NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT (the “Agreement”), dated as of October 12, 2020, is
by and among Workhorse Group Inc., a Nevada corporation with offices located at
100 Commerce Drive, Loveland, Ohio 45140 (the “Company”), each subsidiary of the
Company (a “Subsidiary” and collectively, the “Subsidiaries”), as guarantors
(the “Guarantors”), and each of the investors listed on Schedule I attached
hereto (individually, a “Buyer” and collectively, the “Buyers”).
RECITALS
A.The Company has authorized a new series of 4.00% Senior Secured Convertible
Notes (the “Convertible Notes”) pursuant to that certain Indenture, in the form
attached hereto as Exhibit A, to be dated on or about October 14, 2020 (the
“Indenture”) by and among the Company, the Guarantors and U.S. Bank National
Association, as trustee (the “Trustee”) and collateral agent (the “Collateral
Agent”), which Convertible Notes shall be convertible into shares of the
Company’s common stock, par value $0.001 per share (together with any capital
stock into which such common stock shall have been changed or any share capital
resulting from a reclassification of such common stock, the “Common Stock”)
(such underlying shares of Common Stock issuable pursuant to the terms of the
Convertible Notes, including, without limitation, upon conversion, redemption,
payment of interest or otherwise, collectively, the “Conversion Shares”).
B.The Company has authorized the issuance of shares of its Common Stock to the
Buyers in connection with this Agreement.
C.Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement, the aggregate principal amount of
Convertible Notes set forth opposite such Buyer’s name in column (3) on Schedule
I hereto.
D.At the Closing, the Company and Antara Capital LP shall execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit B (the
“Registration Rights Agreement”).
E.At the Closing (as defined below), the parties hereto shall execute and
deliver a Security Agreement, in the form attached hereto as Exhibit C (the
“Security Agreement”), pursuant to which the Company and each Guarantor has
agreed to grant a first priority security interest to the holders of the
Convertible Notes in substantially all of its assets.
F.The Convertible Notes and Conversion Shares are collectively referred to
herein as the “Securities.”
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Guarantors and
each Buyer hereby agree as follows:
1.PURCHASE AND SALE OF CONVERTIBLE NOTES.
(a)Purchase of Convertible Notes. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 5 and 6 below, the Company shall issue and sell
to each Buyer, and each Buyer severally, but not jointly, agrees to purchase
from the Company on the Closing Date the aggregate principal amount of
Convertible Notes as is set forth opposite such Buyer’s name in column (3) on
Schedule I hereto.
(b)Closing. The closing (the “Closing”) of the purchase of the Convertible Notes
by the Buyers shall occur at the offices of Milbank LLP, 2029 Century Park East,
33rd Floor, Los Angeles, CA 90067. The date and time of the Closing shall be
9:00 a.m. (New York City time) on or about October 14, 2020 (the “Closing Date”)
or, if later, on the first (1st) Business Day on which the conditions to the
Closing set forth in Sections 5(a) and 6(a) below are satisfied or waived (or
such other date as is mutually agreed to by the Company and each Buyer). As used
herein “Business Day” means any day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law or executive order to close or be closed; provided, however, for
clarification, commercial banks in the City of New York shall not be deemed to
be authorized or required by law or executive order to close or be closed due to
“stay at home”, “shelter-in-place”, “non-essential employee” or any other
similar orders or restrictions or the closure of any physical branch locations
at the direction of any governmental authority so long as the electronic funds
transfer systems (including for wire transfers) of commercial banks in the City
of New York are open for use by customers on such day.
(c)Convertible Notes Purchase Price. The aggregate purchase price for the
Convertible Notes to be purchased by each Buyer (the “Purchase Price”) shall be
the amount set forth opposite such Buyer’s name in column (4) on Schedule I
hereto.
(d)Form of Payment for Convertible Notes. On the Closing Date, (i) each Buyer
shall pay its respective Purchase Price to the Company for the Convertible Notes
to be issued and sold to such Buyer at the Closing set forth opposite such
Buyer’s name in column (3) and column (4) on Schedule I on the Closing Date, as
applicable, by wire transfer of immediately available funds in accordance with
the Flow of Funds Letter (as defined below) and (ii) the Company shall deliver
to each Buyer the aggregate principal amount of Convertible Notes as is set
forth opposite such Buyer’s name in column (3) of Schedule I, duly executed on
behalf of the Company and registered in the name of Cede & Co., as nominee for
the Depository Trust Company (“DTC”).
(e)Delivery of Convertible Notes. Upon the prior receipt of a valid DWAC Deposit
(as defined below) initiated by each Buyer, the Trustee will approve the DWAC
Deposit to cause to be delivered the beneficial interests in the Convertible
Notes allocable to each
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Buyer to the DTC account specified in Schedule I to this Agreement. At or prior
to 10:00 a.m. New York City time on the Closing Date, each Buyer acquiring an
interest in the Convertible Notes agrees to direct the eligible DTC participant
through which such Buyer will hold its beneficial interest in the Convertible
Notes to submit a deposit instruction through DTC’s DWAC program to the Trustee,
for the aggregate principal amount of the Convertible Notes (the “DWAC Deposit”)
it is purchasing pursuant to this Agreement. If the DWAC Deposit of any Buyer
does not conform to the beneficial interests in the Convertible Notes to be
issued to such Buyer pursuant to this Agreement, the Trustee shall promptly
notify the Company. If the beneficial interests in the Convertible Notes are not
delivered to any Buyer on the Closing Date as a result of an error in the DWAC
Deposit, such interests will be delivered on the first Business Day following
the Closing Date on which such error is corrected. Interests in the Convertible
Notes will initially be held only in “book-entry” form through DTC.
2.BUYER’S REPRESENTATIONS AND WARRANTIES.
Each Buyer, severally and not jointly, represents and warrants to the Company
and the Guarantors with respect to only itself that, as of the date hereof and
as of the Closing Date:
(a)Organization; Authority. Such Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.
(b)Validity; Enforcement. This Agreement and the Security Agreement have been
duly and validly authorized, executed and delivered on behalf of such Buyer and
shall constitute the legal, valid and binding obligations of such Buyer
enforceable against such Buyer in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
(c)No Conflicts. The execution, delivery and performance by such Buyer of this
Agreement and the Security Agreement and the consummation by such Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Buyer, or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Buyer is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws) applicable to such Buyer, except in the case of clauses (ii)
and (iii) above, for such conflicts, defaults, rights or violations which could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations
hereunder.
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(d)Purchase for Investment. The purchase of the Convertible Notes is for its own
account or for one or more separate accounts maintained by such Buyer or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of such Buyer’s or their
property shall at all times be within such Buyer’s or their control. Each Buyer
understands that the Convertible Notes have not been registered under the
Securities Act of 1933 (and the rules and regulations promulgated thereunder
from time to time in effect, the “Securities Act”) and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Convertible Notes.
(e)Source of Funds. That at least one of the following statements is an accurate
representation as to each source of funds (a “Source”) to be used by such Buyer
to pay the Purchase Price of the Convertible Notes to be purchased by such Buyer
hereunder:
(i)the Source is an “insurance company general account” (as the term is defined
in the United States Department of Labor’s Prohibited Transaction Exemption
(“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the NAIC (the
“NAIC Annual Statement”)) for the general account contract(s) held by or on
behalf of any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with such Buyer’s state of domicile; or
(ii)the Source is a separate account that is maintained solely in connection
with such Buyer’s fixed contractual obligations under which the amounts payable,
or credited, to any employee benefit plan (or its related trust) that has any
interest in such separate account (or to any participant or beneficiary of such
plan (including any annuitant)) are not affected in any manner by the investment
performance of the separate account; or
(iii)the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within
the meaning of the PTE 91-38 and, except as disclosed by such Buyer to the
Company in writing pursuant to this clause (c), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
(iv)the Source constitutes assets of an “investment fund” (within the meaning of
Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
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professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM
Exemption), no employee benefit plan’s assets that are managed by the QPAM in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or
by the same employee organization and managed by such QPAM, represent more than
20% of the total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM maintains an ownership interest in the
Company that would cause the QPAM and the Company to be “related” within the
meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM
and (ii) the names of any employee benefit plans whose assets in the investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within the
meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization, represent 10% or more of the assets of such investment
fund, have been disclosed to the Company in writing pursuant to this clause (d);
or
(v)the Source constitutes assets of a “plan(s)” (within the meaning of Part
IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset
manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption),
the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10%
or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e); or
(vi)the Source is a governmental plan; or
(vii)the Source is one or more employee benefit plans, or a separate account or
trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this clause (g); or
(viii)the Source is not deemed to be plan assets under ERISA.
As used in this Section 2(e), the terms “employee benefit plan,” “governmental
plan,” “plan assets” and “separate account” shall have the respective meanings
assigned to such terms in Section 3 of ERISA.
(f)QIB. That it is, and will be on the Closing Date, a “qualified institutional
buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the
Securities Act.
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(g)Investment Decision. That it has made its own investment decision based upon
its own judgment, due diligence and advice from such advisors as it has deemed
necessary and not upon any view expressed by any other Person (as defined
herein). Neither such inquiries nor any other due diligence investigations
conducted by it or its advisors or representatives, if any, shall modify, amend
or affect its right to rely on the Company’s representations and warranties
contained herein. It is not relying upon, and has not relied upon, any advice,
statement, representation or warranty made by any Person by or on behalf of the
Company, including, without limitation, except for the express statements,
representations and warranties of the Company made or contained in this
Agreement. Furthermore, it acknowledges that nothing in this Agreement or any
other materials presented by or on behalf of the Company to it in connection
with the purchase of the Convertible Notes constitutes legal, tax or investment
advice. Each Buyer has adequate means of providing for its current needs and
contingencies, has no need for liquidity with respect to its investment in the
Convertible Notes, and can withstand a complete loss of such investment in the
Convertible Notes. For purposes of this Agreement, “Person” means an individual,
a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any Governmental
Entity (as defined below) or any department or agency thereof.
(h)Accuracy of Representations. That it understands the Company is relying and
will rely upon the truth and accuracy of the foregoing representations,
acknowledgments and agreements in connection with the transactions contemplated
by this Agreement, and agrees that if any of the representations or
acknowledgments made by it are no longer accurate as of the Closing Date, or if
any of the agreements made by it are breached on or prior to the Closing Date,
it shall promptly notify the Company.
3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS.
The Company and the Guarantors, jointly and severally, represent and warrant to
each of the Buyers that, as of the date hereof and as of the Closing Date:
(a)Disclosure. All reports, schedules, forms, proxy statements, statements and
other documents required to be filed by the Company with the United States
Securities and Exchange Commission (the “SEC”), during the one year period prior
to the date hereof (other than Section 16 ownership filings) pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
“1934 Act”) (reports filed in compliance with the time period specified in Rule
12b-25 promulgated under the 1934 Act shall be considered timely for this
purpose) (all of the foregoing filed during the one year prior to the date
hereof and all exhibits and appendices included therein and financial
statements, notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”) when filed,
complied in all material respects with the 1933 Act. Each of the SEC Documents,
as of its date, did not, and at the Closing Date the SEC Documents taken as a
whole will not, contain any untrue statement of a material fact or omit to state
a material fact necessary in
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order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. There are no contracts or other documents
required to be described in the SEC Documents which have not been described or
filed as required. No event, liability, development or circumstance has occurred
or exists, or is reasonably expected to exist or occur with respect to the
Company and any of its Subsidiaries or any of their respective businesses,
properties, liabilities, prospects, operations (including results thereof) or
condition (financial or otherwise), that (i) would be required to be disclosed
by the Company under applicable securities laws on a registration statement on
Form S-1 filed with the SEC relating to an issuance and sale by the Company of
any shares of Common Stock and which has not been publicly announced, (ii) could
have a material adverse effect on any Buyer’s investment hereunder or (iii)
could have a Material Adverse Effect (as defined below).
(b)Organization and Qualification. The Company and each of its Subsidiaries are
entities duly organized and validly existing and in good standing under the laws
of the jurisdiction in which they are formed, and have the requisite power and
authority to own their properties and to carry on their business as now being
conducted. The Company and each of its Subsidiaries is duly qualified as a
foreign entity to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect. As used in this Agreement, “Material Adverse Effect”
means any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company or its Subsidiaries, taken as a whole,
(ii) the transactions contemplated hereby or in any of the other Transaction
Documents or any other agreements or instruments to be entered into in
connection herewith or therewith or (iii) the authority or ability of the
Company or any of the Guarantors to perform any of their respective obligations
under any of the Transaction Documents. Neither the Company nor any Subsidiary
has any other subsidiaries.
(c)Authorization; Enforcement; Validity. The Company has the requisite power and
authority to enter into and perform its obligations under the Transaction
Documents and to issue the Securities in accordance with the terms hereof and
thereof. Each Guarantor has the requisite power and authority to enter into and
perform its obligations under the Transaction Documents to which it is a party.
The execution and delivery of the Transaction Documents by the Company and each
Guarantor, and the consummation by the Company and the Guarantors of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Convertible Notes, the reservation for issuance and issuance of
the Conversion Shares issuable upon conversion of the Convertible Notes, as
applicable) have been duly authorized by the board of directors of the Company
and each Guarantor, and (other than (i) any filings as may be required by the
SEC and any state securities agencies (collectively, the “Required Filings”)) no
further filing, consent or authorization is required by the Company, any of the
Guarantors, their respective boards of directors or their stockholders or other
governing
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body. This Agreement has been, and the other Transaction Documents will be,
prior to the Closing, duly executed and delivered by the Company and the
Guarantors, and, when duly authenticated by the Trustee in accordance with the
terms of the Indenture, will constitute the legal, valid and binding obligations
of the Company and the Guarantors, enforceable against the Company and each of
the Guarantors in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution
may be limited by federal or state securities law. “Transaction Documents”
means, collectively, this Agreement, the Indenture, the Convertible Notes, the
Security Agreement, the Registration Rights Agreement and each of the other
agreements and instruments entered into or delivered by any of the parties
hereto in connection with the transactions contemplated hereby and thereby, as
may be amended from time to time.
(d)Issuance of Securities. The issuance of the Securities is duly authorized
and, when issued and delivered in accordance with the terms of the Transaction
Documents, the Securities shall be validly issued, fully paid and non-assessable
and free from all preemptive or similar rights, mortgages, defects, claims,
liens, pledges, charges, taxes, rights of first refusal, encumbrances, security
interests and other encumbrances (collectively “Liens”) with respect to the
issuance thereof. As of the Closing, the Company shall have reserved from its
duly authorized capital stock not less than the maximum number of Conversion
Shares to provide for the full conversion of the Convertible Notes and any
payment of accrued and unpaid interest thereon. Upon issuance or conversion in
accordance with the Convertible Notes, the Conversion Shares when issued, will
be validly issued, fully paid and nonassessable and free from all preemptive or
similar rights or Liens with respect to the issuance thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock.
(e)No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the Guarantors and the consummation by the Company
and the Guarantors of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Convertible Notes and the
Conversion Shares and the reservation for issuance of the Conversion Shares)
will not (i) result in a violation of the Certificate of Incorporation (as
defined below), Bylaws (as defined below), certificate of formation, memorandum
of association, articles of association, bylaws or other organizational
documents of the Company or any of its Subsidiaries, or any capital stock or
other securities of the Company or any of its Subsidiaries, (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) in any respect under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or (iii) assuming the accuracy of the representations and warranties in
Section 2, result in a violation of any law, rule, regulation, order, judgment
or decree (including, without limitation, foreign, federal and state securities
laws and regulations and the rules and regulations of the Nasdaq Capital
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Market (the “Principal Market”) and including all applicable foreign, federal
and state laws, rules and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, assuming, with respect to clauses (ii) and
(iii) above, the making of the Required Filings and except in the case of
clauses (ii) and (iii) above, for such breaches, violations or conflicts as
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(f)Consents. Except as set forth on Schedule 3(f), neither the Company nor any
Guarantor is required to obtain any consent from, authorization or order of, or
make any filing or registration with (other than the Required Filings and such
consents, authorizations, filings or registrations the absence of which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect), any Governmental Entity or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of
its respective obligations under or contemplated by the Transaction Documents,
in each case, in accordance with the terms hereof or thereof. To the knowledge
of the Company and the Guarantors, other than the Required Filings, all
consents, authorizations, orders, filings and registrations which the Company or
any of the Guarantors is required to obtain pursuant to the preceding sentence
have been or will be obtained or effected on or prior to the Closing Date, and
neither the Company nor any of the Guarantors is aware of any facts or
circumstances which might prevent the Company or any of the Guarantors from
obtaining or effecting any of the registration, application or filings
contemplated by the Transaction Documents. The Company is not in violation of
the requirements of the Principal Market and has no knowledge of any facts or
circumstances which could reasonably lead to delisting or suspension of the
Common Stock. “Governmental Entity” means any nation, state, county, city, town,
village, district, or other political jurisdiction of any nature, federal,
state, local, municipal, foreign, or other government, governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal),
multi-national organization or body; or body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or instrumentality of any
of the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing.
(g)Acknowledgment Regarding Buyer’s Purchase of Securities. The Company and each
Guarantor acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and that no Buyer is (i) an
officer or director of the Company or any of its Subsidiaries, (ii) an
“affiliate” (as defined in Rule 144) of the Company or any of its Subsidiaries
or (iii) to its knowledge, a “beneficial owner” of more than 10% of the shares
of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The
Company and each Guarantor further acknowledges that no Buyer is acting as a
financial advisor or fiduciary of the Company or any of its Subsidiaries (or in
any similar capacity) with respect to the Transaction Documents and
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the transactions contemplated hereby and thereby, and any advice given by a
Buyer or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to such Buyer’s purchase of the Securities. The Company and the
Guarantors further represent to each Buyer that the Company’s and each
Guarantors’ decision to enter into the Transaction Documents to which they are a
party has been based solely on the independent evaluation by the Company, each
Guarantor and their respective representatives.
(h)Placement Agent. The Company and the Guarantors, jointly and severally, shall
be responsible for the payment of any placement agent’s fees, financial advisory
fees, or brokers’ commissions, including those of Goldman Sachs & Co. LLC and
BTIG, LLC (other than for Persons engaged by any Buyer or its investment
advisor), relating to or arising out of the transactions contemplated hereby.
The Company and the Guarantors, jointly and severally, shall pay, and hold each
Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney’s fees and reasonable and documented out-of-pocket
expenses) arising in connection with any such claim. Except for Goldman Sachs &
Co. LLC and BTIG, LLC, neither the Company nor any of the Guarantors has engaged
any placement agent or other agent in connection with the offer or sale of the
Securities.
(i)No Integrated Offering. None of the Company, the Guarantors or any of their
affiliates, nor any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require approval of stockholders of the
Company in connection with the offering of the Securities for purposes of any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company or a Subsidiary are listed or designated
for quotation. Except as contemplated by the terms of this Agreement, none of
the Company, the Guarantors, their affiliates nor any Person acting on their
behalf will take any action or steps that would cause the offering of any of the
Securities to be integrated with other offerings of securities of the Company or
any Subsidiary.
(j)Dilutive Effect. The Company understands and acknowledges that the number of
Conversion Shares will increase in certain circumstances. The Company further
acknowledges that its obligation to issue the Conversion Shares pursuant to the
terms of the Convertible Notes in accordance with this Agreement is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
(k)Application of Takeover Protections. The Company and its board of directors
have taken or will take prior to the Closing Date all necessary action, if any,
in order to render inapplicable any control share acquisition, interested
stockholder, business combination, poison pill, stockholder rights plan or other
similar anti-takeover provision under the Certificate of Incorporation, Bylaws
or other organizational documents or the
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laws of the jurisdiction of its incorporation which is or could become
applicable to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities.
(l)Financial Statements. During the one (1) year prior to the date hereof, the
Company has timely filed all SEC Documents. The Company has delivered or has
made available to the Buyers or their respective representatives true, correct
and complete copies of each of the SEC Documents not available on the EDGAR
system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company and its
Subsidiaries included in the SEC Documents complied in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto as in effect as of the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”), consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments which will not be material, either
individually or in the aggregate). No other information provided by or on behalf
of the Company to any of the Buyers which is not included in the SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein not misleading, in the
light of the circumstance under which they are or were made. The Company is not
currently contemplating to amend or restate any of the financial statements
(including, without limitation, any notes or any letter of the independent
accountants of the Company with respect thereto) included in the SEC Documents
(the “Financial Statements”), nor is the Company currently aware of facts or
circumstances which would require the Company to amend or restate any of the
Financial Statements, in each case, in order for any of the Financials
Statements to be in material compliance with GAAP and the rules and regulations
of the SEC. The Company has not been informed by its independent accountants
that they recommend that the Company amend or restate any of the Financial
Statements or that there is any need for the Company to amend or restate any of
the Financial Statements.
(m)Absence of Certain Changes. Since the date of the Company’s most recent
audited financial statements contained in a Form 10-K, except as specifically
set forth in a subsequent SEC Document filed prior to the date hereof, there has
been no Material
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Adverse Effect. Since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, except as specifically set forth in a
subsequent SEC Document filed prior to the date hereof, neither the Company nor
any of its Subsidiaries has (i) declared or paid any dividends, other than share
dividends with respect to the Company’s Series B Preferred Stock, (ii) sold any
assets, individually or in the aggregate, outside of the ordinary course of
business or (iii) made any capital expenditures, individually or in the
aggregate, outside of the ordinary course of business. Neither the Company nor
any of its Subsidiaries has taken any steps to seek protection pursuant to any
law or statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor does the Company or any Subsidiary have any
knowledge or reason to believe that any of their respective creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
which would reasonably lead a creditor to do so. The Company and its
Subsidiaries, individually and on a consolidated basis, are not as of the date
hereof, and after giving effect to the transactions contemplated hereby to occur
at the Closing, will not be Insolvent (as defined below). For purposes of this
Section 3(m), “Insolvent” means, (i) with respect to the Company and each
Subsidiary, on a consolidated basis, (A) the present fair saleable value of the
Company’s and its Subsidiaries’ assets is less than the amount required to pay
the Company’s and its Subsidiaries’ total Indebtedness (as defined below), (B)
the Company and its Subsidiaries are unable to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured or (C) the Company and its Subsidiaries intend to incur or
believe that they will incur debts that would be beyond their ability to pay as
such debts mature; and (ii) with respect to the Company and each Subsidiary,
individually, (A) the present fair saleable value of the Company’s or such
Subsidiary’s (as the case may be) assets is less than the amount required to pay
its respective total Indebtedness, (B) the Company or such Subsidiary (as the
case may be) is unable to pay its respective debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured or (C) the Company or such Subsidiary (as the case may be)
intends to incur or believes that it will incur debts that would be beyond its
respective ability to pay as such debts mature.
(n)Regulatory Permits. During the two years prior to the date hereof, (i) the
Common Stock has been listed or designated for quotation on the Principal
Market, (ii) trading in the Common Stock has not been suspended by the SEC or
the Principal Market and (iii) the Company has received no communication (except
as set forth on Schedule 3(n), written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock from the
Principal Market. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
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(o)Foreign Corrupt Practices. Neither the Company, any of its Subsidiaries or
any director, officer, employee nor, to the Company’s knowledge, any agent or
any other person acting for or on behalf of the foregoing (individually and
collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt
Practices Act or any other applicable anti-bribery or anti-corruption laws
(individually and collectively, “Anti-Corruption Law”), nor, to the Company’s
knowledge, has any Company Affiliate offered, paid, promised to pay, or
authorized the payment of any money, or offered, given, promised to give, or
authorized the giving of anything of value, to any officer, employee or any
other person acting in an official capacity for any Governmental Entity to any
political party or official thereof or to any candidate for political office
(individually and collectively, a “Government Official”) or to any person under
circumstances where such Company Affiliate knew or was aware of a high
probability that all or a portion of such money or thing of value would be
offered, given or promised, directly or indirectly, to any Government Official,
for the purpose of:
(i)(A) influencing any act or decision of such Government Official in his/her
official capacity, (B) inducing such Government Official to do or omit to do any
act in violation of his/her lawful duty, (C) securing any improper advantage, or
(D) inducing such Government Official to influence or affect any act or decision
of any Governmental Entity, or
(ii)assisting the Company or its Subsidiaries in obtaining or retaining business
for or with, or directing business to, the Company or its Subsidiaries.
Neither of the Company nor any Guarantor will use, directly or indirectly, any
part of the proceeds of the offering in any manner that would constitute a
violation of Anti-Corruption Laws.
(p)Sarbanes-Oxley Act. Except as disclosed in the SEC Documents, the Company and
each of its Subsidiaries are in material compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002, as amended, and any and all
applicable rules and regulations promulgated by the SEC thereunder.
(q)Transactions With Affiliates. Except as set forth on Schedule 3(q), no
current or former employee, partner, director, officer or shareholder (direct or
indirect) of the Company or its Subsidiaries, or any associate, or, to the
knowledge of the Company, any affiliate of any thereof, or any relative with a
relationship no more remote than first cousin of any of the foregoing, is
presently, or has ever been, (i) a party to any transaction with the Company or
its Subsidiaries (including any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal
property from, or otherwise requiring payments to, any such director, officer or
shareholder or such associate or affiliate or relative subsidiaries (other than
for ordinary course services as employees, officers or directors of the Company
or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest
in any corporation, firm, association or business organization which is a
competitor, supplier or customer of the Company or its Subsidiaries (except for
a passive investment (direct or indirect) in less
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than 5% of the common stock or ordinary shares, as applicable, of a company
whose securities are traded on or quoted through an Eligible Market (as defined
below)), nor does any such Person receive income from any source other than the
Company or its Subsidiaries which relates to the business of the Company or its
Subsidiaries or should properly accrue to the Company or its Subsidiaries. No
employee, officer, shareholder or director of the Company or any of its
Subsidiaries or member of his or her immediate family is indebted to the Company
or its Subsidiaries, as the case may be, nor is the Company or any of its
Subsidiaries indebted (or committed to make loans or extend or guarantee credit)
to any of them, other than (i) for payment of salary for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of the Company or its
Subsidiaries, as the case may be, and (iii) for other standard employee benefits
made generally available to all employees or executives (including share option
agreements outstanding under any share option plan approved by the Board of
Directors of the Company).
(r)Equity Capitalization.
(i)Authorized and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (A) 250,000,000 shares of
Common Stock, of which, 114,874,076 are issued and outstanding and 10,895,180
shares are reserved for issuance pursuant to Convertible Securities (as defined
below) (other than the Convertible Notes) exercisable or exchangeable for, or
convertible into, shares of Common Stock, and (B) 75,000,000 shares of Preferred
Stock, of which (I) 10,000 are designated Series A Preferred Stock, none of
which are issued and outstanding, and (II) 1,250,000 are designated Series B
Preferred Stock, none of which are issued and outstanding. No shares of Common
Stock are held in the treasury of the Company. “Convertible Securities” means
any capital stock or other security of the Company or any of its Subsidiaries
that is at any time and under any circumstances directly or indirectly
convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any capital stock or other security of the
Company (including, without limitation, Common Stock) or any of its
Subsidiaries.
(ii)Valid Issuance; Available Shares; Affiliates. All of such outstanding shares
are duly authorized and have been, or upon issuance will be, validly issued, are
fully paid and nonassessable. As of the Closing Date, there were (A) 10,895,180
Common Shares reserved for issuance pursuant to the Convertible Securities
(other than the Convertible Notes) and (B) 4,949,357 Common Shares owned by
Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act (except
pursuant to the Registration Rights Agreement, dated December 31, 2018, among
the Company, Marathon Structured Product Strategies Fund, LP, Marathon Blue
Grass Credit Fund, LP, Marathon Centre Street Partnership, L.P. and TRS Credit
Fund, LP), calculated based on the assumption that only officers, directors and
holders of at least 10% of the Company’s issued and outstanding Common Stock are
“affiliates” without conceding that any such Persons are
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“affiliates” for purposes of federal securities laws) of the Company or any of
its Subsidiaries. Except as set forth in the SEC Documents, to the Company’s
knowledge, no Person owns 10% or more of the Company’s issued and outstanding
shares of Common Stock (calculated based on the assumption that all Convertible
Securities, whether or not presently exercisable or convertible, have been fully
exercised or converted (as the case may be) taking account of any limitations on
exercise or conversion (including “blockers”) contained therein without
conceding that such identified Person is a 10% stockholder for purposes of
federal securities laws).
(iii)Existing Securities; Obligations. Except as set forth on Schedule 3(r)(iii)
(A) None of the Company’s or any Subsidiary’s shares, interests or capital stock
is subject to preemptive rights or any other similar rights or Liens suffered or
permitted by the Company or any Subsidiary; (B) other than the Company’s
existing Convertible Securities and stock options and restricted stock awarded
to employees of the Company under equity incentive plans adopted by the Company,
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares, interests or
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares, interests or
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or capital stock of the Company or any
of its Subsidiaries; (C) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act; (D) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (E) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; and (F) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement.
(iv)Organizational Documents. The Company and each Guarantor has furnished to
the Buyers true, correct and complete copies of the Certificate of
Incorporation, as amended and as in effect on the date hereof (the “Certificate
of Incorporation”), and bylaws, as amended and as in effect on the date hereof
(the “Bylaws”), of the Company and each Guarantor and the terms of all
Convertible Securities and the material rights of the holders thereof in respect
thereto.
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(s)Indebtedness and Other Contracts. Except as set forth in the SEC Documents,
neither the Company nor any of its Subsidiaries (i) has any material outstanding
debt securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing Indebtedness of the Company or
any of its Subsidiaries or by which the Company or any of its Subsidiaries is or
may become bound, (ii) has any financing statements securing obligations in any
amounts filed in connection with the Company or any of its Subsidiaries; (iii)
is in violation of any term of, or in default under, any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect, or (iv) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the
Company’s officers, has or is expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries have any liabilities or
obligations required to be disclosed in the SEC Documents which are not so
disclosed in the SEC Documents, other than those incurred in the ordinary course
of the Company’s or its Subsidiaries’ respective businesses and which,
individually or in the aggregate, do not or could not have a Material Adverse
Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means,
without duplication, (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with GAAP) (other than trade payables entered into in the ordinary
course of business consistent with past practice), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in any property or assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; and (y) “Contingent
Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto.
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(t)Litigation. Except as set forth on Schedule 3(t), there is no material
action, suit, arbitration, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, other Governmental Entity,
self-regulatory organization or body pending or, to the knowledge of the Company
and the Guarantors, threatened against or affecting the Company or any of its
Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’
officers or directors, whether of a civil or criminal nature or otherwise, in
their capacities as such. To the knowledge of the Company and the Guarantors, no
director, officer or employee of the Company or any of its Subsidiaries has
willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable
anticipation of litigation. Without limitation of the foregoing, there has not
been, and to the knowledge of the Company and the Guarantors, there is not
pending, contemplated or anticipated, any inquiry or investigation by the SEC
involving the Company, any of its Subsidiaries or any current or former director
or officer of the Company or any of its Subsidiaries. The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the 1933 Act or the 1934 Act. After
reasonable inquiry of its officers (as defined in Rule 16a-1(f) promulgated
under the 1934 Act) and members of its board of directors, neither the Company
nor any Subsidiary is aware of any fact which might result in or form the basis
for any such action, suit, arbitration, investigation, inquiry or other
proceeding. Neither the Company nor any of its Subsidiaries is subject to any
order, writ, judgment, injunction, decree, determination or award of any
Governmental Entity.
(u)Insurance. The Company and each of its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged. Neither the
Company nor any of its Subsidiaries has been refused any insurance coverage
sought or applied for, and neither the Company nor any of its Subsidiaries has
any reason to believe that it will be unable to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(v)Employee Relations. Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or employs any member of a union.
The Company and its Subsidiaries believe that their relations with their
employees are good. No executive officer (as defined in Rule 501(f) promulgated
under the 1933 Act) or other key employee of the Company or any of its
Subsidiaries has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such
officer’s employment with the Company or any such Subsidiary. To the knowledge
of the Company and the Guarantors, no executive officer or other key employee of
the Company or any of its Subsidiaries is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non- competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer or other key employee (as the case may
be) does not subject
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the Company or any of its Subsidiaries to any liability with respect to any of
the foregoing matters. The Company and its Subsidiaries are in material
compliance with all applicable federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure to
be in compliance would not, either individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(w)Title. Each of the Company and its Subsidiaries holds good title to all real
property, leases in real property, facilities or other interests in real
property owned or held by the Company or any of its Subsidiaries that are
material to the business of the Company or its Subsidiaries (the “Real
Property”). The Real Property is free and clear of all Liens and is not subject
to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except for (a) Liens for current
taxes not yet due, (b) zoning laws and other land use restrictions that do not
impair the present or anticipated use of the property subject thereto and (c)
those that are not likely to result in a Material Adverse Effect. Any Real
Property held under lease by the Company or any of its Subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere in any material respect with the use made and
proposed to be made of such property and buildings by the Company or any of its
Subsidiaries.
(x)Fixtures and Equipment. Each of the Company and its Subsidiaries (as
applicable) has good title to, or a valid leasehold interest in, the tangible
personal property, equipment, improvements, fixtures, and other personal
property and appurtenances that are used by the Company or its Subsidiaries in
connection with the conduct of its business (the “Fixtures and Equipment”). The
Fixtures and Equipment are structurally sound, are in good operating condition
and repair, are adequate for the uses to which they are being put, are not in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs and are sufficient for the conduct of the Company’s and/or its
Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the
Closing. Each of the Company and its Subsidiaries owns all of its Fixtures and
Equipment free and clear of all Liens except for (a) Liens for current taxes not
yet due and (b) zoning laws and other land use restrictions that do not impair
the present or anticipated use of the property subject thereto, and (c) Liens in
favor of the holders of the Existing Convertible Note (as defined below), which
shall be released prior to the Closing Date.
(y)Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks,
service mark registrations, service names, original works of authorship,
patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property
Rights”) necessary to conduct their respective businesses as now conducted.
Neither the Company nor any Guarantor has any knowledge of any
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infringement by the Company or its Subsidiaries of Intellectual Property Rights
of others. There is no claim, action or proceeding made or brought, or to the
knowledge of the Company and the Guarantors, threatened, regarding any
Intellectual Property Rights owned by the Company or any of its Subsidiaries,
except where such claim, action or proceeding is not reasonably likely to result
in a Material Adverse Effect. Except as set forth on Schedule 3(y), neither the
Company nor any of its Subsidiaries has received any notice alleging any such
infringement or claim, action or proceeding.
(z)Environmental Laws. (i) The Company and its Subsidiaries (A) are in
compliance with any and all Environmental Laws (as defined below), (B) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (C) are
in compliance with all terms and conditions of any such permit, license or
approval where, except in each of the foregoing clauses (A), (B) and (C), where
the failure to so comply or having such permits, licenses or other approval
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The term “Environmental Laws” means all federal, state,
local or foreign laws or regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous materials, substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of, or
exposure to, Hazardous Materials, as well as all authorizations, codes, decrees,
demands or demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations issued, entered, promulgated or
approved thereunder.
(i)No Hazardous Materials:
(A)to the knowledge of the Company and the Guarantors, have been disposed of or
otherwise released from any Real Property of the Company or any of its
Subsidiaries in violation of any Environmental Laws or in quantities, a manner
or location that would reasonably be expected to require remedial action
pursuant to any Environmental Laws; or
(B)to the knowledge of the Company and the Guarantors, are present on, over,
beneath, in or upon any Real Property or any portion thereof that would
constitute a violation of any Environmental Laws or in quantities, a manner or
location that would reasonably be expected to require remedial action pursuant
to any Environmental Laws. No prior use by the Company or any of its
Subsidiaries of any Real Property has occurred that violates any Environmental
Laws, which violation would have a Material Adverse Effect on the business of
the Company or any of its Subsidiaries.
(ii)To the knowledge of the Company and the Guarantors, neither the Company nor
any of its Subsidiaries knows of any other person who or entity
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which has stored, treated, recycled, disposed of or otherwise located on any
Real Property any Hazardous Materials, including, without limitation, such
substances as asbestos and polychlorinated biphenyls.
(iii)To the knowledge of the Company and the Guarantors, none of the Real
Property is on any federal or state “Superfund” list or Comprehensive
Environmental Response, Compensation and Liability Information System
(“CERCLIS”) list or any state environmental agency list of sites under
consideration for CERCLIS, nor subject to any environmental related Liens.
(iv)Neither the Company nor its Subsidiaries is subject to any pending or, to
the knowledge of the Company and the Guarantors, threatened claim or proceeding
to any Environmental Laws, except for any claims or proceeding that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(aa)Tax Status. The Company and each of its Subsidiaries (i) has timely made or
filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject through the
date of this Agreement or have requested extensions thereof (except where the
failure to file would not, individually or in the aggregate, have a Material
Adverse Effect) and (ii) has timely paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and for which
reserves required by GAAP have been created in the financial statements of the
Company or for cases in which the failure to pay would not have a Material
Adverse Effect. There is no tax deficiency that has been determined adversely to
the Company or any of its Subsidiaries which has had a Material Adverse Effect,
nor does the Company or its Subsidiaries have any knowledge or notice of any tax
deficiency which could reasonably be expected to be determined adversely to the
Company or its Subsidiaries and which could reasonably be expected to have a
Material Adverse Effect.
(bb)Internal Accounting and Disclosure Controls. Except as disclosed in the SEC
Documents, the Company and each of its Subsidiaries maintains internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the
1934 Act) that is effective to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP, including that (i) transactions
are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a‑15(e) under the
1934 Act) that are effective in ensuring that information required to
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be disclosed by the Company in the reports that it files or submits under the
1934 Act are recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
1934 Act is accumulated and communicated to the Company’s management, including
its respective principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure. Since the filing of the Annual Report, neither
the Company nor any of its Subsidiaries has received any notice or
correspondence from any accountant, Governmental Entity or other Person relating
to any potential material weakness or significant deficiency in any part of the
internal controls over financial reporting of the Company or any of its
Subsidiaries.
(cc)Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise could be reasonably likely to have a Material Adverse Effect.
(dd)Investment Company Status. The Company is not, and after giving effect to
the sale of the Convertible Notes and the application of the proceeds thereof
will not be, an “investment company,” as such term is defined in the Investment
Company Act of 1940, as amended.
(ee)Acknowledgement Regarding Buyers’ Trading Activity. It is understood and
acknowledged by the Company and the Guarantors that (i) following the public
disclosure of the transactions contemplated by the Transaction Documents, in
accordance with the terms thereof, none of the Buyers have been asked by the
Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the
Company or any of its Subsidiaries, to desist from effecting any transactions in
or with respect to (including, without limitation, purchasing or selling, long
and/or short) any securities of the Company or its Subsidiaries, or “derivative”
securities based on securities issued by the Company or its Subsidiaries or to
hold any of the Securities for any specified term; (ii) any Buyer, and
counterparties in “derivative” transactions to which any such Buyer is a party,
directly or indirectly, presently may have a “short” position in the Common
Stock which was established prior to such Buyer’s knowledge of the transactions
contemplated by the Transaction Documents; (iii) each Buyer shall not be deemed
to have any affiliation with or control over any arm’s length counterparty in
any “derivative” transaction; and (iv) each Buyer may rely on the Company’s
obligation to timely deliver shares of Common Stock upon conversion, exercise or
exchange, as applicable, of the Securities as and when required pursuant to the
Transaction Documents for purposes of effecting trading in the Common Stock of
the Company. The Company and each Guarantor further understands and acknowledges
that following the public disclosure of the transactions contemplated by the
Transaction Documents pursuant to the Press Release (as defined below) one or
more Buyers may engage in hedging and/or trading
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activities (including, without limitation, the location and/or reservation of
borrowable shares of Common Stock) at various times during the period that the
Securities are outstanding, including, without limitation, during the periods
that the value and/or number of the Conversion Shares deliverable with respect
to the Securities are being determined and such hedging and/or trading
activities (including, without limitation, the location and/or reservation of
borrowable shares of Common Stock), if any, can reduce the value of the existing
stockholders’ equity interest in the Company both at and after the time the
hedging and/or trading activities are being conducted. The Company and each
Guarantor acknowledges that such aforementioned hedging and/or trading
activities do not constitute a breach of this Agreement, the Convertible Notes
or any other Transaction Document or any of the documents executed in connection
herewith or therewith.
(ff)Manipulation of Price. Neither the Company nor any of its Subsidiaries has,
and, to the knowledge of the Company and the Guarantors, no Person acting on
their behalf has, directly or indirectly, (i) taken any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company or any of its Subsidiaries to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company or any of its Subsidiaries or (iv) paid or agreed to
pay any Person for research services with respect to any securities of the
Company or any of its Subsidiaries.
(gg)U.S. Real Property Holding Corporation. Neither the Company nor any of its
Subsidiaries is, or has ever been, and so long as any of the Securities are held
by any of the Buyers, shall become, a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company and each Subsidiary shall so certify upon any Buyer’s
request.
(hh)Transfer Taxes. All stock transfer or other taxes (other than income or
similar taxes) which are required to be paid in connection with the issuance,
sale and transfer of the Securities to be sold to each Buyer hereunder will be,
or will have been, fully paid or provided for by the Company, and all laws
imposing such taxes will be or will have been complied with; provided that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any Conversion Shares upon
conversion or exercise of the Convertible Notes in a name other than that of the
Buyer of such Convertible Notes, and the Company shall not be required to issue
or deliver such Conversion Shares unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
(ii)Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is
subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to
regulation by the Board of Governors of the Federal Reserve System (the “Federal
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Reserve”). Neither the Company nor any of its Subsidiaries owns or controls,
directly or indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent (25%) or more of the total
equity of a bank or any entity that is subject to the BHCA and to regulation by
the Federal Reserve. Neither the Company nor any of its Subsidiaries exercises a
controlling influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve.
(jj)Shell Company Status. The Company is not, and has never been, an issuer
identified in, or subject to, Rule 144(i).
(kk)Illegal or Unauthorized Payments; Political Contributions. Neither the
Company nor any of its Subsidiaries nor, to the best of the Company’s and
Guarantors’ knowledge (after reasonable inquiry of its officers and directors),
any of the officers, directors, employees, agents or other representatives of
the Company or any of its Subsidiaries or affiliates, has, directly or
indirectly, made or authorized any payment, contribution or gift of money,
property, or services, whether or not in contravention of applicable law, (i) as
a kickback or bribe to any Person or (ii) to any political organization, or the
holder of or any aspirant to any elective or appointive public office to
influence official action or secure an improper advantage, except for personal
political contributions not involving the direct or indirect use of funds of the
Company or any of its Subsidiaries.
(ll)Money Laundering. The operations of the Company and its Subsidiaries are and
have been conducted at all times in material compliance with the USA Patriot Act
of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws
and regulations.
(mm)Sanctions. None of the Company, any of its Subsidiaries or any director,
officer, employee or, to the knowledge of the Company and the Guarantors, agent
or other person acting for or on behalf of the foregoing is the subject or
target of any economic or financial sanctions imposed, administered or enforced
by the United States (including the U.S. Department of the Treasury Office of
Foreign Assets Control and the U.S. Department of State) or other relevant
sanctions authority (collectively, “Sanctions” and each such Person, a
“Sanctioned Person”). The operations of the Company and its Subsidiaries are,
and have been conducted within the past five (5) years, in compliance with
applicable Sanctions. Neither the Company nor any of its Subsidiaries will,
directly or indirectly, use any part of the proceeds of this offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other Person, to fund or facilitate any dealings or
transactions with, involving or for the benefit of any Sanctioned Person, or
otherwise in any manner that would constitute or give rise to a violation of any
Sanctions by any Person (including any Person participating in the offering,
whether as buyer, underwriter, advisor, investor or otherwise).
(nn)Management. During the past five year period, no current or former officer
or director, to the knowledge of the Company and the Guarantors, has been the
subject of:
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(i)a petition under bankruptcy laws or any other insolvency or moratorium law or
the appointment by a court of a receiver, fiscal agent or similar officer for
such Person, or any partnership in which such person was a general partner at or
within two years before the filing of such petition or such appointment, or any
corporation or business association of which such person was an executive
officer at or within two years before the time of the filing of such petition or
such appointment;
(ii)a conviction in a criminal proceeding or a named subject of a pending
criminal proceeding (excluding traffic violations);
(iii)any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining any such person from, or otherwise limiting, the following activities:

(1)Acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures
Trading Commission or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;
(2)Engaging in any particular type of business practice; or
(3)Engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of securities laws or
commodities laws;

(iv)any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any authority barring, suspending or otherwise limiting for more
than sixty (60) days the right of any such person to engage in any activity
described in the preceding sub paragraph, or to be associated with persons
engaged in any such activity;

(v)a finding by a court of competent jurisdiction in a civil action or by the
SEC or other authority to have violated any securities law, regulation or decree
and the judgment in such civil action or finding by the SEC or any other
authority has not been subsequently reversed, suspended or vacated; or

(vi)a finding by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding has not been subsequently
reversed, suspended or vacated.
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(oo)Stock Option Plans. Except as set forth in Schedule 3(oo), each stock option
granted by the Company was granted (i) in accordance with the terms of the
applicable stock option plan of the Company and (ii) with an exercise price at
least equal to the fair market value of the Common Stock on the date such stock
option would be considered granted under GAAP and applicable law. To the
knowledge of the Company and the Guarantors, no stock option granted under the
Company’s stock option plan has been backdated. The Company has not knowingly
granted, and there is no and has been no policy or practice of the Company to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects.
(pp)Cybersecurity. The information technology assets and equipment, computers,
systems, networks, hardware, software, websites, applications and databases used
or owned by, or leased or licensed to, the Company or any of its Subsidiaries
(collectively, “IT Systems”) are adequate for, and operate and perform in all
material respects as required in connection with the operation of the business
of the Company and its Subsidiaries as currently conducted, free and clear of
all material bugs, errors, defects, Trojan horses, time bombs, malware and other
corruptants that would reasonably be expected to have a Material Adverse Effect
on the Company’s business. The Company and its Subsidiaries have implemented and
maintained commercially reasonable physical, technical and administrative
controls, policies, procedures and safeguards to maintain and protect their
respective material confidential information and the integrity, continuous
operation, redundancy and security of all IT Systems and data, including
“Personal Data,” used in connection with their respective businesses. “Personal
Data” means (i) a natural person’s name, street address, telephone number,
e-mail address, photograph, social security number or tax identification number,
driver’s license number, passport number, credit card number, bank information,
or customer or account number; (ii) any information which would qualify as
“personally identifying information” under the Federal Trade Commission Act, as
amended; (iii) “personal data” as defined by the European Union General Data
Protection Regulation (“GDPR”) (EU 2016/679); (iv) any information which would
qualify as “protected health information” under the Health Insurance Portability
and Accountability Act of 1996, as amended by the Health Information Technology
for Economic and Clinical Health Act (collectively, “HIPAA”); and (v) any other
piece of information that allows the identification of such natural person, or
his or her family, or permits the collection or analysis of any data related to
an identified person’s health or sexual orientation. There have been no
breaches, violations, outages or unauthorized uses of or accesses to same,
except for those that have been remedied without material cost or liability or
the duty to notify any other person, nor any incidents under internal review or
investigations relating to the same. The Company and its Subsidiaries are
presently in material compliance with all applicable laws or statutes and all
judgments, orders, rules and regulations of any court or arbitrator or
governmental or regulatory authority, internal policies and contractual
obligations relating to the privacy and security of IT Systems and Personal Data
and to the protection of such IT
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Systems and Personal Data from unauthorized use, access, misappropriation or
modification.
(qq)Compliance with Data Privacy Laws. The Company and its Subsidiaries are, and
at all prior times were, in material compliance with all applicable state and
federal data privacy and security laws and regulations, including without
limitation HIPAA, and the Company and its Subsidiaries have taken commercially
reasonable actions to prepare to comply with, and since May 25, 2018, have been
and currently are in compliance with, the GDPR (EU 2016/679) (collectively, the
“Privacy Laws”). To ensure compliance with the Privacy Laws, the Company and its
Subsidiaries have in place, comply with, and take appropriate steps reasonably
designed to ensure compliance in all material respects with their policies and
procedures relating to data privacy and security and the collection, storage,
use, disclosure, handling, and analysis of Personal Data (the “Policies”). The
Company and its Subsidiaries have at all times made all disclosures to users or
customers required by applicable laws and regulatory rules or requirements, and
none of such disclosures made or contained in any Policy have, to the knowledge
of the Company and the Guarantors, been inaccurate or in violation of any
applicable laws and regulatory rules or requirements in any material respect.
The Company and each Guarantor further certifies that it: (i) has not received
notice of any actual or potential liability under or relating to, or actual or
potential violation of, any of the Privacy Laws, and have no knowledge of any
event or condition that would reasonably be expected to result in any such
notice; (ii) is not currently conducting or paying for, in whole or in part, any
investigation, remediation, or other corrective action pursuant to any Privacy
Law; or (iii) are not a party to any order, decree, or agreement that imposes
any obligation or liability under any Privacy Law.
(rr)No Additional Agreements. Neither the Company nor any of the Guarantors has
any agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.
(ss)Disclosure. The Company and each Guarantor confirms that neither it nor any
other Person acting on its behalf has provided any of the Buyers or their agents
or counsel with any information that constitutes or could reasonably be expected
to constitute material, non-public information concerning the Company or any of
its Subsidiaries, other than the existence of the transactions contemplated by
the Transaction Documents. The Company and each Guarantor understands and
confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Buyers regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries is true and
correct and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
All of the written information furnished after the date hereof by or on behalf
of the
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Company or any of its Subsidiaries to each Buyer pursuant to or in connection
with the Transaction Documents, taken as a whole, will be true and correct in
all material respects as of the date on which such information is so provided
and will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
Company and each Guarantor acknowledges and agrees that no Buyer makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 2. Except
for the representations and warranties contained in this Section 3 and in
Section 2 of the Security Agreement, neither the Company, any Guarantor nor any
other Person has made or makes any other express or implied representation or
warranty, either written or oral, on behalf of the Company or its Subsidiaries.
(tt)Margin Stock. The application of the proceeds received by the Company from
the issuance, sale and delivery of the Convertible Notes as described in the
Transaction Documents will not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve system or any other regulation of such Board of
Governors.
4.COVENANTS.
(a)Best Efforts. Each Buyer shall use its best efforts to timely satisfy each of
the covenants hereunder and conditions to be satisfied by it as provided in
Section 5 of this Agreement. The Company and each Guarantor shall use its best
efforts to timely satisfy each of the covenants hereunder and conditions to be
satisfied by it as provided in Section 6 of this Agreement.
(b)Blue Sky. The Company and each Guarantor shall, on or before the Closing
Date, take such action as the Company or such Guarantor shall reasonably
determine is necessary in order to obtain an exemption for, or to, qualify the
applicable Securities for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to the Buyers on or prior to the
Closing Date. Without limiting any other obligation of the Company and any
Guarantor under this Agreement, the Company shall timely make all filings and
reports relating to the offer and sale of the Securities required under all
applicable securities laws (including, without limitation, all applicable
federal securities laws and all applicable “Blue Sky” laws), and the Company and
each Guarantor shall comply with all applicable foreign, federal, state and
local laws, statutes, rules, regulations and the like relating to the offering
and sale of the Securities to the Buyers.

(c)Use of Proceeds. The Company will use the net proceeds from the sale of the
Securities for working capital and general corporate purposes, but not, directly
or indirectly, for (i) the redemption or repurchase of any other securities of
the Company or any of its Subsidiaries or (ii) the settlement of any outstanding
litigation that involves payment by the Company of $500,000 or more.
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(d)Listing. The Company shall promptly secure the listing or designation for
quotation (as the case may be) of all of the Conversion Shares upon each
national securities exchange and automated quotation system, if any, upon which
the Common Stock is then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) and shall maintain such listing or
designation for quotation (as the case may be) of all Conversion Shares from
time to time issuable under the terms of the Transaction Documents on such
national securities exchange or automated quotation system. The Company shall
maintain the Common Stock’s listing or authorization for quotation (as the case
may be) on the Principal Market, The New York Stock Exchange, the NYSE American,
the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible
Market”). Neither the Company nor any of its Subsidiaries shall take any action
which could be reasonably expected to result in the delisting or suspension of
the Common Stock on an Eligible Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(d).
(e)Fees. The Company and the Guarantors, jointly and severally, shall pay for
the due diligence and legal fees and expenses incurred by the Buyers in
connection with the structuring, documentation, negotiation, and closing of the
transactions contemplated by the Transaction Documents (and the enforcement
thereof by the Buyers), including, without limitation, all reasonable legal fees
and disbursements of Milbank LLP, counsel to the Antara Capital LP, and Latham &
Watkins, LLP, counsel to HT Investments MA LLC, and due diligence and regulatory
filings in connection therewith (the “Transaction Expenses”) and such
Transaction Expenses, to the extent they have not already been paid to the
Buyers, may be withheld by the Buyers from the Purchase Price at the Closing;
provided, however, that the legal fees and expenses payable by the Company and
the Guarantors hereunder in connection with the structuring, documentation,
negotiation, and closing of the transactions contemplated by the Transaction
Documents shall not exceed (i) in the case of Antara Capital LP, $550,000 and
(ii) in the case of HT Investments MA LLC, $100,000. The Company and the
Guarantors, jointly and severally, shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, transfer agent fees, fees of
DTC or broker’s commissions (other than for Persons engaged by any Buyer)
relating to or arising out of the transactions contemplated hereby. The Company
and the Guarantors, jointly and severally, shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorneys’ fees and reasonable and documented out-of-pocket expenses)
arising in connection with any claim relating to any such payment. Except as
otherwise set forth in the Transaction Documents, each party to this Agreement
shall bear its own expenses in connection with the sale of the Securities to the
Buyers.
(f)Pledge of Securities. Notwithstanding anything to the contrary contained in
this Agreement, the Company and each Guarantor acknowledges and agrees that the
Securities may be pledged by a Buyer in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and no Buyer effecting a pledge of
Securities shall be required to provide the
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Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document. The Company and
each Guarantor hereby agrees to execute and deliver such documentation as a
pledgee of the Securities may reasonably request in connection with a pledge of
the Securities to such pledgee by a Buyer.
(g)Disclosure of Transactions and Other Material Information.
(i)Disclosure of Transaction. The Company shall, on or before 9:15 a.m., New
York time, on Monday, October 12, 2020, issue a press release (the “Press
Release”) reasonably acceptable to the Buyers disclosing all the material terms
of the transactions contemplated by the Transaction Documents. After the Closing
Date, the Company shall file a Current Report on Form 8-K describing all the
material terms of the transactions contemplated by the Transaction Documents in
the form and within the time period required by the 1934 Act and attaching all
the material Transaction Documents (the “8-K Filing”). From and after the
issuance of the Press Release, the Company shall have disclosed all material,
non-public information (if any) provided to any of the Buyers by the Company or
any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the
Transaction Documents. In addition, effective upon the issuance of the Press
Release, the Company and each Guarantor acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one hand, and any
of the Buyers or any of their affiliates, on the other hand, shall terminate.
(ii)Limitations on Disclosure. Other than as required under the Transaction
Documents (but subject to any other disclosure obligations of the Company with
respect thereto), the Company and the Guarantors shall not, and the Company and
the Guarantors shall cause each of its respective officers, directors, employees
and agents not to, provide any Buyer with any material, non-public information
regarding the Company or any of its Subsidiaries from and after the date hereof
unless prior thereto such Buyer shall have consented in writing to the receipt
of such information and agreed with the Company and its Subsidiaries to keep
such information confidential. To the extent that the Company or any of the
Guarantors delivers any material, non-public information to a Buyer without such
Buyer’s prior written consent, the Company and each Guarantor hereby covenants
and agrees that such Buyer shall not have any duty of confidentiality with
respect to, or a duty not to trade on the basis of, such material, non-public
information, provided that the Buyer shall remain subject to applicable law.
Subject to the foregoing, neither the Company, any Guarantor nor any Buyer shall
issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, the Company shall be
entitled, without the prior approval of any Buyer, to make the Press Release and
any press release
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or other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i), each Buyer shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release). Without the
prior written consent of the applicable Buyer (which may be granted or withheld
in such Buyer’s sole discretion), the Company and the Guarantors shall not (and
shall cause each of their respective affiliates to not) disclose the name of
such Buyer in any filing, announcement, release or otherwise, except in the 8-K
filing and as otherwise may be required by applicable law. Notwithstanding
anything contained in this Agreement to the contrary and without implication
that the contrary would otherwise be true, the Company and each Guarantor
expressly acknowledges and agrees that no Buyer shall have (unless expressly
agreed to by a particular Buyer after the date hereof in a written definitive
and binding agreement executed by the Company and such particular Buyer (it
being understood and agreed that no Buyer may bind any other Buyer with respect
thereto)), any duty of confidentiality with respect to, or a duty not to trade
on the basis of, any material, non-public information regarding the Company or
any of its Subsidiaries.
(h)Additional Issuance of Securities.
(i)So long as any Convertible Notes remain outstanding, the Company will not,
without the prior written consent of each of the Buyers, issue any Convertible
Notes (other than to the Buyers as contemplated hereby) and the Company shall
not issue any other securities that would cause a breach or default under the
Convertible Notes. Except as otherwise permitted under Sections 4(h)(ii) and
4(h)(iii), the Company agrees that for the period commencing on the date hereof
and ending on the date immediately following (x) the 30th calendar day after the
Closing Date, neither the Company nor any of its Subsidiaries shall directly or
indirectly issue, offer, sell, grant any option or right to purchase, or
otherwise dispose of (or announce any issuance, offer, sale, grant of any option
or right to purchase or other disposition of) any equity security or related
security (including, without limitation, any “equity security” (as that term is
defined under Rule 405 promulgated under the 1933 Act), any preferred stock or
any purchase rights) and (y) the 30th calendar day after the Closing Date,
neither the Company nor any of its Subsidiaries shall directly or indirectly
issue, offer, sell, grant any option or right to purchase, or otherwise dispose
of (or announce any issuance, offer, sale, grant of any option or right to
purchase or other disposition of) any equity-linked security (or any Convertible
Securities) (each such period, a “Restricted Period”); any such issuance, offer,
sale, grant, disposition or announcement (whether occurring during the
Restricted Period or at any time thereafter) in clause (x) or (y) is referred to
as a “Subsequent Placement”.
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(ii)Notwithstanding the foregoing, this Section 4(h)(ii) shall not apply during
any Restricted Period in respect of the issuance of (A) shares of Common Stock
or standard options to purchase Common Stock, restricted stock, or other
incentive equity awards issued to directors, officers, consultants or employees
of the Company in their capacity as such pursuant to an Approved Stock Plan (as
defined below), provided that (1) all such issuances (taking into account the
shares of Common Stock issuable upon exercise of such options) after the date
hereof pursuant to this clause (1) do not, in the aggregate, exceed more than 5%
of the Common Stock issued and outstanding immediately prior to the date hereof
and (2) the exercise price of any such options is not lowered, none of such
options are amended to increase the number of shares issuable thereunder and
none of the terms or conditions of any such options are otherwise materially
changed in any manner that adversely affects any of the Buyers; (B) shares of
Common Stock issued upon the conversion, exercise, or settlement of (or
otherwise pursuant to the terms of) Convertible Securities (other than standard
options to purchase Common Stock or other incentive equity awards issued
pursuant to an Approved Stock Plan that are covered by clause (i) above) issued
prior to the date hereof, provided that the conversion, exercise or other method
of issuance (as the case may be) of any such Convertible Security is made solely
pursuant to the conversion, exercise or other method of issuance (as the case
may be) provisions of such Convertible Security that were in effect on the date
immediately prior to the date of this Agreement, the conversion, exercise or
issuance price of any such Convertible Securities (other than standard options
to purchase Common Stock or other incentive equity awards issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) is not lowered, none
of such Convertible Securities (other than standard options to purchase Common
Stock issued pursuant to an Approved Stock Plan that are covered by clause (i)
above) are amended to increase the number of shares issuable thereunder and none
of the terms or conditions of any such Convertible Securities (other than
standard options to purchase Common Stock or other incentive equity awards
issued pursuant to an Approved Stock Plan that are covered by clause (i) above)
are otherwise materially changed in any manner that adversely affects any of the
Buyers; (C) shares of the Company’s capital stock issuable pursuant to
shareholder rights plans; (D) shares of Common Stock issued as matching
contributions under the Company’s 401(k) plan; (E) shares of Common Stock issued
by the Company upon conversion of the Convertible Notes and any registration
statement in connection with the Registration Rights Agreement; (F) shares of
Common Stock issued by the Company pursuant to an “at-the-market” offering, and
(H) the Conversion Shares. In addition, notwithstanding the foregoing, (i) the
Company may file a registration statement and prospectus supplement with the SEC
and enter into a sales agreement relating to an at-the-market offering program,
and (ii) the Company may file a registration statement and prospectus supplement
to cover shares issued or issuable to current or former or holders of its
convertible debt securities or warrants during the Restricted Period. “Approved
Stock Plan” means any stock option plans, equity incentive plans or employee
benefit plans
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which have been approved by the board of directors of the Company prior to or
subsequent to the date hereof pursuant to which shares of Common Stock and
standard options to purchase Common Stock, restricted stock and other incentive
equity awards may be issued to any employee, officer, consultant or director for
services provided to the Company in their capacity as such.
(iii)In addition, so long as any Convertible Notes remain outstanding, the
Company and each Subsidiary shall be prohibited from effecting, or entering into
an agreement to effect, any Subsequent Placement involving a Variable Rate
Transaction or any Convertible Notes issued hereunder. “Variable Rate
Transaction” means a transaction in which the Company or any Subsidiary (A)
issues or sells any Convertible Securities either (1) at a conversion, exercise
or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time after
the initial issuance of such Convertible Securities, or (2) with a conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such Convertible Securities or upon the occurrence
of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock, other than pursuant to a
customary “weighted average” anti-dilution provision or customary adjustments
for stock splits, stock dividends, stock combinations, recapitalizations and
similar events or (B) enters into any agreement (including, without limitation,
an equity line of credit, but not including an “at-the-market” offering) whereby
the Company or any Subsidiary may sell securities at a future determined price
(other than standard and customary “preemptive” or “participation” rights).
(iv)Each Buyer shall be entitled to obtain injunctive relief against the Company
and its Subsidiaries to preclude any issuance prohibited by this Section 4(h),
which remedy shall be in addition to any right to collect damages.
(i)Reservation of Shares. So long as any of the Convertible Notes remain
outstanding, the Company shall take all action necessary to at all times have
authorized and reserved for the purpose of issuance, the maximum number of
Conversion Shares to provide for the full conversion of the Convertible Notes
and any payment of accrued and unpaid interest thereon. Upon conversion, the
Company shall pay any accrued and unpaid interest on the Convertible Notes in
Conversion Shares; provided that at no time shall the number of shares of Common
Stock reserved pursuant to this Section 4(i) be reduced other than in connection
with any stock combination, reverse stock split or other similar transaction or
proportionally in connection with any conversion and/or redemption, as
applicable, of the Convertible Notes.
(j)Conduct of Business. The business of the Company and its Subsidiaries shall
not be conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except where such violations would not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.
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(k)Passive Foreign Investment Company. The Company and its Subsidiaries shall
conduct their respective businesses in such a manner as will ensure that neither
the Company nor any of its Subsidiaries will be deemed to constitute a passive
foreign investment company within the meaning of Section 1297 of the Internal
Revenue Code of 1986, as amended.
(l)Corporate Existence. So long as any Convertible Notes remain outstanding, the
Company shall not be party to any Fundamental Change (as defined in the
Convertible Notes) unless the Company and each Subsidiary is in compliance with
the applicable provisions governing Fundamental Changes set forth in the
Convertible Notes.
(m)Stock Splits. Until the Convertible Notes are no longer outstanding, the
Company shall not effect any stock combination, reverse stock split or other
similar transaction (or make any public announcement or disclosure with respect
to any of the foregoing) without the prior written consent of each of the
Buyers, except as required by any Principal Market to provide for the
eligibility or continued eligibility of the Common Stock for listing or
quotation on such market.
(n)Conversion Procedures. The form of conversion notice included in the
Convertible Notes sets forth the totality of the procedures required of the
Buyers in order to convert the Convertible Notes. No additional legal opinion,
other information or instructions shall be required of the Buyers to convert
their Convertible Notes. The Company shall honor conversions of the Convertible
Notes and shall deliver the Conversion Shares in accordance with the terms,
conditions and time periods set forth in the Convertible Notes.
(o)Regulation M. Neither the Company nor any Subsidiary will take any action
prohibited by Regulation M under the 1934 Act, in connection with the
distribution of the Securities contemplated hereby.
(p)Integration. None of the Company, any of the Guarantors, any of their
affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting
on behalf of the Company, the Guarantors or such affiliate will sell, offer for
sale, or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the 1933 Act) which will be integrated with the sale of the
Securities in a manner which would require stockholder approval under the rules
and regulations of the Principal Market and the Company and each Guarantor will
take all action that is appropriate or necessary to assure that its offerings of
other securities will not be integrated for purposes of the rules and
regulations of the Principal Market, with the issuance of Securities
contemplated hereby.
(q)Closing Documents. On or prior to fourteen (14) calendar days after the
Closing Date, the Company and each Guarantor agrees to deliver, or cause to be
delivered, to each Buyer and Milbank LLP a complete closing set of the
respective executed Transaction Documents, Securities and any other document
required to be delivered to any party pursuant to Section 6 hereof or otherwise
(which may be in photocopies or pdf versions of executed copies).
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(r)No Stockholder Approval. No stockholder approval is required for the issuance
or sale of the Convertible Notes
(s)Limitation on Resale. The Buyers shall not resell any of their respective
Convertible Notes within six months of the Issue Date; provided, however, that
the foregoing shall not restrict the any Buyer from (i) pledging or financing
its respective Convertible Notes pursuant to customary arrangements used by such
Buyer and its respective affiliates and managed accounts, or the foreclosure or
settlement of such arrangements or (ii) transferring the Convertible Notes to
such Buyer’s respective “affiliates” (as defined in Rule 405 of the 1933 Act);
provided further, that Antara Capital LP shall be entitled to resell its
Convertible Notes within six months of the Issue Date in a principal amount no
greater than $10,000,000.
(t)Restriction on Repurchases. Until the expiration of one year after the
Closing Date, the Company will not, and will cause its “affiliates” (as defined
in Rule 405 of the 1933 Act) not to, resell any offered Securities which are
“restricted securities” (as such term is defined under Rule 144(a)(3)), whether
as beneficial owner or otherwise (except as agent acting as a securities broker
on behalf of and for the account of customers in the ordinary course of business
in unsolicited broker’s transactions). For the avoidance of doubt, the Buyers
listed on Schedule I as of the date hereof, shall not be considered “affiliates”
for purposes of this Section 4(t).
(u)FAST Compliance. While any Convertible Notes remain outstanding, the Company
shall maintain a transfer agent that participates in the DTC Fast Automated
Securities Transfer Program.
(v)DTC Eligibility. From and after the Closing Date, the Company will use its
commercially reasonable efforts, upon issuance thereof and while outstanding, to
ensure that the Convertible Notes are eligible for clearance and settlement
through the facilities of DTC.
(w)Registration Rights. Within ten (10) Business Days following the Closing
Date, the Company shall file with the SEC the registration statement required
pursuant to the Registration Rights Agreement.
(x)Rule 144. The Company shall cause the Convertible Notes and, notwithstanding
Section 4(w), any shares of Common Stock issuable upon conversion of the
Convertible Notes or as payment of interest pursuant to the terms of the
Convertible Notes, to be eligible to be offered, sold or otherwise transferred
by the Buyers pursuant to Rule 144 under the Securities Act, without any
requirements as to volume, manner of sale, availability of current public
information (whether or not then satisfied) or notice under the Securities Act
and without any requirement for registration under any state securities or “blue
sky” law, on and after the date that is six (6) months following the Closing
Date.
(y)Press Release. The Company shall not, and shall not permit any of its
Subsidiaries to, issue or disseminate to the public (by advertisement, press
release or
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otherwise), submit for publication or otherwise cause or seek to publish any
information naming any of the Buyers without the prior written consent of such
Buyer; provided that, nothing in the foregoing shall be construed to prohibit
the Company from making any submission or filing which it is required to make by
applicable law or pursuant to judicial process; provided further, that (i) such
filing or submission shall contain only such information as is necessary to
comply with applicable law or judicial process and (ii) unless specifically
prohibited by applicable law or court order, the Company shall promptly notify
the Buyers of the requirement to make such submission or filing and provide the
Buyers with a copy thereof.
5.CONDITIONS TO THE COMPANY’S AND THE GUARANTORS’ OBLIGATION TO SELL THE
CONVERTIBLE NOTES.
(a)The obligation of the Company and each Guarantor hereunder to issue and sell
the Convertible Notes to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the sole benefit of the
Company and the Guarantors and may be waived by the Company and the Guarantors
at any time in their sole discretion by providing each Buyer with prior written
notice thereof:
(i)Such Buyer shall have executed each of the other Transaction Documents to
which it is a party and delivered the same to the Company and the Guarantors.
(ii)Such Buyer and each other Buyer shall have delivered to the Company and the
Guarantors the Purchase Price for the Convertible Notes being purchased by such
Buyer at the Closing by wire transfer of immediately available funds in
accordance with the Flow of Funds Letter.
(iii)The representations and warranties of such Buyer shall be true and correct
in all material respects (except for such representations and warranties that
are qualified by materiality or material adverse effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such
specific date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such Buyer at or
prior to the Closing Date.
6.CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE THE CONVERTIBLE NOTES.
(a)The obligation of each Buyer hereunder to purchase its Convertible Notes at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for each
Buyer’s sole benefit and
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may be waived by such Buyer at any time in its sole discretion by providing the
Company and the Guarantors with prior written notice thereof:
(i)The Company and each Guarantor (as the case may be) shall have duly executed
and delivered to such Buyer each of the Transaction Documents to which it is a
party and the Convertible Notes as set forth across from such Buyer’s name in
column (3) of Schedule I as being purchased by such Buyer at the Closing
pursuant to this Agreement.
(ii)Such Buyer shall have received the opinion of Taft Stettinius & Hollister
LLP, counsel for the Company and the Guarantors, dated as of the Closing Date,
in the form acceptable to such Buyer.
(iii)The Company and each Guarantor shall have delivered to such Buyer a
certificate evidencing the formation and good standing of the Company and each
Guarantor in such entity’s jurisdiction of formation issued by the Secretary of
State (or comparable office) of such jurisdiction of formation as of a date
within ten (10) days of the Closing Date.
(iv)The Company and each Guarantor shall have delivered to such Buyer a
certified copy of the Certificate of Incorporation of the Company and each of
the Guarantors as certified by the Delaware Secretary of State within ten (10)
days of the Closing Date.
(v)The Company and each Guarantor shall have delivered to such Buyer a
certificate, in the form acceptable to such Buyer, executed by the Secretary of
the Company and such Guarantor, dated as of the Closing Date, as to (A) the
resolutions consistent with Section 3(b) as adopted by the Company’s and each of
the Guarantors’ respective board of directors, in a form reasonably acceptable
to such Buyer, (B) the Certificate of Incorporation of the Company and each of
the Guarantors and (C) the Bylaws of the Company and each of the Guarantors,
each as in effect at the Closing.
(vi)Each and every representation and warranty of the Company and the Guarantors
shall be true and correct in all material respects (except for such
representations and warranties that are qualified by materiality or material
adverse effect, which shall be true and correct in all respects) as of the date
when made and as of the Closing Date as though originally made at that time
(except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date) and the Company and
each Guarantor shall have performed, satisfied and complied in all material
respects with (except for covenants, agreements or conditions that are qualified
by materiality or material adverse effect, which shall be performed, satisfied
and complied in all respects with) the covenants, agreements and conditions
required to be performed, satisfied or complied with by the Company and each
Guarantor at or prior to the Closing Date. Such Buyer shall have received a
certificate, duly executed by the
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Chief Executive Officer of the Company and the President of each of the
Guarantors, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer in the form
acceptable to such Buyer.
(vii)The Company shall have delivered to such Buyer a letter from the Transfer
Agent certifying the number of shares of Common Stock outstanding on the Closing
Date immediately prior to the Closing.
(viii)The Common Stock (A) shall be designated for quotation or listed (as
applicable) on the Principal Market and (B) shall not have been suspended, as of
the Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of the Closing Date, either (1) in writing by the SEC or the
Principal Market or (2) by falling below the minimum maintenance requirements of
the Principal Market.
(ix)The Company and each Guarantor shall have obtained all governmental,
regulatory or third party consents and approvals (including stockholder
approval), if any, necessary for the sale of the Convertible Notes, including
without limitation, those required by the Principal Market, if any.
(x)No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
Governmental Entity of competent jurisdiction that prohibits the consummation of
any of the transactions contemplated by the Transaction Documents.
(xi)Since the date of execution of this Agreement, no event or series of events
shall have occurred that reasonably would have or result in a Material Adverse
Effect.
(xii)Such Buyer shall have received a letter on the letterhead of the Company,
duly executed by the Chief Executive Officer of the Company, setting forth the
wire amounts of each Buyer and the wire transfer instructions of the Company
(the “Flow of Funds Letter”).
(xiii)The Company and each Guarantor shall have delivered to such Buyer such
other documents, instruments or certificates relating to the transactions
contemplated by the Transaction Documents as such Buyer or its counsel may
reasonably request.
(xiv)The Company and each Guarantor shall have delivered to such Buyer the
results of a recent lien, bankruptcy and judgment search in each relevant
jurisdiction with respect to the Company and any of its Subsidiaries and such
search shall reveal no Liens on any of the Collateral (as such term is defined
in the Security Agreement) or other assets of the Company and its Subsidiaries
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except, in the case of assets other than Collateral, for Permitted Liens (as
such term is defined in the Convertible Notes) and except for Liens to be
discharged on or prior to the Closing Date pursuant to documentation reasonably
satisfactory to the Buyer.
(xv)The Company and each Guarantor shall have delivered to the Buyers a duly
completed and executed perfection certificate in a form reasonably acceptable to
the Buyers.
(xvi)The Convertible Notes shall be eligible for clearance and settlement
through the facilities of DTC.
(xvii)All costs, fees, expenses (including, without limitation, legal fees and
expenses) contemplated hereby to be payable to the Buyers shall have been paid
to the extent due and, in the case of expenses of the Buyers that are
reimbursable in accordance herewith, invoiced at least one day prior to the
Closing Date.
(xviii)As of the Closing Date, such Buyer shall have received written
confirmation that the 4.50% Senior Secured Convertible Note due 2023 issued by
the Company July 16, 2020 (the “Existing Convertible Note”) have been exchanged
for Common Stock; that all of the outstanding indebtedness and obligations under
the Existing Convertible Note have been extinguished; that the Company shall
have obtained and delivered payoff letters and releases relating to the Existing
Convertible Note; and that all Liens securing such Existing Convertible Note
have been released.
(xix)As of the Closing Date, no other indebtedness for borrowed money shall be
outstanding, except for $2,000,000 under the existing Paycheck Protection Term
Loan made by PNC Bank, National Association to the Company on or about April 14,
2020.
7.TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer on
or before seven (7) days after the date hereof (the “Outside Date”), then such
Buyer shall have the right to terminate its obligations under this Agreement
with respect to itself at any time on or after the close of business on such
date without liability of such Buyer to any other party; provided however, that
(1) the right to terminate this Agreement under this Section 7 shall not be
available to such Buyer if the failure of the transactions contemplated by this
Agreement to have been consummated by such date is the result of such Buyer’s
breach of this Agreement and (2) the abandonment of the sale and purchase of the
Convertible Notes shall be applicable only to such Buyer providing such written
notice; provided further that no such termination shall affect any obligation of
the Company and Guarantors under this Agreement to reimburse such Buyer for the
expenses described in Section 4(e) above. Nothing contained in this Section 7
shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement or the other Transaction
Documents or to impair the right of any party to compel
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specific performance by any other party of its obligations under this Agreement
or the other Transaction Documents.
8.MISCELLANEOUS.
(a)Governing Law; Jurisdiction; 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 jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. The Company and each
Guarantor hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or under any
of the other Transaction Documents or with any transaction contemplated hereby
or thereby, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Nothing contained herein shall be deemed or operate to preclude any Buyer from
bringing suit or taking other legal action against the Company or any of the
Guarantors in any other jurisdiction to collect on the Company’s or any
Guarantor’s obligations to such Buyer or to enforce a judgment or other court
ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b)Counterparts; Electronic Signatures. This Agreement may be executed in two or
more identical counterparts, all of which 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. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof. A party’s electronic signature
(complying with the New York Electronic Signatures and Records Act (N.Y. State
Tech. §§ 301-309), as amended from time to time, or other applicable law) of
this
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Agreement shall have the same validity and effect as a signature affixed by the
party’s hand.
(c)Headings; Gender. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like
import shall be construed broadly as if followed by the words “without
limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import
refer to this entire Agreement instead of just the provision in which they are
found.
(d)Severability; Maximum Payment Amounts. If any provision of this Agreement is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair
the respective expectations or reciprocal obligations of the parties or the
practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s). Notwithstanding anything to the contrary contained
in this Agreement or any other Transaction Document (and without implication
that the following is required or applicable), it is the intention of the
parties that in no event shall amounts and value paid by the Company and/or any
of its Subsidiaries (as the case may be), or payable to or received by any of
the Buyers, under the Transaction Documents (including without limitation, any
amounts that would be characterized as “interest” under applicable law) exceed
amounts permitted under any applicable law. Accordingly, if any obligation to
pay, payment made to any Buyer, or collection by any Buyer pursuant the
Transaction Documents is finally judicially determined to be contrary to any
such applicable law, such obligation to pay, payment or collection shall be
deemed to have been made by mutual mistake of such Buyer, the Company and its
Subsidiaries and such amount shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by the applicable law. Such adjustment shall
be effected, to the extent necessary, by reducing or refunding, at the option of
such Buyer, the amount of interest or any other amounts which would constitute
unlawful amounts required to be paid or actually paid to such Buyer under the
Transaction Documents. For greater certainty, to the extent that any interest,
charges, fees, expenses or other amounts required to be paid to or received by
such Buyer under any of the Transaction Documents or related thereto are held to
be within the meaning of
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“interest” or another applicable term to otherwise be violative of applicable
law, such amounts shall be pro-rated over the period of time to which they
relate.
(e)Entire Agreement; Amendments. This Agreement, the other Transaction Documents
and the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein supersede all other prior oral or written
agreements between the Buyers, the Company, its Subsidiaries, their affiliates
and Persons acting on their behalf, including, without limitation, any
transactions by any Buyer with respect to Common Stock or the Securities, and
the other matters contained herein and therein, and this Agreement, the other
Transaction Documents, the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein contain the entire
understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any effect on any
agreements any Buyer has entered into with, or any instruments any Buyer has
received from, the Company or any of its Subsidiaries prior to the date hereof
with respect to any prior investment made by such Buyer in the Company or (ii)
waive, alter, modify or amend in any respect any obligations of the Company or
any of its Subsidiaries, or any rights of or benefits to any Buyer or any other
Person, in any agreement entered into prior to the date hereof between or among
the Company and/or any of its Subsidiaries and any Buyer, or any instruments any
Buyer received from the Company and/or any of its Subsidiaries prior to the date
hereof, and all such agreements and instruments shall continue in full force and
effect. Except as specifically set forth herein or therein, neither the Company,
any Guarantor nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. For clarification purposes, the
Recitals are part of this Agreement. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company, each
Guarantor and each Buyer, and any amendment to any provision of this Agreement
made in conformity with the provisions of this Section 8(e) shall be binding on
all Buyers and holders of Securities, as applicable; provided that no such
amendment shall be effective to the extent that it (A) applies to less than all
of the holders of the Securities then outstanding or (B) imposes any obligation
or liability on any Buyer without such Buyer’s prior written consent (which may
be granted or withheld in such Buyer’s sole discretion). No waiver shall be
effective unless it is in writing and signed by an authorized representative of
the waiving party, provided that each of the Buyers may waive any provision of
this Agreement, and any waiver of any provision of this Agreement made in
conformity with the provisions of this Section 8(e) shall be binding on all
Buyers and holders of Securities, as applicable, provided that no such waiver
shall be effective to the extent that it (1) applies to less than all of the
holders of the Securities then outstanding (unless a party gives a waiver as to
itself only) or (2) imposes any obligation or liability on any Buyer without
such Buyer’s prior written consent (which may be granted or withheld in such
Buyer’s sole discretion). No consideration (other than reimbursement of legal
fees) shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the
same consideration also is offered to all of the parties to the Transaction
Documents and all holders of the
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Convertible Notes. From the date hereof and while any Convertible Notes are
outstanding, neither the Company nor any Guarantor shall be permitted to receive
any consideration from a Buyer or a holder of Convertible Notes that is not
otherwise contemplated by the Transaction Documents in order to, directly or
indirectly, induce the Company or any Guarantor (i) to treat such Buyer or
holder of Convertible Notes in a manner that is more favorable than to other
similarly situated Buyers or holders of Convertible Notes, or (ii) to treat any
Buyer(s) or holder(s) of Convertible Notes in a manner that is less favorable
than the Buyer or holder of Convertible Notes that is paying such consideration;
provided, however, that the determination of whether a Buyer has been treated
more or less favorably than another Buyer shall disregard any securities of the
Company purchased or sold by any Buyer. Neither the Company nor any Guarantor
has, directly or indirectly, made any agreements with any Buyers relating to the
terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents. Without limiting the
foregoing, the Company and each Guarantor confirms that, except as set forth in
this Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company, any of the Guarantors or
otherwise. As a material inducement for each Buyer to enter into this Agreement,
the Company and each Guarantor expressly acknowledges and agrees that (x) no due
diligence or other investigation or inquiry conducted by a Buyer, any of its
advisors or any of its representatives shall affect such Buyer’s right to rely
on, or shall modify or qualify in any manner or be an exception to any of, the
Company’s or any Guarantor’s representations and warranties contained in this
Agreement or any other Transaction Document and (y) unless a provision of this
Agreement or any other Transaction Document is expressly preceded by the phrase
“except as disclosed in the SEC Documents,” nothing contained in any of the SEC
Documents shall affect such Buyer’s right to rely on, or shall modify or qualify
in any manner or be an exception to any of, the Company’s or any Guarantor’s
representations and warranties contained in this Agreement or any other
Transaction Document.
(f)Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided that
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party) or electronic mail (provided that such sent
email is kept on file (whether electronically or otherwise) by the sending party
and the sending party does not receive an automatically generated message from
the recipient’s email server that such e-mail could not be delivered to such
recipient); or (iii) one (1) Business Day after deposit with an overnight
courier service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The addresses, facsimile numbers and
e-mail addresses for such communications shall be:
If to the Company or the Guarantors:
(i) Workhorse Group Inc.
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100 Commerce Drive
Loveland, Ohio 45140
Attention: Stephen M. Fleming
Facsimile: (516)-977-1209
Email: smf@flemingpllc.com

with a copy (for informational purposes only) to:
Taft Stettinius & Hollister LLP
425 Walnut Street, Suite 1800
Cincinnati, OH 45202
Attention: David A. Zimmerman
Facsimile: (513) 381-0205
Email: dzimmerman@taftlaw.com

If to the Transfer Agent:
Empire Stock Transfer, Inc.
1859 Whitney Mesa Drive
Henderson, NV 89014
Telephone: (702) 818-5898
Facsimile: (702) 974-1444
Attention: Brian Barthlow
E-mail: brian@empirestock.com

If to a Buyer, to (i) its e-mail address set forth on Schedule I, with copies to
such Buyer’s representatives as set forth on Schedule I and (ii) to:
Antara Capital LP
500 Fifth Avenue, Suite 2320
New York, NY 10110
Attention: Lance Kravitz
Email: Operations@antaracapital.com
with a copy (for informational purposes only) to:
Milbank LLP
2029 Century Park East, 33rd Floor
Los Angeles, CA 90067
Telephone: (424) 386-4000
Facsimile: (212) 751-4864
Attention: Casey T. Fleck
E-mail: Cfleck@milbank.com

and
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HT Investments MA LLC
High Trail Capital
221 River Street, 9th Floor
Hoboken, NJ 07030
Attn: Eric Helenek
E-Mail: notices@hightrailcap.com

with a copy (for informational purposes only) to:
Latham & Watkins LLP
12670 High Bluff Drive
San Diego, CA 92130
Facsimile: (858) 523-5450
Attention: Michael E. Sullivan
E-Mail: michael.sullivan@lw.com

or to such other address, e-mail address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or e-mail containing
the time, date, recipient facsimile number and, with respect to each facsimile
transmission, an image of the first page of such transmission or (C) provided by
an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clauses (i), (ii) or (iii) above, respectively.
(g)Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including
any purchasers of any of the Convertible Notes. Neither the Company nor any
Guarantor shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of each of the Buyers, including, without
limitation, by way of a Fundamental Change (as defined in the Convertible Notes)
(unless the Company and each of its Subsidiaries is in compliance with the
applicable provisions governing Fundamental Changes set forth in the Convertible
Notes). A Buyer may assign some or all of its rights hereunder in connection
with any transfer of any of its Securities without the consent of the Company or
the Guarantors, provided that such assignee agrees in writing to be bound by the
provisions hereof that apply to Buyers in which event such assignee shall be
deemed to be a Buyer hereunder with respect to such assigned rights.
(h)No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, other than the Indemnitees referred to in Section 8(k).
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(i)Survival. The representations, warranties, agreements and covenants shall
survive the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j)Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(k)Indemnification.
(i)In consideration of each Buyer’s execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company’s and each Guarantor’s other obligations under the Transaction
Documents, the Company and each Guarantor shall, jointly and severally, defend,
protect, indemnify and hold harmless each Buyer and each holder of any
Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons’ agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (A) any misrepresentation or breach of any
representation or warranty made by the Company or any of the Guarantors in any
of the Transaction Documents, (B) any breach of any covenant, agreement or
obligation of the Company or any of the Guarantors contained in any of the
Transaction Documents or (C) any cause of action, suit, proceeding or claim
brought or made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Company or any Subsidiary)
or which otherwise involves such Indemnitee that arises out of or results from
(1) the execution, delivery, performance or enforcement of any of the
Transaction Documents (including, without limitation, any hedging or similar
activities in connection therewith), or (2) the status of such Buyer or holder
of the Securities either as an investor in the Company or any Guarantor pursuant
to the transactions contemplated by the Transaction Documents or as a party to
this Agreement (including, without limitation, any hedging or similar activities
in connection therewith or as a party in interest or otherwise in any action or
proceeding for injunctive or other equitable relief); provided, however, that
the foregoing indemnity will not, as to any Indemnitee, be available to the
extent that such Indemnified Liabilities are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted
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primarily from the bad faith, gross negligence or willful misconduct of, the
inaccuracy of any representation or warranty made by, or material breach of any
Transaction Document by, such Indemnitee. To the extent that the foregoing
undertaking by the Company and the Guarantors may be unenforceable for any
reason, the Company and the Guarantors, jointly and severally, shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
(ii)Promptly after receipt by an Indemnitee under this Section 8(k) of notice of
the commencement of any action or proceeding (including, without limitation, any
governmental action or proceeding) involving an Indemnified Liability, such
Indemnitee shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8(k), deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnitee; provided, however, that an Indemnitee
shall have the right to retain its own counsel with the fees and expenses of
such counsel to be paid by the indemnifying party if: (i) the indemnifying party
has agreed in writing to pay such fees and expenses; (ii) the indemnifying party
shall have failed promptly to assume the defense of such Indemnified Liability
and to employ counsel reasonably satisfactory to such Indemnitee in any such
Indemnified Liability; or (iii) the named parties to any such Indemnified
Liability (including, without limitation, any impleaded parties) include both
such Indemnitee and the indemnifying party, and such Indemnitee shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnitee and the indemnifying party (in which
case, if such Indemnitee notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, then
the indemnifying party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the indemnifying party), provided
further that in the case of clause (iii) above the indemnifying party shall not
be responsible for the reasonable fees and expenses of more than one (1)
separate legal counsel for such Indemnitee. The Indemnitee shall reasonably
cooperate with the indemnifying party in connection with any negotiation or
defense of any such action or claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the Indemnitee
which relates to such Indemnified Liability. The indemnifying party shall keep
the Indemnitee reasonably apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. No indemnifying party shall
be liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnitee, consent to entry of
any judgment or enter into any
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settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnitee of a release
from all liability in respect to such Indemnified Liability, and such settlement
shall not include any admission as to fault on the part of the Indemnitee.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnitee with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnitee under this
Section 8(k), except to the extent that the indemnifying party is materially and
adversely prejudiced in its ability to defend such action. The indemnification
required by this Section 8(k) shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or Indemnified Liabilities are incurred. The indemnity and contribution
agreements contained herein shall be in addition to (i) any cause of action or
similar right of the Indemnitees against the indemnifying party or others, and
(ii) any liabilities the indemnifying party may be subject to pursuant to the
law.
(l)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. No specific
representation or warranty shall limit the generality or applicability of a more
general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this Agreement that relate to
the Common Stock shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar transactions
that occur with respect to the Common Stock after the date of this Agreement.
Notwithstanding anything in this Agreement to the contrary, for the avoidance of
doubt, nothing contained herein shall constitute a representation or warranty
against, or a prohibition of, any actions with respect to the borrowing of,
arrangement to borrow, identification of the availability of, and/or securing
of, securities of the Company or any of the Guarantors in order for such Buyer
(or its broker or other financial representative) to effect short sales or
similar transactions in the future.
(m)Remedies. Each Buyer and in the event of assignment by such Buyer of its
rights and obligations hereunder, each holder of Securities, shall have all
rights and remedies set forth in the Transaction Documents and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company and each Guarantor recognizes that in the event that it fails to
perform, observe, or discharge any or all of its obligations under the
Transaction Documents, any remedy at law would inadequate relief to the Buyers.
The Company and each Guarantor
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therefore agree that the Buyers shall be entitled to specific performance and/or
temporary, preliminary and permanent injunctive or other equitable relief from
any court of competent jurisdiction in any such case without the necessity of
proving actual damages and without posting a bond or other security. The
remedies provided in this Agreement and the other Transaction Documents shall be
cumulative and in addition to all other remedies available under this Agreement
and the other Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief).
(n)Withdrawal Right. Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever
any Buyer exercises a right, election, demand or option under a Transaction
Document and the Company or any of the Guarantors do not timely perform their
related obligations within the periods therein provided, then such Buyer may
rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company or such Guarantor (as the case may be), any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
(o)Payment Set Aside; Currency. To the extent that the Company or any Guarantor
makes a payment or payments to any Buyer hereunder or pursuant to any of the
other Transaction Documents or any of the Buyers enforce or exercise their
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
or such Guarantor, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred. Unless otherwise
expressly indicated, all dollar amounts referred to in this Agreement and the
other Transaction Documents are in United States Dollars (“U.S. Dollars”), and
all amounts owing under this Agreement and all other Transaction Documents shall
be paid in U.S. Dollars. All amounts denominated in other currencies (if any)
shall be converted into the U.S. Dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to
any amount of currency to be converted into U.S. Dollars pursuant to this
Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal
on the relevant date of calculation.
(p)Judgment Currency.
(i)If for the purpose of obtaining or enforcing judgment against the Company or
any of the Guarantors in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to convert into
any other currency (such other currency being hereinafter in this Section 8(p)
referred to as the “Judgment Currency”) an amount due in U.S.
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Dollars under this Agreement, the conversion shall be made at the Exchange Rate
prevailing on the Business Day immediately preceding:
(1)the date actual payment of the amount due, in the case of any proceeding in
the courts of New York or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date; or
(2)the date on which the foreign court determines, in the case of any proceeding
in the courts of any other jurisdiction (the date as of which such conversion is
made pursuant to this Section 8(p)(i)(2) being hereinafter referred to as the
“Judgment Conversion Date”).
(ii)If in the case of any proceeding in the court of any jurisdiction referred
to in Section 8(p)(i)(2) above, there is a change in the Exchange Rate
prevailing between the Judgment Conversion Date and the date of actual payment
of the amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of U.S. Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.
(iii)Any amount due from the Company or a Guarantor under this provision shall
be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other
Transaction Document.
(q)Independent Nature of Buyers’ Obligations and Rights. The obligations of each
Buyer under the Transaction Documents are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as, and the Company and each Guarantor acknowledges that
the Buyers do not so constitute, a partnership, an association, a joint venture
or any other kind of group or entity, or create a presumption that the Buyers
are in any way acting in concert or as a group or entity, and neither the
Company nor any Guarantor shall assert any such claim with respect to such
obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company and each Guarantor acknowledges that the Buyers are not
acting in concert or as a group, and neither the Company nor any of the
Guarantors shall assert any such claim, with respect to such obligations or the
transactions contemplated by the Transaction Documents. The decision of each
Buyer to purchase Securities pursuant to the Transaction Documents has been made
by such Buyer independently of any other Buyer. Each Buyer acknowledges that no
other Buyer has acted as agent for such Buyer in connection with such Buyer
making its investment hereunder and that no other Buyer
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will be acting as agent of such Buyer in connection with monitoring such Buyer’s
investment in the Securities or enforcing its rights under the Transaction
Documents. The Company, each Guarantor and each Buyer confirms that each Buyer
has independently participated with the Company and the Guarantors in the
negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors. Each Buyer shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose. The use of a single agreement to effectuate the
purchase and sale of the Securities contemplated hereby was solely in the
control of the Company and the Guarantors, not the action or decision of any
Buyer, and was done solely for the convenience of the Company and the Guarantors
and not because it was required or requested to do so by any Buyer. It is
expressly understood and agreed that each provision contained in each of the
Transaction Document is between the Company, each Guarantor and a Buyer, solely,
and not between the Company, the Guarantors and the Buyers collectively and not
between and among the Buyers.
(r)Performance Date. If the date by which any obligation under any of the
Transaction Documents must be performed occurs on a day other than a Business
Day, then the date by which such performance is required shall be the next
Business Day following such date.
(s)Enforcement Fees. The Company and each Guarantor agrees, jointly and
severally, to pay all costs and expenses of the Buyers reasonably incurred as a
result of enforcement of the Transaction Documents and the collection of any
amounts owed to the Buyers hereunder (whether in cash, equity or otherwise),
including, without limitation, reasonable attorneys’ fees and expenses.
[signature pages follow]

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IN WITNESS WHEREOF, each Buyer, the Company and each Guarantor has caused their
respective signature page to this Agreement to be duly executed as of the date
first written above.
COMPANY:
WORKHORSE GROUP INC.
By:        
Name:    Duane A. Hughes
Title:    Chief Executive Officer

Ex. C

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GUARANTOR:
WORKHORSE TECHNOLOGIES INC.

By:        
Name:    
Title:    

2    

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GUARANTOR:
WORKHORSE MOTOR WORKS INC.

By:        
Name:    
Title:    

3    

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GUARANTOR:
WORKHORSE PROPERTIES INC.

By:        
Name:    
Title:    

4    

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BUYER:
ANTARA CAPITAL LP
By:        
Name:    Himanshu Gulati
Title: Chief Investment Officer (CIO)

5    

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BUYER:
HT INVESTMENTS MA LLC

By:        
Name:    
Title:

6