Grantor and subject to a certificate of title or ownership statute is described
on Schedule X hereto.

 

Section 3. Collateral.

 

(a) As collateral security
for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Obligations, each Grantor
hereby pledges and grants to the Secured Party, for the benefit of the Lenders, a Lien on and security interest in all of such
Grantor’s right, title and interest in the following properties and assets of such Grantor, whether now owned by such Grantor
or hereafter acquired and whether now existing or hereafter coming into existence and wherever located (all being collectively
referred to herein as “Collateral”):

 

i) all Instruments,
together with all payments thereon or thereunder, and Letter-of-Credit Rights;

 

ii) all Accounts and
Supporting Obligations;

 

iii) all Inventory;

 

iv) all General Intangibles
(including Software);

 

v) all Equipment;

 

vi) all Documents;

 

vii) all Contracts;

 

viii) all Goods;

 

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ix) all Investment
Property, including without limitation all equity interests now owned or hereafter acquired by such Grantor;

 

x) all Deposit Accounts,
including, without limitation, the Reserve Account and the balance from time to time in all bank accounts maintained by such Grantor;

 

xi) all Commercial
Tort Claims specified on Schedule VIII;

 

xii) all Trademarks,
Patents and Copyrights;

 

xiii) all Chattel Paper,
all amounts payable thereunder, all rights and remedies of such Grantor thereunder including but limited to the right to amend,
grant waivers and declare defaults, any and all accounts evidenced thereby, any guarantee thereof, and all collections and monies
due or to become due or received by any Person in payment of any of the foregoing;

 

xiv) all books and
records pertaining to the Collateral; and

 

xv) all other tangible
and intangible property of such Grantor, 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 Grantor 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 Grantor, any computer bureau or service company from time to time acting for such Grantor.

 

Notwithstanding anything
to the contrary in this Agreement, this Agreement shall not constitute a grant of a security interest in, and the term “Collateral”
shall be deemed to exclude, all of the following property: (A) any intent-to-use trademark applications filed pursuant to Section
1(b) of the Lanham Act, 15 U.S.C. §1051, to the extent that, and solely during the period in which, the grant of a security
interest therein would otherwise invalidate such Grantor’s right, title or interest therein, (B) any property owned by a
Grantor that is subject to a purchase money Lien or a Capital Lease permitted hereunder or under the Credit Agreement if the contractual
obligation pursuant to which such Lien is granted (or the document providing for such Capital Lease) prohibits the creation of
a Lien thereon or expressly requires the consent of any person other than a Loan Party, unless such consent has been obtained or
such prohibitions otherwise cease to exist, in which case such Collateral shall automatically become subject to the security interest
granted hereunder, (C) any General Intangibles or other rights, in each case arising under any contracts, instruments, licenses
or other documents as to which the grant of a security interest would violate or invalidate any such contract, instrument, license
or other document or give any other party to such contract, instrument, license or other document the right to terminate its
obligations thereunder, (D) any asset, the granting of a security interest in which would be void or illegal under any applicable
governmental law, rule or regulation, or pursuant thereto would result in, or permit the termination of, such asset, provided,
that the property described in clauses (C) and (D) above shall only be excluded from the term “Collateral” to the extent
the conditions stated therein are not rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or any
other Applicable Law and (E) the Excluded Accounts.

 

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(b) The security interest
grant under this Section does not constitute and is not intended to result in a creation or an assumption by the Secured Party
of any obligation of any Grantor or any other Person in connection with any or all of the Collateral or under any agreement or
instrument relating thereto. Anything herein to the contrary notwithstanding, (i) the exercise by the Secured Party of any of its
rights in the Collateral shall not release any Grantor from any of its duties or obligations in respect of the Collateral other
than any duties and obligations arising with respect to Collateral after such Grantor has been dispossessed of such Collateral
by the Secured Party (or its assignee), which, by their nature, may not be satisfied without possession of such Collateral and
(ii) neither the Secured Party nor any Lender shall have any obligations or liability in respect of the Collateral by reason of
this Agreement, nor shall the Secured Party or any Lender be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

 

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

 

4.1 Delivery and Other
Perfection; Maintenance, etc.

 

(a) Delivery of
Instruments, Documents, Etc. Each Grantor shall deliver and pledge to the Secured Party or its Representative any and all Instruments,
negotiable Documents and Chattel Paper evidencing amounts greater than $100,000 individually or in the aggregate and certificated
securities accompanied by stock/membership interest powers executed in blank, which stock/membership interest powers may be filled
in and completed at any time upon the occurrence and during the continuance of any Event of Default duly endorsed and/or accompanied
by such instruments of assignment and transfer executed by such Grantor in such form and substance as the Secured Party or its
Representative may request; provided, that so long as no Event of Default shall have occurred and be continuing, each Grantor
may retain for collection in the ordinary course of business any Instruments, negotiable Documents and Chattel Paper received by
such Grantor in the ordinary course of business, and the Secured Party or its Representative shall, promptly upon request of a
Grantor, make appropriate arrangements for making any other Instruments, negotiable Documents and Chattel Paper pledged by such
Grantor available to such Grantor for purposes of presentation, collection or renewal (any such arrangement to be effected, to
the extent deemed appropriate by the Secured Party or its Representative, against a trust receipt or like document). If a Grantor
retains possession of any Chattel Paper, negotiable Documents or Instruments evidencing amounts greater than $50,000 individually
or in the aggregate 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 Wilmington Trust, National Association, in its capacity as agent for one or more creditors, as Secured Party.”

 

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(b) Other Documents
and Actions. Each Grantor shall give, execute, deliver, file and/or record any financing statement, registration, notice, instrument,
document, agreement, Mortgage or other papers that may be necessary (as determined in the reasonable judgment of the Secured Party
or its Representative (at the direction of the Required Lenders) or the Required Lenders) 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 Secured Party or its Representative to exercise and enforce
the rights of the Secured Party 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 Grantor hereby irrevocably authorizes the Secured Party 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 any 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 Grantor 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 Grantor is an organization, the type of organization and any organization identification
number issued to such Grantor 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 Grantor agrees to furnish any such information to the Secured Party promptly
upon request.

 

(c) Books and Records.
Each Grantor shall maintain at its own cost and expense, in accordance with sound business practices, complete and accurate, in
all material respects, books and records of the Collateral, including, without limitation, a record of all payments received and
all credits granted with respect to the Collateral and all other dealings with the Collateral. Upon the occurrence and during the
continuation of any Event of Default, each Grantor shall deliver and turn over any such books and records (or true and correct
copies thereof) to the Secured Party or its Representative at any time on demand. Each Grantor shall permit any Representative
of the Secured Party to inspect such books and records in accordance with Section 6.2 of the Credit Agreement.

 

(d) Motor Vehicles.
Each Grantor shall, promptly upon acquiring same, cause the Secured Party to be listed as the lienholder on each certificate of
title or ownership covering any items of Equipment, including Motor Vehicles, having a value in excess of $300,000 individually
or in the aggregate for all such items of Equipment of the Grantor, or otherwise comply with the certificate of title or ownership
laws of the relevant jurisdiction issuing such certificate of title or ownership in order to properly evidence and perfect the
Secured Party’s security interest in the assets represented by such certificate of title or ownership.

 

(e) Notice to Account
Debtors; Verification. (i) Upon the occurrence and during the continuance of any Event of Default, upon request of the
Secured Party or its Representative, each Grantor shall promptly notify (and each Grantor hereby authorizes the Secured Party 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 Secured Party hereunder, and that any payments due or to become due in
respect of such Collateral are to be made directly to the Secured Party, and (ii) the Secured Party 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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(f) Intellectual
Property. Each Grantor represents and warrants that the Copyrights, Patents, Intellectual Property Licenses and Trademarks
listed on Schedules III, IV, V and VI, respectively (if any), constitute all of the registered Copyrights
and all of the Patents, Intellectual Property Licenses and Trademarks owned by such Grantor as of the date hereof. If such Grantor
shall (i) obtain rights to any new patentable inventions, any registered Copyrights or any Patents, Intellectual Property Licenses
or Trademarks, or (ii) become entitled to the benefit of any registered Copyrights or any Patents, Intellectual Property Licenses
or Trademarks or any improvement on any Patent, the provisions of this Agreement above shall automatically apply thereto and such
Grantor shall give to the Secured Party notice thereof in accordance with Section 6.8(d) of the Credit Agreement. Each Grantor
hereby authorizes the Secured Party to modify this Agreement by amending Schedules III, IV, V and VI,
as applicable, to include any such registered Copyrights or any such Patents, Intellectual Property Licenses and Trademarks. Each
Grantor shall (i) prosecute diligently any patent, trademark or service mark applications pending as of the date hereof or hereafter
to the extent material to the operations of the business of such Grantor, (ii) preserve and maintain all rights in the Copyrights,
Patents, Intellectual Property Licenses and Trademarks, to the extent material to the operations of the business of such Grantor
and (iii) ensure that the Copyrights, Patents, Intellectual Property Licenses and Trademarks are and remain enforceable, to the
extent material to the operations of the business of such Grantor. Any expenses incurred in connection with such Grantor’s
obligations under this Section 4.1(f) shall be borne by such Grantor. Except for any such items that a Grantor reasonably
believes in good faith (using prudent industry customs and practices) are no longer necessary for the on-going operations of its
business, no Grantor 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, Intellectual Property License or Trademark without
the prior written consent of the Secured Party (at the direction of the Required Lenders), which consent shall not be unreasonably
withheld.

 

(g) Further Identification
of Collateral. Each Grantor will, when and as often as requested by the Secured Party or its Representative (but, absent the
occurrence and continuance of an Event of Default, in no event more frequently than quarterly), furnish to the Secured Party or
such Representative, statements and schedules further identifying and describing the Collateral and such other reports in connection
with the Collateral as the Secured Party or its Representative may reasonably request, all in reasonable detail.

 

(h) Investment Property.
Each Grantor will take any and all actions required or requested by the Secured Party, from time to time, to cause the Secured
Party to obtain exclusive control of any Investment Property owned by such Grantor. For purposes of this Section 4.1(h),
the Secured Party shall have exclusive control of Investment Property if (i) such Investment Property consists of certificated
securities and a Grantor delivers such certificated securities to the Secured Party (with assignments in blank or appropriate endorsements
if such certificated securities are in registered form); (ii) such Investment Property consists of uncertificated securities
and the issuer thereof agrees, pursuant to documentation in form and substance reasonably satisfactory to the Secured Party and
the Required Lenders, that it will comply with instructions originated by the Secured Party without further consent by such Grantor,
and (iii) such Investment Property consists of security entitlements and either (x) the Secured Party becomes the entitlement holder
thereof or (y) the appropriate securities intermediary agrees, pursuant to the documentation in form and substance satisfactory
to the Secured Party and the Required Lenders, that it will comply with entitlement orders originated by the Secured Party without
further consent by any Grantor.

 

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(i) Commercial Tort
Claims. Each Grantor shall promptly notify the Secured Party of any Commercial Tort Claims acquired by it that concerns claims
in excess of $100,000 individually or in the aggregate and unless otherwise consented to by the Secured Party or the Required Lenders,
such Grantor shall enter into a supplement to this Agreement granting to the Secured Party a Lien on and security interest in such
Commercial Tort Claim.

 

4.2 Preservation of
Rights. Whether or not an Event of Default has occurred or is continuing, the Secured Party and its Representative shall have
the right, at the direction of the Required Lenders, to take any steps the Secured Party or its Representative (at the direction
of the Required Lenders) reasonably deems necessary or appropriate to preserve any Collateral or any rights against third parties
to any of the Collateral upon the Grantors’ failure to do so, including obtaining insurance for the Collateral at any time
when such Grantor has failed to do so, and Grantors shall promptly pay, or reimburse the Secured Party and the Lenders for, all
reasonable and customary out-of-pocket expenses incurred in connection therewith.

 

4.3 Name Change; Location;
Bailees.

 

(a) No Grantor shall
form or acquire any subsidiary other than in accordance with the express terms of the Credit Agreement.

 

(b) Each Grantor shall
provide the Secured Party at least 10 Business Days prior written notice of (i) any reincorporation or reorganization of itself
under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the date hereof,
and/or (ii) any change of its name, identity or corporate structure. Each Grantor will notify the Secured Party promptly, in writing
(but in any event at least 10 Business Days) prior to any such change in the proposed use by such Grantor of any tradename or fictitious
business name other than any such name set forth on Schedule II attached hereto.

 

(c) Except for the
sale of Inventory in the ordinary course of business, other sales of assets expressly permitted by the terms of the Credit Agreement
and except for Collateral temporarily located for maintenance or repair (so long as the applicable Grantor shall promptly provide
the Secured Party with written notice of such temporary location), each Grantor will keep Collateral with a value in excess of
$100,000 individually or in the aggregate at the locations specified in Schedule I. Each Grantor will give the Secured Party
10 Business Days prior written notice before any change in such Grantor’s chief place of business or of any new location
for any of the Collateral with a value in excess of $50,000 individually or in the aggregate at all such locations.

 

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4.4 Other Liens.
Grantors 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 Liens, and will defend the right, title and interest of the Secured Party
in and to the Collateral and in and to all Proceeds thereof against the claims and demands of all Persons whatsoever.

 

(a) If any Collateral
is at any time in the possession or control of any warehousemen, bailee, consignee or processor, such Grantor shall promptly notify
the Secured Party of such fact and, upon the request of the Secured Party or its Representative, notify such warehousemen, bailee,
consignee or processor of the Lien and security interest created hereby and shall instruct such Person to hold all such Collateral
for the Secured Party’s account subject to the Secured Party’s instructions.

 

(b) Each Grantor acknowledges
that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement
naming a Grantor, as debtor, and the Secured Party, as secured party, without the prior written consent of the Secured Party and
agrees that it will not do so without the prior written consent of the Secured Party, subject to such Grantor’s rights under
Section 9-509(d)(2) to the UCC.

 

4.5 Bank Accounts
and Securities Accounts. On or prior to the date hereof, the Secured Party and each Grantor, as applicable, shall enter into
an account control agreement or securities account control agreement, as applicable (each a “Control Agreement”),
in a form reasonably acceptable to the Secured Party and the Required Lenders, with each financial institution with which such
Grantor maintains from time to time any Deposit Accounts (general or special), securities accounts, brokerage accounts or other
similar accounts (other than Excluded Accounts), which financial institutions are set forth on Schedule IX attached hereto.
Pursuant to this Agreement, each such Grantor grants and shall grant to the Secured Party a continuing lien upon, and security
interest in, all such accounts and all funds at any time paid, deposited, credited or held in such accounts (whether for collection,
provisionally or otherwise) or otherwise in the possession of such financial institutions. Following the Closing Date, no Grantor
shall establish any Deposit Account, securities account, brokerage account or other similar account (other than Excluded Accounts)
with any financial institution unless prior or concurrently thereto the Secured Party and such Grantor shall have entered into
a Control Agreement with such financial institution which purports to cover such account. Each Grantor shall deposit and keep on
deposit all of its funds in a Deposit Account (other than funds in Excluded Accounts) which is subject to a Control Agreement.

 

4.6 Events of Default,
Etc. During the period during which an Event of Default shall have occurred and be continuing:

 

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

 

(b) the Secured Party
or its Representative (each at the direction of the Required Lenders) or the Required Lenders 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;

 

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(c) the Secured Party
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 exercise all voting, consensual and other
powers of ownership pertaining to the Collateral in accordance with this Agreement and the other Loan Documents as if the Secured
Party were the sole and absolute owner thereof (and each Grantor agrees to take all such action as may be appropriate to give effect
to such right);

 

(d) the Secured Party
or its Representative shall have the right, at the direction of the Required Lenders, in the name of the Secured Party or in the
name of a Grantor or otherwise, to 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 Secured Party
or its Representative shall have the right, at the direction of the Required Lenders, to take immediate possession and occupancy
of any premises owned, used or leased by a Grantor and exercise all other rights and remedies which may be available to the Secured
Party;

 

(f) the Secured Party
shall have the right, at the direction of the Required Lenders, upon reasonable notice (such reasonable notice to be determined
by the Secured Party in its sole and absolute discretion, which shall not be less than 10 days), with respect to the Collateral
or any part thereof (whether or not the same shall then be or shall thereafter come into the possession, custody or control of
the Secured Party or its Representative), to sell, lease, license, assign or otherwise dispose of all or any part of such Collateral,
at such place or places as the Secured Party (at the direction of the Required Lenders) 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 Secured Party or any Lender 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 Grantors, any such demand, notice and right or equity being hereby expressly
waived and released. The Secured Party (at the direction of the Required Lenders) or the Required Lenders may, to the fullest extent
permitted by Applicable Law, 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 Secured Party
may, and at the direction of the Required Lenders shall, proceed to perform any and all of the obligations of any Grantor contained
in any Contract and exercise any and all rights of a Grantor therein contained as such Grantor itself could;

 

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(h) the Secured Party
shall have the right to use any Grantor’s rights under any Intellectual Property Licenses in connection with the enforcement
of the Secured Party’s rights hereunder; and

 

(i) the rights, remedies
and powers conferred by this Section 4.6 are in addition to, and not in substitution for, any other rights, remedies or
powers that the Secured Party may have under any Loan Document, at law, in equity or by or under the UCC or any other statute or
agreement. The Secured Party may proceed by way of any action, suit or other proceeding at law or in equity and no right, remedy
or power of the Secured Party will be exclusive of or dependent on any other. The Secured Party 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 4.6 shall be applied in accordance with Section 4.9 hereof.

 

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

 

4.8 Private Sale.
Each Grantor recognizes that the Secured Party 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 Grantor 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 Grantor agrees that
it is not commercially unreasonable for the Secured Party to engage in any such private sales or dispositions under such circumstances.
The Secured Party shall be under no obligation to delay a sale of any of the Collateral to permit a Grantor to register such Collateral
for public sale under the Act, or under applicable state securities laws, even if any Grantors would agree to do so. The Secured
Party 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 and each Grantor hereby waives any claims against the 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 Secured Party accepts the first offer received
and does not offer the Collateral to more than one offeree.

 

Each Grantor 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 Grantor’s expense. Each Grantor further agrees that a breach of any of the covenants
contained in this Section 4.8 will cause irreparable injury to the Secured Party and the Lenders, that the Secured Party
and the Lenders 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 the Grantors, and each Grantor 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.

 

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4.9 Application of
Proceeds. The proceeds of any collection, sale or other realization of all or any part of the Collateral following the occurrence
and during the continuance of an Event of Default, and any other cash at the time held by the Secured Party under this Agreement,
shall be applied to the Obligations in such order as the Secured Party or the Required Lenders shall elect.

 

4.10 Attorney-in-Fact.
Each Grantor hereby irrevocably constitutes and appoints the Secured Party, 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 Grantor and in the name of such Grantor
or in its own name, from time to time upon the occurrence and during the continuance of an Event of Default in the discretion of
the Secured Party, 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 to perfect or protect any security interest granted hereunder,
to maintain the perfection or priority of any security interest granted hereunder, and, without limiting the generality of the
foregoing, hereby gives the Secured Party the power and right, on behalf of such Grantor, without notice to or assent by such Grantor
(to the extent permitted by Applicable Law), to do the following:

 

(a) upon the occurrence
and during the continuation of an Event of Default, to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary to accomplish the purposes of this Agreement;

 

(b) upon the occurrence
and during the continuation of an Event of Default, 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 Grantor 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 Secured Party (at the direction of the Required Lenders) 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 Secured Party (at the direction of the Required Lenders) for the purpose of
collecting any and all such moneys due under any Collateral whenever payable;

 

(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 or the Credit Agreement and to pay all or any part of the premiums therefor;

 

(d) upon the occurrence
and during the continuation of an Event of Default, 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 Secured Party or as the Secured Party shall direct
(at the direction of the Required Lenders), 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;

 

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(e) upon the occurrence
and during the continuation of an Event of Default, to sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against Grantors, assignments, verifications and notices in connection with accounts and
other Documents constituting or relating to the Collateral;

 

(f) upon the occurrence
and during the continuation of an Event of Default, 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) upon the occurrence
and during the continuation of an Event of Default, to defend any suit, action or proceeding brought against a Grantor with respect
to any Collateral;

 

(h) upon the occurrence
and during the continuation of an Event of Default, to settle, compromise or adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases as the Secured Party may deem appropriate (at the direction of
the Required Lenders);

 

(i) to the extent that
a Grantor’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 Grantor’s signature, or to file a photocopy of this Agreement in substitution
for a financing statement, as the Secured Party may deem appropriate (at the direction of the Required Lenders);

 

(j) upon the occurrence
and during the continuation of an Event of Default, 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 Secured Party were the absolute owner thereof for
all purposes; and

 

(k) to do, at the Secured
Party’s option (at the direction of the Required Lenders) and at such Grantor’s expense, at any time, or from time
to time, all acts and things which the Secured Party reasonably deems necessary to protect or preserve or, upon the occurrence
and during the continuation of an Event of Default, realize upon the Collateral and the Secured Party’s lien therein, in
order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

Each Grantor 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 Paid in Full and this Agreement is terminated in accordance with Section 4.12 hereof.

 

Each Grantor also authorizes
the Secured Party, 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 Grantor 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 4.6 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect
to the Collateral.

 

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

 

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

 

(b) at the Secured
Party’s or the Required Lenders’ request, deliver to the Secured Party or its Representative the originals of all Instruments
required to be so delivered hereunder 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) deliver to the
Secured Party or its Representative an Account Control Agreement for each Deposit Account owned by such Grantor, acceptable in
all respects to the Secured Party and the Required Lenders, duly executed by the applicable Grantor and the financial institution
at which such Grantor maintains such Deposit Account; and

 

(d) deliver to the
Secured Party or its Representative the originals of all Motor Vehicle titles with respect to Motor Vehicles having a value in
excess of $300,000 in the aggregate, duly endorsed indicating the Secured Party’s interest therein as a lienholder, together
with such other documents as may be required consistent with Section 4.1(d) hereof to perfect the security interest granted
by Section 3 in all such Motor Vehicles (if any).

 

4.12 Termination;
Partial Release of Collateral. This Agreement and the Liens and security interests granted hereunder shall continue in effect
until the Obligations are Paid in Full. When the Obligations are Paid in Full, the security interest granted hereby shall automatically
terminate and all rights to the Collateral shall revert to the applicable Grantor, and the Secured Party will promptly following
such termination deliver possession of all Collateral to the Grantors and execute and deliver to the Grantors such documents as
are necessary to evidence such termination, including UCC termination statements and such other documentation as shall be reasonably
requested by the Grantors to effect the termination and release of the Liens and security interests in favor of the Secured Party
affecting the Collateral. Upon any sale of property, permitted by the Credit Agreement, to a party who is not a Grantor or a Subsidiary
of a Grantor, the Liens granted herein shall be deemed to be automatically released and such property shall automatically revert
to the applicable Grantor with no further action on the part of any Person. The Secured Party shall, at Grantors’ expense,
execute and deliver or otherwise authorize the filing of such documents as Grantors shall reasonably request, in form and substance
reasonably satisfactory to the Secured Party, including financing statement amendments to evidence such release.

 

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4.13 Further Assurances.
At any time and from time to time, upon the written request of the Secured Party, its Representative or the Required Lenders, and
at the sole expense of the Grantors, the Grantors shall promptly and duly execute and deliver any and all such further instruments,
documents and agreements and take such further actions as the Secured Party, its Representative or the Required Lenders may reasonably
require in order for the Secured Party to obtain the full benefits of this Agreement and of the rights and powers herein granted
in favor of the Secured Party, including, without limitation, using the Grantors’ commercially reasonable efforts to secure
all consents and approvals necessary or appropriate for the assignment to the Secured Party of any Collateral held by the Grantors
or in which a Grantor 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 Secured Party’s possession
(if a security interest in such Collateral can be perfected by possession), placing the interest of the Secured Party as lienholder
on the certificate of title of any Motor Vehicle, obtaining waivers of liens from landlords and mortgagees and delivering to the
Secured Party all such Control Agreements as the Secured Party, its Representative or the Required Lenders shall require duly executed
by the applicable Grantor and the financial institution at which such Grantor maintains a Deposit Account covered by such Control
Agreement. Each Grantor also hereby authorizes the Secured Party and its Representative to file any such financing or continuation
statement without the signature of such Grantor to the extent permitted by Applicable Law.

 

4.14 Limitation on
Duty of Secured Party. The powers conferred on the Secured Party under this Agreement are solely to protect the Secured Party’s
interest on behalf of itself and the Lenders in the Collateral and shall not impose any duty upon it to exercise any such powers.
Without in any way limiting the exculpation and indemnification provisions of the Credit Agreement, the Secured Party shall be
accountable only for amounts that it actually receives and retains for its own account as a result of the exercise of such powers
and neither the Secured Party nor its Representative nor any of their respective officers, directors, employees or agents shall
be responsible to Grantors for any act or failure to act, except for gross negligence or willful misconduct. Without limiting the
foregoing, the Secured Party and any Representative shall each be deemed to have exercised reasonable care in the custody and preservation
of the Collateral in its respective possession if such Collateral is accorded treatment substantially similar to that which the
relevant Secured Party 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 Secured Party 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.

 

Without limiting the
generality of the foregoing, neither the Secured Party 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 Secured Party of a security interest therein
or assignment thereof or the receipt by the Secured Party or any Representative of any payment relating to any Contract or license
pursuant hereto, nor shall the Secured Party or any Representative be required or obligated in any manner to perform or fulfill
any of the obligations of the Grantors 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 Secured Party 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 Secured Party 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.
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than
the State of New York.

 

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 Credit Agreement; provided, that, to the extent any such communication
(i) is being made or sent to a Grantor such communication shall be effective as to such Grantor if made or sent to the Borrower
or in accordance with the foregoing or (ii) is being made or sent to the Agent, such communication shall be made to the Agent at
the address set forth below the Agent’s signature hereto. The Grantors and the Agent may change their respective notice addresses
by written notice given to the other parties hereto 10 days following 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 each Grantor and
the Secured Party. Any such amendment or waiver shall be binding upon the Secured Party and each Grantor 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 Grantor shall assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Secured Party and the Required Lenders. The Secured Party, in its capacity as the Agent, may assign
its rights and obligations hereunder (a) without the consent of the Grantors, to any Eligible Assignee or (b) with the Grantors’
consent (not to be unreasonably withheld, conditioned or delayed), any other Person acceptable to the Required Lenders and the
Secured Party; provided that the Grantors’ consent under this clause (b) shall not be required if an Event of Default has
occurred and is then continuing, and in each event such assignee shall be deemed to be the Secured Party hereunder with respect
to such assigned rights.

 

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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 Secured Party and its Representative 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.

 

5.8 SUBMISSION
TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK
OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST
ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT’S OPTION (AT THE DIRECTION OF THE REQUIRED LENDERS), IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH LOAN PARTY
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

5.9 WAIVER OF RIGHT
TO TRIAL BY JURY. EACH GRANTOR AND THE SECURED PARTY HEREBY 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 GRANTOR AND THE SECURED PARTY HEREBY 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.

 

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

 

5.11 Agent.

 

(a) The Lenders have,
pursuant to Section 9 of the Credit Agreement, designated and appointed the Agent as the administrative agent and collateral agent
of the Lenders under this Agreement and the other Loan Documents.

 

(b) For the avoidance
of doubt, all of the powers, rights, remedies and privileges granted or provided to the Secured Party under this Agreement are
for the benefit of and may be exercised and utilized by the Lenders directly, at the option of the Required Lenders. The Agent
shall act (or omit to act) at the direction of the Required Lenders under any provision of this Agreement requiring the Secured
Party to take action or to omit from taking action (other than ordinary administration) or to exercise discretion.

 

(c) Nothing in this
Section 5.11 shall be deemed to limit or otherwise affect the rights of the Secured Party or the Lenders to exercise any
remedy provided in this Agreement or any other Loan Document.

 

(d) If pursuant to
any Loan Document, the Secured Party is given the discretion to allocate proceeds received by the Secured Party pursuant to the
exercise of remedies under the Loan 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 Loan Documents), the
Secured Party (at the direction of the Required Lenders) or the Required Lenders shall apply such proceeds to the then outstanding
Obligations in such order as the Secured Party (at the direction of the Required Lenders) or the Required Lenders shall elect.

 

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.

 

5.13 ENTIRE AGREEMENT;
AMENDMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN
THE SECURED PARTY, THE GRANTORS, THEIR AFFILIATES AND PERSONS ACTING ON THEIR BEHALF WITH RESPECT TO THE MATTERS DISCUSSED HEREIN,
AND THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS AND THE OTHER INSTRUMENTS REFERENCED HEREIN AND THEREIN, 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 THE SECURED PARTY NOR ANY GRANTOR 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 GRANTORS AND THE SECURED PARTY.

 

[Signature Pages Follow]

 

    21

     

    

 

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.

 

	 	GRANTORS:
	 	 
	 	WORKHORSE GROUP Inc.
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE TECHNOLOGIES INC.
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE PROPERTIES INC.
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE MOTOR WORKS INC
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	SUREFLY, INC.
	 	 	 
	 	By:	/s/ Duane A. Hughes
	 	Name:	Duane A. Hughes
	 	Title:	CEO

 

[Signature Page to Security Agreement]

 

     

     

    

 

	 	SECURED PARTY:
	 	 
	 	WILMINGTON TRUST, NATIONAL ASSOCIATION, as the Agent
	 	 	 
	 	By:	/s/ Jamie Roseberg
	 	Name:	Jamie Roseberg
	 	Title:	Banking Officer
	 	 	 
	 	Notice Address:
	 	50 South Sixth Street, Ste. 1290
	 	Minneapolis, MN  55402

 

[Signature Page to Security Agreement]

 

     

     

    

 

Schedule I

 

A. Organizational
Information

 

	Exact Legal Name	 	Jurisdiction of Formation and Registration	 	Country / State / Provincial Entity Registration
    / ID No.	 	Federal employer identification number	 	Date of Formation	 	Chief executive offices	 	Principal mailing addresses
	Workhorse Group Inc.	 	Nevada	 	E0780542007-8	 	26-1394771	 	November 13, 2007	 	100 Commerce Drive, Loveland, Ohio 45140	 	100 Commerce Drive, Loveland, Ohio 45140
	Workhorse Technologies Inc.	 	Ohio	 	1679236	 	20-8529895	 	February 20, 2007	 	100 Commerce Drive, Loveland, Ohio 45140	 	100 Commerce Drive, Loveland, Ohio 45140
	Workhorse Properties Inc.	 	Ohio	 	3943690	 	32-0553760	 	September 23, 2016	 	100 Commerce Drive, Loveland, Ohio 45140	 	100 Commerce Drive, Loveland, Ohio 45140
	Workhorse Motor Works Inc	 	Indiana	 	2013011400560	 	38-3900022	 	January 11, 2013	 	100 Commerce Drive, Loveland, Ohio 45140	 	100 Commerce Drive, Loveland, Ohio 45140
	Surefly, Inc.	 	Delaware	 	6675215	 	35-2615741	 	December 22, 2017	 	100 Commerce Drive, Loveland, Ohio 45140	 	100 Commerce Drive, Loveland, Ohio 45140

  

     

     

    

 

B. Location
of Equipment, Inventory and Goods

 

	Grantor Name	 	Location of Equipment, Inventory and Goods
	Workhorse Group Inc., Workhorse Properties Inc., Workhorse Technologies Inc., and Workhorse Motor Works Inc	 	100 Commerce Drive, Loveland, Ohio 45140
	Workhorse Group Inc.	 	119 Northeast Drive, Loveland, Ohio 45140
	Workhorse Motor Works Inc	 	940 S. State Road 32, Union City, Indiana  47390
	Surefly, Inc.	 	4760 Airport Road, Cincinnati, Ohio 45226

 

     

     

    

 

C. Collateral
in Possession of Bailee, Warehousemen, Processor or Consignee.

 

	Name	 	Complete Street and Mailing Address,
 including County and Zip Code
	 	Company/Subsidiary
	None.	 	     	 	     

  

     

     

    

 

Schedule II

 

List of Trade Names/Fictitious Names
Used in the Past Five Years

 

Former names of Loan Parties listed below:

 

Workhorse Group Inc., a Nevada company (f/k/a AMP Holding Inc.)

Workhorse Technologies Inc., an Ohio company (f/k/a AMP Electric
Vehicles Inc.)

Workhorse Motor Works Inc, an Indiana company (f/k/a AMP Trucks
Inc.)

 

     

     

    

 

Schedule III

 

List of Copyrights

 

None.

 

     

     

    

 

Schedule IV

 

List of License Agreements

 

None.

 

     

     

    

 

Schedule V

 

List of Patents and Patent Applications

 

	Code/Matter No.	 	Country	 	Serial

    Number	 	Application

    Date	 	Patent

    Number	 	Issue/

    Grant Date	 	Expiration

    Date	 	Title	 	Assignee
	AMPI	 	Canada	 	2523653	 	10/17/2005	 	2523653	 	12/22/2009	 	10/17/2025	 	VEHICLE CHASSIS ASSEMBLY	 	Workhorse Motor Works Inc
	AMPI	 	United States	 	11/252,220	 	10/17/2005	 	7,717,464	 	05/18/2010	 	09/06/2026	 	Vehicle Chassis Assembly	 	Workhorse Group Inc.
	AMPI	 	United States	 	11/252,219	 	10/17/2005	 	7,559,578	 	07/14/2009	 	09/06/2026	 	Vehicle Chassis Assembly	 	Workhorse Group Inc.
	AMPI	 	United States	 	29/243,074	 	11/18/2005	 	D561,078	 	02/05/2008	 	02/05/2022	 	Vehicle Header	 	Workhorse Group Inc.
	AMPI	 	United States	 	29/243,129	 	11/18/2005	 	D561,079	 	02/05/2008	 	02/05/2022	 	Vehicle Header	 	Workhorse Group Inc.
	AMPI 10US	 	United States	 	13/283,663	 	10/28/2011	 	8,541,915	 	09/24/2013	 	12/16/2031	 	DRIVE MODULE AND MANIFOLD FOR ELECTRIC MOTOR
    DRIVE ASSEMBLY	 	Workhorse Technologies Inc.
	AMPI 23U	 	United States	 	14/606,497	 	01/27/2015	 	9,481,256	 	11/01/2016	 	05/03/2035	 	ONBOARD GENERATOR DRIVE SYSTEM FOR ELECTRIC
    VEHICLES	 	Workhorse Technologies Inc.
	AMPI 24A	 	United States	 	15/915,144	 	03/08/2018	 	 	 	 	 	 	 	PACKAGE DELIVERY BY MEANS OF AN AUTOMATED
    MULTI-COPTER UAS/UAV DISPATCHED FROM A CONVENTIONAL DELIVERY VEHICLE	 	Workhorse Group Inc.
	AMPI 24U	 	United States	 	14/989,870	 	01/07/2016	 	9,915,956	 	03/13/2018	 	06/24/2036	 	PACKAGE DELIVERY BY MEANS OF AN AUTOMATED
    MULTI-COPTER UAS/UAV DISPATCHED FROM A CONVENTIONAL DELIVERY VEHICLE	 	Workhorse Group Inc.
	AMPI 26U	 	United States	 	15/994,185	 	05/31/2018	 	 	 	 	 	 	 	AUXILIARY POWER SYSTEM FOR ROTORCRAFT WITH
    FOLDING PROPELLER ARMS AND CRUMPLE ZONE LOADING GEAR	 	Surefly, Inc.
	AMPI 26WO	 	Patent Cooperation Treaty	 	US2018/035353	 	05/31/2018	 	 	 	 	 	 	 	AUXILIARY POWER SYSTEM FOR ROTORCRAFT WITH
    FOLDING PROPELLER ARMS AND CRUMPLE ZONE LOADING GEAR	 	Surefly, Inc.
	AMPI 31	 	United States	 	62/733,870	 	09/20/2018	 	 	 	 	 	 	 	AUTONOMOUS TRACTOR SYSTEM	 	Workhorse Group Inc.

 

     

     

    

 

Schedule VI

 

List of Trademarks

 

	Code/Matter 

    No.	 	Mark
    Name	 	Country	 	Current Owner	 	Application 

    Number	 	Application 

    Date	 	Registration 

    Number	 	Registration 

    Date	 	Classes	 	Goods
	     	 	NOTHING
    OUTWORKS A WORKHORSE	 	Canada	 	Workhorse
    Group Inc.	 	1,053,053	 	03/30/2000	 	601,870	 	02/11/2004	 	N/A	 	Chassis,
    bodies and parts thereof for delivery trucks, recreational land vehicles, buses and other specialty motorized vehicles, namely,
    auto transport trucks, concrete mixer trucks, dump trucks, garbage hauler trucks, oil-field trucks, stake and platform trucks,
    tank trucks, wrecker and tow trucks and scissors trucks, but specifically excluding utility cars for turf maintenance for
    use at golf courses, country clubs, municipalities, building complexes and large scale industrial complexes
	AMPI
    01	 	WORKHORSE
    CUSTOM CHASSIS	 	Canada	 	Workhorse
    Group Inc.	 	1,053,052	 	03/30/2000	 	601,775	 	02/10/2004	 	N/A	 	Chassis,
    bodies and parts thereof for delivery trucks, recreational land vehicles, buses and other specialty motorized vehicles, namely,
    auto transport trucks, concrete mixer trucks, dump trucks, garbage hauler trucks, oil-field trucks, stake and platform trucks,
    tank trucks, wrecker and tow trucks and scissors trucks, but specifically excluding utility cars for turf maintenance for
    use at golf courses, country clubs, municipalities, building complexes and large scale industrial complexes
	AMPI
    01	 	Workhorse
    UFO and Logo	 	Canada	 	Workhorse
    Group Inc.	 	1,328,215	 	12/14/2006	 	757,840	 	01/26/2010	 	N/A	 	Chassis
    and bodies for recreational vehicles
	AMPI
    01	 	WORKHORSE	 	Canada	 	Workhorse
    Group Inc.	 	1,468,395	 	02/04/2010	 	783,257	 	11/23/2010	 	N/A	 	Chassis,
    bodies, and parts thereof, for recreational land vehicles, buses and trucks
	AMPI
    01	 	WORKHORSE	 	Mexico	 	Workhorse
    Group Inc.	 	1068329	 	02/18/2010	 	1200569	 	02/10/2011	 	 	 	 
	AMPI
    01	 	WORKHORSE
    CUSTOM CHASSIS	 	Mexico	 	Workhorse
    Group Inc.	 	419462	 	04/05/2000	 	685022	 	01/31/2001	 	 	 	 
	AMPI
    01	 	NOTHING
    OUTWORKS A WORKHORSE	 	Mexico	 	Workhorse
    Group Inc.	 	419463	 	04/05/2000	 	685023	 	01/31/2001	 	 	 	 
	AMPI
    01	 	WORKHORSE
    CUSTOM CHASSIS	 	United
    States	 	Workhorse
    Motor Works Inc	 	75/816,152	 	10/05/1999	 	2,413,878	 	12/19/2000	 	12	 	Chassis,
    bodies, and parts thereof, for recreational land vehicles, buses
	AMPI
    15IS	 	AMP	 	Iceland	 	Workhorse
    Group Inc.	 	1295/2011	 	05/05/2011	 	557/2011	 	05/31/2011	 	12	 	Electric
    drives for vehicles; Electric vehicles, namely, land vehicles
	AMPI
    25	 	WORKHORSE	 	United
    States	 	Workhorse
    Motor Works Inc	 	78/571,788	 	02/21/2005	 	3,214,777	 	03/06/2007	 	12	 	Chassis,
    bodies, and parts thereof, for recreational land vehicles, buses and trucks
	AMPI
    27	 	SUREFLY	 	United
    States	 	Workhorse
    Group Inc.	 	87/431,425	 	05/01/2017	 	5,476,952	 	05/22/2018	 	12	 	Aircraft
	AMPI
    28	 	Horsefly	 	United
    States	 	Workhorse
    Group Inc.	 	87/770,725	 	01/25/2018	 	 	 	 	 	12	 	Package
    Delivery System 
 Utilizing Drones
	AMPI
    28CA	 	HORSEFLY	 	Canada	 	Workhorse
    Group Inc.	 	1909131	 	07/12/2018	 	 	 	 	 	12	 	Package
    delivery systems consisting primarily of civilian drones
	AMPI
    28CN	 	HORSEFLY	 	China
    P.R.	 	Workhorse
    Group Inc.	 	32402121	 	07/23/2018	 	 	 	 	 	12	 	Package
    delivery systems consisting primarily of civilian drones
	AMPI
    28EM	 	HORSEFLY	 	European
    Union Trademark	 	Workhorse
    Group Inc.	 	017930054	 	07/13/2018	 	 	 	 	 	12,
    39	 	Package
    delivery systems consisting primarily of civilian drones; drones; Vehicle leasing services; leasing of land vehicles (delivery
    trucks); leasing of drones
	AMPI
    28MX	 	HORSEFLY	 	Mexico	 	Workhorse
    Group Inc.	 	2075312	 	07/16/2018	 	 	 	 	 	12	 	Package
    delivery systems consisting primarily of civilian drones

 

     

     

    

 

Schedule VII

 

Depositary Accounts

 

For each Grantor, list all depositary and
other accounts including, without limitation, Deposit Accounts, securities accounts, brokerage accounts and other similar accounts,
maintained by each Grantor (other than Excluded Accounts), which description includes for each such account the name of the Grantor
maintaining such account, the name and address of the financial institution at which such account is maintained and the account
number of such account.

 

	Bank	 	Currency	 	Account No.	 	Branch	 	Company / Subsidiary
	PNC Bank, National Association	 	USD	 	40-0712-9788	 	500 First Avenue 
Mailstop P7-PFSC-3-B 
Pittsburgh, PA 15219 
Attention: TM Legal Liaison Team	 	Workhorse Technologies Inc.
	PNC Bank, National Association	 	USD	 	42-4047-6014	 	500 First Avenue 
Mailstop P7-PFSC-3-B 
Pittsburgh, PA 15219 
Attention: TM Legal Liaison Team	 	Workhorse Technologies Inc.
	PNC Bank, National Association	 	USD	 	41-0284-5707	 	500 First Avenue 
Mailstop P7-PFSC-3-B 
Pittsburgh, PA 15219 
Attention: TM Legal Liaison Team	 	Workhorse Technologies Inc.

  

     

     

    

 

Schedule VIII

 

List of Commercial Tort Claims

 

None.

 

     

     

    

 

Schedule IX

 

List of Interests in
Real Property 

 

	Complete Street and Mailing Address, 
including County
    and Zip Code	 	Company/Subsidiary
	100 Commerce Drive, Loveland, Ohio 45140	 	Workhorse Properties Inc.
	940 S. State Road 32, Union City, Indiana  47390	 	Workhorse Motor Works Inc
	119 Northeast Drive, Loveland, Ohio 45140	 	Workhorse Group Inc.
	4760 Airport Road, Cincinnati, Ohio 45226	 	Workhorse Technologies Inc.

 

     

     

    

 

Schedule X

 

List of Titled Equipment

 

	Year	 	Make	 	Model	 	Vehicle ID#
	2011	 	Chevrolet Silverado	 	C3500	 	1GC5CZCG2BZ132623
	2010	 	Gator Trailer	 	 	 	4Z1HD2029AS014857
	2010	 	Mercedes Benz	 	ML450 Hybrid	 	4JGBB9FB4AA516434
	2010	 	Mercedes Benz	 	ML450	 	4JGBB9FBXAA518267
	2010	 	Mercedes Benz	 	ML450	 	4JGBB9FB8AA518140
	2012	 	Mercedes Benz	 	ML350	 	4JGDA5HBXCA008358
	2010	 	Mercedes Benz	 	ML450	 	4JGBB9FB5AA526633
	2007	 	Saturn Sky	 	 	 	1G8MB35B87Y106581
	2012	 	Mule Egen	 	 	 	5B4MDG199D3447867
	1999	 	Workhorse P30	 	 	 	5B4HP32R8X3308074
	2010	 	Mercedes Benz	 	ML450	 	4JGBB9FBXAA527079
	2014	 	BMW	 	I3 REX	 	WBY1Z4C53EV275024
	2014	 	BMW	 	I3 REX	 	WBY1Z4C51EVX62903
	2017	 	Chevrolet Silverado	 	1500	 	1GCVKNEH0HZ139161
	2018	 	Chevrolet Silverado	 	3500	 	1GC4KYCY1JF110811
	2015	 	Workhorse W-88	 	Alpha	 	452521
	2015	 	Workhorse W-88	 	Alpha	 	452522
	2015	 	Workhorse W-88	 	Alpha	 	452523
	2015	 	Workhorse W-88	 	Alpha	 	452524
	2015	 	Workhorse W-88	 	Alpha	 	452525Exhibit 10.3

 

Execution Version

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT
is made as of December 31, 2018 (the “Agreement”), among Workhorse Group Inc., a Nevada corporation, Workhorse
Technologies Inc., an Ohio corporation, Workhorse Properties Inc., an Ohio corporation, Workhorse Motor Works Inc., an Indiana
corporation, and Surefly, Inc., a Delaware corporation (each a “Pledgor” and, collectively, the “Pledgors”)
and Wilmington Trust National Association, in its capacity as agent (the “Agent”) for the Lenders (as defined
below) (in such capacity, together with its successors and assigns, the “Pledgee”).

 

WHEREAS:

 

A. Pursuant to that
certain Credit Agreement, dated as of the date hereof (as amended, restated, supplemented and/or otherwise modified from time to
time, the “Credit Agreement”), by and among Workhorse Group Inc., a Nevada corporation (the “Borrower”),
the financial institutions from time to time party thereto (collectively, with their permitted successors and assignees, the “Lenders”)
and Pledgee, the Lenders have agreed to provide certain financial accommodations to the Borrower;

 

B. Each Pledgor legally
and beneficially owns the interests specified on Exhibit A hereto and the corporations, limited liability companies and
other entities set forth on Exhibit A and each other corporation or other entity, the stock or other equity interests and
securities of which are owned or acquired by such Pledgor and described on a supplement to Exhibit A from time to time delivered
by any Pledgor, and otherwise satisfactory to the Agent and the Required Lenders, are referred to herein collectively as the “Pledged
Entities”, and each a “Pledged Entity”; provided that the Pledgor represents and warrants that, as
of the date hereof, the Pledged Entities specified on Exhibit A are the only Pledged Entities.

 

C. Pursuant to a Security
Agreement dated as of the date hereof by and among the Pledgors and the Pledgee (as the same may be amended, restated, modified
or supplemented and in effect from time to time, the “Security Agreement”), each of the Pledgors has granted
the Pledgee, for its benefit and the benefit of the Lenders, a first priority security interest in, lien upon and pledge of all
of such Pledgor’s rights in such Pledgor’s Collateral (as defined in the Security Agreement and the other Collateral
Documents).

 

D. To induce the Lenders
to enter into the Credit Agreement and to make the financial accommodations available to the Borrower under the Credit Agreement,
and in order to secure the payment and performance by the Borrower of the Obligations, each Pledgor has agreed to pledge to the
Pledgee, for its benefit and the benefit of the Lenders, all of the capital stock and other equity interests and securities (the
“Pledged Equity”) of the Pledged Entities now or hereafter owned or acquired by such Pledgor to secure the Obligations.

 

     

     

    

  

NOW, THEREFORE,
in consideration of the premises and in order to induce the Lenders to provide certain financial accommodations under the Credit
Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Pledgor
hereby agrees with the Pledgee as follows:

 

1. Defined Terms.
Unless otherwise defined herein, all capitalized terms used herein shall have the meanings given them in the Credit Agreement.

 

2. Pledge.

 

(a) Each Pledgor hereby
pledges, assigns, hypothecates, transfers, delivers and grants to the Pledgee, for its benefit and the benefit of the Lenders,
a first priority lien on and perfected security interest in (i) all of the Pledged Equity and other equity interests of the Pledged
Entities now owned or hereafter acquired by such Pledgor (collectively, the “Pledged Interests”), (ii) any other
shares of Pledged Equity hereafter pledged or referred to be pledged to Pledgee pursuant to this Agreement; (iii) all “investment
property” as such term is defined in §9-102(a)(49) of the UCC (as defined below) with respect thereto; (iv) any “security
entitlement” as such term is defined in § 8-102(a)(17) of the UCC with respect thereto; (v) all books and records relating
to the foregoing; and (vi) all Accessions and Proceeds (as each is defined in the UCC) of the foregoing, including, without limitation,
all distributions (cash, stock or otherwise), dividends, stock dividends, securities, cash, instruments, rights to subscribe, purchase
or sell, and other property, rights and interest that such Pledgor is at any time entitled to receive or is otherwise distributed
in respect of, or in exchange for, any or all of the Pledged Collateral (as defined below), and without affecting the obligations
of any Pledgor under any provision of the Security Agreement, in the event of any consolidation or merger in which any Pledgor
is not the surviving corporation, all shares of each class of the Pledged Equity of the successor entity formed by or resulting
from such consolidation or merger (the collateral described in clauses (i) through (vi) of this Section 2 being collectively
referred to as the “Pledged Collateral”), as collateral security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. All of the Pledged Interests now owned
by any Pledgor which are presently represented by certificates are listed on Exhibit A hereto, which certificates, with
undated assignments separate from certificates or stock/membership interest powers duly executed in blank by such Pledgor and irrevocable
proxies, are being delivered to the Pledgee simultaneously herewith. Upon the creation or acquisition of any new Pledged Interests,
each Pledgor shall execute a supplement to Exhibit A (a “Pledge Supplement”) and deliver such Pledge
Supplement to the Pledgee and the Lenders. Any Pledged Collateral described in a Pledge Supplement delivered by any Pledgor shall
thereafter be deemed to be listed on Exhibit A hereto. The Pledgee shall maintain possession and custody of the certificates
representing the Pledged Interests and any additional Pledged Collateral.

 

(b) Each Pledged Interest
consisting of either (i) a membership interest in a Person that is a limited liability company or (ii) a partnership interest in
a Person that is a partnership (if any), in the case of clauses (i) and (ii), (x) is not and will not be evidenced by a certificate
and (y) is not and will not be deemed a “security” governed by Article 8 of the UCC.

 

3. Representations
and Warranties of Pledgors. Each Pledgor represents and warrants to the Pledgee, and covenants to the Pledgee, that:

 

(a) Exhibit A
sets forth (i) the authorized capital stock and other equity interests of each Pledged Entity, (ii) the number of shares of capital
stock and other equity interests of each Pledged Entity that are issued and outstanding as of the date hereof and (iii) the percentage
of the issued and outstanding shares of capital stock and other equity interests of each Pledged Entity held by such Pledgor. Such
Pledgor is the record and beneficial owner of, and has good and marketable title to, the Pledged Interests of such Pledgor, and
such shares are and will remain free and clear of all pledges, liens, security interests and other encumbrances and restrictions
whatsoever, except the liens and security interests in favor of the Pledgee created by this Agreement (other than Liens in favor
of Arosa Opportunistic Fund LP, which shall be released on the Closing Date) and Permitted Liens;

 

    2

     

    

  

(b) Except as set forth
on Exhibit A, there are no outstanding options, warrants or other similar agreements with respect to the Pledged Interests
or any of the other Pledged Collateral;

 

(c) This Agreement is
the legal, valid and binding obligation of each Pledgor, enforceable against such Pledgor in accordance with its terms except to
the extent that such enforceability is subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and
moratorium laws and other laws of general application affecting enforcement of creditors’ rights generally, or the availability
of equitable remedies, which are subject to the discretion of the court before which an action may be brought;

 

(d) The Pledged Interests
have been duly and validly authorized and issued, are fully paid and non-assessable, and the Pledged Interests listed on Exhibit
A constitute all of the issued and outstanding capital stock or other equity interests of the Pledged Entities;

 

(e) No material consent,
approval or authorization of or designation or filing with any governmental or regulatory authority on the part of any Pledgor
is required in connection with the pledge and security interest granted under this Agreement (other than (i) any consent or approval
which has been obtained and is in full force and effect and (ii) recordings and filings in connection with the Liens granted to
the Agent under the Collateral Documents);

 

(f) The execution, delivery
and performance of this Agreement will not violate (i) any material provision of any Applicable Law, (ii) in any material respect
any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, which are applicable to any Pledgor,
(iii) the articles or certificate of incorporation, certificate of formation, bylaws or any other similar organizational documents
of any Pledgor or any Pledged Entity or of any securities issued by any Pledgor or any Pledged Entity, (iv) in any material respect
any mortgage, indenture, lease, contract, or other agreement, instrument or undertaking to which any Pledgor or any Pledged Entity
is a party or which is binding upon any Pledgor or any Pledged Entity or upon any of the assets of any Pledgor or any Pledged Entity,
and will not result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets
of any Pledgor or any Pledged Entity, except as otherwise contemplated by this Agreement;

 

(g) The pledge, assignment
and delivery of the Pledged Interests and the other Pledged Collateral pursuant to this Agreement creates a valid lien on and perfected
security interest in such Pledged Interests and Pledged Collateral and the proceeds thereof in favor of the Pledgee, subject to
no prior pledge, lien, mortgage, hypothecation, security interest, charge, option or encumbrance, other than Permitted Liens, or
to any agreement purporting to grant to any third party a security interest in the property or assets of Pledgor which would include
the Pledged Interests or any other Pledged Collateral (other than Liens in favor of Arosa Opportunistic Fund LP, which shall be
released simultaneously with the funding of the Loans on the Closing Date). Until this Agreement is terminated pursuant to Section
11 hereof, each Pledgor covenants and agrees that it will defend, for the benefit of the Pledgee, the Pledgee’s right, title
and security interest in and to the Pledged Interests, the other Pledged Collateral and the proceeds thereof against the claims
and demands of all other persons or entities; and

 

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(h) No Pledgor nor any
Pledged Entity (i) will become a person whose property or interests in property are blocked or subject to blocking pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001)), (ii) will engage in any dealings or transactions prohibited
by Section 2 of such executive order, or (iii) will otherwise become a person on the list of Specially Designated Nationals and
Blocked Persons or a target of limitations or prohibitions under any other Office of Foreign Asset Control regulation or executive
order.

 

4. Dividends, Distributions,
Etc. If, prior to the Payment in Full of the Obligations, any Pledgor shall receive any certificate (including, without limitation,
any certificate representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital,
or issued in connection with any reorganization, merger or consolidation), or any options or rights, whether as an addition to,
in substitution for, or in exchange for any of the Pledged Interests or otherwise, such Pledgor agrees, in each case, to accept
the same as the Pledgee’s agent and to hold the same in trust for the Pledgee, and to deliver the same promptly (but in any
event within five (5) Business Days of receipt) to Pledgee in the exact form received, with the endorsement of such Pledgor when
necessary and/or with appropriate undated assignments separate from certificates or stock powers duly executed in blank, to be
held by the Pledgee subject to the terms hereof, as additional Pledged Collateral. The applicable Pledgor shall promptly deliver
to the Pledgee (i) a Pledge Supplement with respect to such additional certificates, and (ii) any financing statements or amendments
to financing statements as requested by the Pledgee. Each Pledgor hereby authorizes the Pledgee to attach each such Pledge Supplement
to this Agreement. Except as provided in Section 5(b) below, all sums of money and property so paid or distributed in respect
of the Pledged Interests which are received by any Pledgor shall, until paid or delivered to the Pledgee, be held by each Pledgor
in trust as additional Pledged Collateral.

 

5. Voting Rights:
Dividends: Certificates.

 

(a) So long as no Event
of Default has occurred and is continuing, each Pledgor shall be entitled (subject to the other provisions hereof, including, without
limitation, Section 8 below) to exercise its voting and other consensual rights with respect to the Pledged Interests and
otherwise exercise the incidents of ownership thereof in any manner not inconsistent with this Agreement, the Credit Agreement
and/or any of the other Loan Documents. Each Pledgor hereby grants to the Pledgee or its nominee, an irrevocable proxy to exercise
all voting, corporate and limited liability company rights relating to the Pledged Interests in any instance, which proxy shall
be effective, at the discretion of the Pledgee (as determined, and to be exercised, at the direction of the Required Lenders),
upon the occurrence and during the continuance of an Event of Default so long as the Pledgee has notified the relevant Pledgor
or Pledgors of its intent to exercise its voting power under this clause prior to the exercise thereof. Upon the request of the
Pledgee at any time, each Pledgor agrees to deliver to the Pledgee such further evidence of such irrevocable proxy or such further
irrevocable proxies to vote the Pledged Interests as the Pledgee may reasonably request.

 

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(b) So long as no Event
of Default shall have occurred and be continuing, each Pledgor shall be entitled to receive cash dividends or other distributions
made in respect of the Pledged Interests, to the extent permitted to be made pursuant to the terms of the Credit Agreement. Upon
the occurrence and during the continuance of an Event of Default, in the event that any Pledgor, as record and beneficial owner
of the Pledged Interests, shall have received or shall have become entitled to receive, any cash dividends or other distributions
in the ordinary course, such Pledgor shall deliver to the Pledgee, and the Pledgee shall be entitled to receive and retain, for
the benefit of the Pledgee and the Lenders, all such cash or other distributions as additional security for the Obligations.

 

(c) Subject to any sale
or other disposition by the Pledgee of the Pledged Interests, any other Pledged Collateral or other property pursuant to this Agreement,
upon the Payment in Full and the termination of this Agreement pursuant to Section 11 hereof, the liens and security interests
hereby granted shall automatically terminate and all rights to the Pledged Interests, the other Pledged Collateral and any other
property then held as part of the Pledged Collateral in accordance with the provisions of this Agreement shall revert to the applicable
Pledgor and the Pledgee, promptly following such termination, will deliver possession of the Pledged Interests, the other Pledged
Collateral and any other property then held as part of the Pledged Collateral to the applicable Pledgor or to such other persons
or entities as shall be legally entitled thereto.

 

(d) Each Pledgor shall
cause all Pledged Interests (other than the Pledged Interests consisting of limited liability company or partnership interests)
to be certificated at all times while this Agreement is in effect.

 

6. Rights of Pledgee.
Pledgee shall not be liable for failure to collect or realize upon the Obligations or any collateral security or guaranty therefor,
or any part thereof, or for any delay in so doing, nor shall Pledgee be under any obligation to take any action whatsoever with
regard thereto. Any or all of the Pledged Interests held by Pledgee hereunder may, if an Event of Default has occurred and is continuing
and so long as the Pledgee has notified the relevant Pledgor or Pledgors of its intent to exercise its power of registration under
this sentence prior to the exercise thereof, be registered in the name of Pledgee or its nominee, and Pledgee or its nominee may
thereafter without notice exercise (at the direction of the Required Lenders) all voting and corporate rights at any meeting with
respect to any Pledged Entity and exercise any and all rights of conversion, exchange, subscription or any other rights, privileges
or options pertaining to any of the Pledged Interests as if it were the absolute owner thereof, including, without limitation,
the right to vote in favor of, and to exchange at its discretion (at the direction of the Required Lenders) any and all of the
Pledged Interests upon the merger, consolidation, reorganization, recapitalization or other readjustment with respect to any Pledged
Entity or upon the exercise by any Pledged Entity, any Pledgor or Pledgee of any right, privilege or option pertaining to any of
the Pledged Interests, and in connection therewith, to deposit and deliver any and all of the Pledged Interests with any committee,
depository, transfer agent, registrar or other designated agency upon such terms and conditions as Pledgee may reasonably determine,
all without liability except to account for property actually received by Pledgee, but Pledgee shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing.

 

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7. Remedies.
Upon the occurrence and during the continuance of an Event of Default, the Pledgee may (and, at the direction of the Required Lenders,
shall) exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise
available to it to the fullest extent permitted by the Applicable Law, all the rights and remedies of a secured party under the
Uniform Commercial Code (“UCC”) of the jurisdiction applicable to the affected Pledged Collateral from time
to time. Without limiting the foregoing, the Pledgee may (and, at the direction of the Required Lenders, shall), without demand
of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public
or private sale) to or upon any Pledgor or any other person or entity (all and each of which demands, advertisements and/or notices
are hereby expressly waived), upon the occurrence and during the continuance of an Event of Default forthwith collect, receive,
appropriate and realize upon the Pledged Collateral, or any part thereof, and/or may forthwith date and otherwise fill in the blanks
on any assignments separate from certificates or stock power or otherwise sell, assign, give an option or options to purchase,
contract to sell or otherwise dispose of and deliver said Pledged Collateral, or any part thereof, in one or more portions at one
or more public or private sales or dispositions, at any exchange or broker’s board or at any of the Pledgee’s offices
or elsewhere upon such terms and conditions as the Pledgee may deem advisable and at such prices as it may deem best, for any combination
of cash and/or securities or other property or on credit or for future delivery without assumption of any credit risk, with the
right of the Pledgee or any Lender (or the designee of any of them) upon any such sale, public or private, to purchase the whole
or any part of said Pledged Collateral so sold, free of any right or equity of redemption of any Pledgor, which right or equity
is hereby expressly waived or released. The Pledgee (at the direction of the Required Lenders) shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization, sale or disposition, after deducting all costs and expenses
of every kind incurred therein or incidental to the safekeeping of any and all of the Pledged Collateral or in any way relating
to the rights of the Pledgee hereunder, including reasonable attorneys’ fees and legal expenses, to the payment, in whole
or in part, of the Obligations, in such order as the Pledgee (at the direction of the Required Lenders) may elect. The Pledgor
shall remain liable for any deficiency remaining unpaid after such application. Only after so paying over such net proceeds and
after the payment by the Pledgee (at the direction of the Required Lenders) of any other amount required by any provision of law,
including, without limitation, Section 9-608 of the UCC, need the Pledgee (at the direction of the Required Lenders) account for
the surplus, if any, to any Pledgor. Each Pledgor agrees that the Pledgee need not give more than ten (10) days’ notice of
the time and place of any public sale or of the time after which a private sale or other intended disposition is to take place
and that such notice is reasonable notification of such matters. No notification need be given to any Pledgor if it has signed
after default a statement renouncing or modifying any right to notification of sale or other intended disposition. Notwithstanding
any provision in any operating agreement or shareholder agreement of any issuer of the Pledged Collateral or any other Applicable
Law to the contrary, the undersigned constituting all of the members and/or shareholders of each issuer hereby acknowledge that
such member and/or shareholder, as applicable, may pledge to the Pledgee all of such member’s and/or shareholder’s
right, title and interest in such issuer, and upon foreclosure the successful bidder (which may include the Pledgee or any Lender)
will be deemed admitted as a member and/or shareholder, as applicable, of such issuer, and will automatically succeed to all of
such pledged right, title and interest, including without limitation such members’ and/or shareholder’s limited liability
company and equity interests, right to vote and participate in the management and business affairs of the issuer, right to a share
of the profits and losses of the issuer and right to receive distributions from the issuer.

 

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8. No Disposition,
Etc. Until the irrevocable Payment in Full of the Obligations, each Pledgor agrees that it will not sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the Pledged Interests or any other Pledged Collateral,
nor will any Pledgor create, incur or permit to exist any pledge, lien, mortgage, hypothecation, security interest, charge, option
or any other encumbrance with respect to any of the Pledged Interests or any other Pledged Collateral, or any interest therein,
or any proceeds thereof, except for the lien and security interest of the Pledgee provided for by this Agreement, the Security
Agreement, the other Collateral Documents and Permitted Liens.

 

9. Sale of Pledged
Interests.

 

(a) Each Pledgor recognizes
that the Pledgee may be unable to effect a public sale or disposition (including, without limitation, any disposition in connection
with a merger of a Pledged Entity) of any or all the Pledged Interests by reason of certain prohibitions contained in the Securities
Act of 1933, as amended, and applicable state securities laws, but may be compelled to resort to one or more private sales or dispositions
thereof to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities for their
own account, for investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges and agrees that
any such private sale or disposition may result in prices and other terms (including the terms of any securities or other property
received in connection therewith) less favorable to the seller than if such sale or disposition were a public sale or disposition
and each Pledgor agrees that it is not commercially unreasonable for the Pledgee to engage in any such private sales or dispositions
under such circumstances. The Pledgee shall be under no obligation to delay a sale or disposition of any of the Pledged Interests
in order to permit any Pledgor or any Pledged Entity to register such securities for public sale under the Securities Act of 1933,
as amended, or under applicable state securities laws, even if such Pledgor or such Pledged Entity would agree to do so.

 

(b) Each Pledgor further
agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such sales or dispositions
of the Pledged Interests valid and binding and in compliance with any and all Applicable Laws having jurisdiction over any such
sales or dispositions, all at such Pledgor’s expense; provided that no Pledgor shall have any obligation to register
the Pledged Interests as securities under the Securities Act of 1933, as amended, or the applicable state securities laws solely
by virtue of this Section 9(b). Each Pledgor further agrees that a breach of any of the covenants contained in Sections
4, 5(a), 5(b), 8, 9 and 23 will cause irreparable injury to the Pledgee and the Lenders
and that the Pledgee and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, agrees, without
limiting the right of the Pledgee or the Lenders to seek and obtain specific performance of other obligations of such Pledgor contained
in this Agreement, that each and every covenant referenced above shall be specifically enforceable against such Pledgor, and such
Pledgor 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.

 

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(c) Each Pledgor further
agrees not to exercise any and all rights of subrogation it may have against a Pledged Entity upon the sale or disposition of all
or any portion of the Pledged Collateral by the Pledgee pursuant to the terms of this Agreement until the termination of this Agreement
in accordance with Section 11 below.

 

10. No Waiver; Cumulative
Remedies. The Pledgee shall not by any act, delay, omission or otherwise be deemed to have waived any of its remedies hereunder,
and no waiver by the Pledgee shall be valid unless in writing and signed by the Pledgee, and then only to the extent therein set
forth. A waiver by the Pledgee of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right
or remedy which the Pledgee would otherwise have on any further occasion. No course of dealing between any Pledgor and the Pledgee
and no failure to exercise, nor any delay in exercising on the part of the Pledgee or the Lenders of, any right, power or privilege
hereunder or under the other Loan Documents shall impair such right or remedy or operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies herein provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights or remedies provided by law or in the Credit Agreement.

 

11. Termination.
This Agreement and the Liens and security interests granted hereunder shall automatically terminate upon the Payment in Full of
the Obligations and the Pledgee, at the Pledgors’ sole cost and expense, shall promptly following such termination return
any Pledged Interests or other Pledged Collateral then held by the Pledgee in accordance with the provisions of this Agreement
to the appropriate Pledgor.

 

12. Possession of
Collateral. Beyond the exercise of reasonable care to assure the safe custody of the Pledged Interests in the physical possession
of the Pledgee pursuant hereto, neither the Pledgee, nor any nominee of the Pledgee, shall have any duty or liability to collect
any sums due in respect thereof or to protect, preserve or exercise any rights pertaining thereto (including any duty to ascertain
or take action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to the Pledged Collateral
and any duty to take any necessary steps to preserve rights against any parties with respect to the Pledged Collateral), and shall
be relieved of all responsibility for the Pledged Collateral upon surrendering such Pledged Collateral to any Pledgor. Each Pledgor
assumes the responsibility for being and keeping itself informed of the financial condition of each Pledged Entity and of all other
circumstances bearing upon the risk of non-payment of the Obligations, and the Pledgee shall have no duty to advise any Pledgor
of information known to the Pledgee regarding such condition or any such circumstance. The Pledgee shall have no duty to inquire
into the powers of a Pledged Entity or its officers, directors, managers, members, partners or agents thereof acting or purporting
to act on its behalf.

 

13. Pledgee Appointed
Attorney-In-Fact. Each Pledgor hereby irrevocably appoints the Pledgee as such Pledgor’s attorney-in-fact, with full
authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time in the Pledgee’s
discretion, to take any action and to execute any instrument that the Pledgee deems reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to
such Pledgor representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same, when and to the extent permitted by this Agreement; provided that the power of
attorney granted hereunder shall only be exercised by the Pledgee after the occurrence and during the continuance of an Event of
Default.

 

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14. Governing Law;
Jurisdiction; Service of Process; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of New York. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE
OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT’S OPTION (AT THE DIRECTION OF THE REQUIRED LENDERS),
IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH LOAN PARTY
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PLEDGORS, THE AGENT AND THE LENDERS EACH HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH
OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

15. Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided
that a facsimile, .pdf or similar electronically transmitted signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the signature were an original signature.

 

16. Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

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17. Severability.
If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.

 

18. ENTIRE AGREEMENT;
AMENDMENTS. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN
ANY PLEDGOR, THE PLEDGEE, THEIR AFFILIATES AND PERSONS ACTING ON THEIR BEHALF WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND
THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS AND THE OTHER INSTRUMENTS REFERENCED HEREIN AND THEREIN, 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 THE PLEDGEE NOR ANY PLEDGOR 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. EXCEPT AS SET FORTH IN SECTION 2(A) HEREOF, NO PROVISION OF THIS AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED OTHER
THAN BY AN INSTRUMENT IN WRITING SIGNED BY THE PLEDGORS AND THE PLEDGEE.

 

19. 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 Security Agreement.

 

20. Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted
assigns. No Pledgor shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the
Pledgee. The Pledgee may assign its rights hereunder (a) without the consent of the Pledgors to any Eligible Assignee or (b) with
the Pledgors’ consent (not to be unreasonably withheld, conditioned or delayed) to any other Person acceptable to the Required
Lenders and the Pledgee; provided that the Pledgors’ consent under this clause (b) shall not be required if an Event of Default
has occurred and is then continuing, and in each event such assignee shall be deemed to be the Pledgee hereunder with respect to
such assigned rights.

 

21. No Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted
assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person or entity.

 

22. Survival.
All representations, warranties, covenants and agreements of each Pledgor and the Pledgee shall survive the execution and delivery
of this Agreement.

 

23. Further Assurances.
Each Pledgor agrees that it will, at any time and from time to time upon the reasonable written request of the Pledgee, execute
and deliver all assignments separate from certificates or stock powers, financing statements and such further documents and do
such further acts and things as the Pledgee may reasonably request consistent with the provisions hereof in order to carry out
the intent and accomplish the purpose of this Agreement and the consummation of the transactions contemplated hereby.

 

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24. 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.

 

25. Pledgee Authorized.
Each Pledgor hereby authorizes the Pledgee to file one or more financing or continuation statements and amendments thereto (or
similar documents required by any laws of any applicable jurisdiction) relating to all or any part of the Pledged Interests or
other Pledged Collateral without the signature of such Pledgor.

 

26. Pledgor Acknowledgement.
Each Pledgor acknowledges receipt of an executed copy of this Agreement. Each Pledgor waives the right to receive any amount that
it may now or hereafter be entitled to receive (whether by way of damages, fine, penalty, or otherwise) by reason of the failure
of the Pledgee to deliver to any Pledgor a copy of any financing statement or any statement issued by any registry that confirms
registration of a financing statement relating to this Agreement.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF,
the parties hereto have caused this Pledge Agreement to be duly executed and delivered on the date first above written.

 

	 	PLEDGORS:
	 	 
	 	WORKHORSE GROUP Inc.
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE TECHNOLOGIES INC. 
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE PROPERTIES INC. 
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE MOTOR WORKS INC. 
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	SUREFLY, INC. 
	 	 	 
	 	By:	/s/ Duane A. Hughes
	 	Name:	Duane A. Hughes
	 	Title:	CEO

 

[Signature Page to Pledge Agreement]

  

     

     

    

 

	 	PLEDGEE:
	 	 
	 	WILMINGTON TRUST, NATIONAL ASSOCIATION, as Agent
	 	 	 
	 	By:	/s/ Jamie Roseberg
	 	Name:	Jamie Roseberg
	 	Title:	Banking Officer

 

[Signature Page to Pledge Agreement]

  

     

     

    

 

ACKNOWLEDGEMENT 

 

Notwithstanding anything
to the contrary contained in any operating agreement, shareholder agreement, organizational document or business corporation or
limited liability company law of the state of formation of any Pledged Entity, each of the undersigned hereby (i) acknowledges
receipt of a copy of the foregoing Pledge Agreement, (ii) agrees promptly to note on its books and records the grant of the security
interest in the stock or other equity interests of the undersigned as provided in such Pledge Agreement, (iii) acknowledges that
any member and/or shareholder of any Pledged Entity may pledge, grant a security interest in, or hypothecate all or a portion of
such member’s and/or shareholder’s right, title and interest in such Pledged Entity and upon foreclosure the successful
bidder (which may include the Agent, any Lender or any such party’s designee) will be deemed admitted as a member and/or
shareholder, as applicable, of such Pledged Entity and will automatically succeed to all of such pledged right, title and interest,
including, without limitation, such member’s and/or shareholder’s equity interests, right to vote and participate in
the management and business affairs of the Pledged Entity, right to a share of the profits and losses of the Pledged Entity and
right to receive distributions from the Pledged Entity; (iv) waives any restrictions on the Pledgee’s ability and/or right
to sell any equity interests in such Pledged Entity in accordance with the Pledge Agreement, (v) consents to the transactions contemplated
by the foregoing Pledge Agreement; (vi) waives any and all obligations of the members and/or shareholders of any Pledged Entity
to notify such Pledged Entity’s other members and/or shareholders of any of the actions set forth in the foregoing clause
“(iii)” (each, a “Transfer”), (vii) waives any and all rights of first refusal in connection with
any Transfer and (viii) acknowledges that no stock or membership interest certificate shall require that any restrictive legend
be included thereon, including without limitation, any legend restricting the sale, pledge, hypothecation or other transfer of
the equity interests evidenced by such certificate.

 

Dated: December 31, 2018

 

[Signature page follows.]

 

     

     

    

 

	 	PLEDGED ENTITIES:
	 	 
	 	WORKHORSE GROUP Inc.
	 	 	 
	 	By:	/s/ Stephen S. Burns  
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE TECHNOLOGIES INC. 
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE PROPERTIES INC. 
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	WORKHORSE MOTOR WORKS INC. 
	 	 	 
	 	By:	/s/ Stephen S. Burns
	 	Name:	Stephen S. Burns
	 	Title:	CEO
	 	 	 
	 	SUREFLY, INC. 
	 	 	 
	 	By:	/s/ Duane A. Hughes
	 	Name:	Duane A. Hughes
	 	Title:	CEO

 

     

     

    

 

Exhibit A

 

SUBJECT SECURITIES

	 
Pledged Entity 
	 	Pledgor	 	Percentage of
 Ownership
	 	 	Shares	 	 	Certificate Number(s)
	   Workhorse Technologies Inc.	 	Workhorse Group Inc.	 	 	100	%	 	 	1,000	 	 	WT-001
	Workhorse Motor Works Inc	 	Workhorse Group Inc.	 	 	100	%	 	 	200	 	 	WMW-001
	Workhorse Properties Inc.	 	Workhorse Group Inc.	 	 	100	%	 	 	1,000	 	 	WP-001
	Surefly, Inc.	 	Workhorse Technologies Inc.	 	 	100	%	 	 	1,000	 	 	C-001

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00290-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00290-of-00352.parquet"}]]