Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 30, 2020,
is by and among Workhorse Group Inc., a Nevada corporation with offices located
at 100 Commerce Drive, Loveland, Ohio 45140 (the “Company”), and each of the
investors listed on the Schedule of Buyers attached hereto (individually, a
“Buyer” and collectively, the “Buyers”).

 

RECITALS

 

A. The Company has authorized a new series of 4.50% Senior Secured Convertible
Notes in the form attached hereto as Exhibit A (the “Convertible Notes”), 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 the
Schedule of Buyers.

 

D. At the Closing (as defined below), the parties hereto shall execute and
deliver a Security Agreement, in the form attached hereto as Exhibit B (the
“Security Agreement”), pursuant to which the Company has agreed to grant a first
priority security interest to the holders of the Convertible Notes in
substantially all of its assets.

 

E. At or before the Closing, each of the officers and directors of the Company
and Stephen S. Burns shall execute and deliver a Voting Agreement, in the form
attached hereto as Exhibit C (the “Voting Agreement”), pursuant to which such
parties shall agree to vote their shares of the Company’s Common Stock in favour
of providing the Requisite Stockholder Approval (as defined in the Convertible
Notes).

 

F. The Convertible Notes and Conversion Shares are collectively referred to
herein as the “Securities.”

 

G. The Company and each Buyer is executing and delivering this Agreement in
reliance upon the effective registration statement on Form S-3 (Commission File
No. 333-237920) (the “Registration Statement”) filed by the Company with the
United States Securities and Exchange Commission (the “SEC”) pursuant to the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the “1933 Act”), for the registration of the
Securities, as such Registration Statement may be amended and supplemented from
time to time (including pursuant to Rule 462(b) of the 1933 Act), including all
documents filed as part thereof or incorporated by reference therein, and
including all information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430B of the 1933 Act, and the prospectus
supplement (the “Prospectus Supplement”) complying with Rule 424(b) of the 1933
Act that is delivered by the Company to each Buyer in connection with the
execution and delivery of this Agreement, including the documents incorporated
by reference therein, and that is filed with the SEC.

 

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AGREEMENT

 

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 and each Buyer hereby
agree as follows:

 

1.PURCHASE AND SALE OF PURCHASEd SECURITIES.

 

(a) Purchase of Purchased Securities. Subject to the satisfaction (or waiver) of
the conditions set forth in Sections 6 and 7 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
the Schedule of Buyers (the “Purchased Securities”).

 

(b) Closing.  The closing (the “Closing”) of the purchase of the Purchased
Securities by the Buyers shall occur at the offices of Latham & Watkins LLP, 885
Third Avenue, New York, NY 10022. The date and time of the Closing (the “Closing
Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on
which the conditions to the Closing set forth in Sections 6 and 7 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 New York, 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 New York, New York are open for use by customers on such
day.

 

(c) Securities Purchase Price.  The aggregate purchase price for the Purchased
Securities to be purchased by each Buyer (the “Purchase Price”) shall be the
amount set forth opposite such Buyer’s name in column (4) on the Schedule of
Buyers.

 

(d) Form of Payment for Purchased Securities.  On the Closing Date, (i) each
Buyer shall pay its respective Purchase Price to the Company for the Purchased
Securities to be issued and sold to such Buyer at the Closing set forth opposite
such Buyer’s name in column (4) on the Schedule of Buyers on the Closing Date,
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 the Schedule of Buyers, duly executed on
behalf of the Company and registered in the name of such Buyer or its designee.

 

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2.BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally and not jointly, represents and warrants to the Company
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.

 

3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each of the Buyers that, as of the date
hereof and as of the Closing Date:

 

(a) Compliance with Registration Requirements. The Registration Statement has
become effective under the 1933 Act. The Company has complied, to the SEC’s
satisfaction, with all requests of the SEC for additional or supplemental
information, if any. No stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the knowledge of the Company, are
contemplated or threatened by the SEC. At the time the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019 (the “Annual Report”) was
filed with the SEC, or, if later, at the time the Registration Statement was
originally filed with the SEC, the Company met the then-applicable requirements
for use of Form S-3 under the 1933 Act. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement, at the time they
were or hereafter are filed with the SEC, or became effective under the
Securities Exchange Act of 1934, as amended (the “1934 Act”), as the case may
be, complied and will comply in all material respects with the requirements of
the 1934 Act.

 

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(b) Disclosure. The Prospectus Supplement when filed complied in all material
respects with the 1933 Act. Each of the Registration Statement and any
post-effective amendment thereto, at the time it became or becomes effective,
complied and will comply in all material respects with the 1933 Act and did not
and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus Supplement (including any Prospectus
wrapper), as of its date, did not, and at the Closing Date, will not, contain
any untrue statement of a material fact or omit to state a material fact
necessary in 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 Prospectus Supplement or to
be filed as an exhibit to the Registration Statement 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, any of its Subsidiaries (as defined below) 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).

 

(c) Organization and Qualification.  Each of 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.  Each of 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 defined below).  As
used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations
(including results thereof), or condition (financial or otherwise) 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 its Subsidiaries to
perform any of their respective obligations under any of the Transaction
Documents.  Other than the Persons (as defined below) set forth on
Schedule 3(c), the Company has no significant Subsidiaries within the meaning of
Rule 1-02(w) of Regulation S-X.  “Subsidiaries” means any Person in which the
Company, directly or indirectly, (I) owns any of the outstanding capital stock
or holds any equity or similar interest of such Person or (II) controls or
operates all or any part of the business, operations or administration of such
Person, and each of the foregoing, is individually referred to herein as a
“Subsidiary.”  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.

 

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(d) Authorization; Enforcement; Validity.  The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and
the other Transaction Documents and to issue the Securities in accordance with
the terms hereof and thereof.  Each Subsidiary 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 this Agreement
and the other Transaction Documents by the Company, and the consummation by the
Company and its Subsidiaries of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Convertible Notes and the
reservation for issuance and issuance of the Conversion Shares issuable upon
conversion of the Convertible Notes) have been duly authorized by the Company’s
board of directors, and (other than (i) the filing with the SEC of the
Prospectus Supplement in accordance with the requirements of this Agreement,
(ii) any filings as may be required by any state securities agencies and (iii) a
Listing of Additional Shares Notification with the Principal Market (as defined
below) (collectively, the “Required Filings”)) no further filing, consent or
authorization is required by the Company, its Subsidiaries, their respective
boards of directors or their stockholders or other governing body.  This
Agreement has been, and the other Transaction Documents to which it is a party
will be prior to the Closing, duly executed and delivered by the Company, and
each constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its 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 Convertible Notes, the
Security Agreement, the Voting Agreement, the Irrevocable Transfer Agent
Instructions (as defined below) 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.

 

(e) 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 20,000,000 shares for issuance upon
the issuance of the Conversion Shares.  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.

 

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(f) No Conflicts.  The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company 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 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.

 

(g) Consents.  Neither the Company nor any Subsidiary 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 Company’s knowledge, other than the Required
Filings, all consents, authorizations, orders, filings and registrations which
the Company or any Subsidiary 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 its Subsidiaries are aware of any facts
or circumstances which might prevent the Company or any of its Subsidiaries 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.

 

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(h) Acknowledgment Regarding Buyer’s Purchase of Securities.  The Company
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 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 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 further represents to each Buyer that the Company’s and
each Subsidiary’s decision to enter into the Transaction Documents to which it
is a party has been based solely on the independent evaluation by the Company,
each Subsidiary and their respective representatives.

 

(i) Placement Agent.  The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other
than for Persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby.  The Company 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.  Neither the Company nor
any of its Subsidiaries has engaged any placement agent or other agent in
connection with the offer or sale of the Securities.

 

(j) No Integrated Offering.  None of the Company, its Subsidiaries 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 are listed or
designated for quotation.  Except as contemplated by the terms of this
Agreement, none of the Company, its Subsidiaries, 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.

 

(k) 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.

 

(l) 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 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. 

 

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(m) Financial Statements.  During the one (1) year prior to the date hereof, the
Company has timely filed all reports, schedules, forms, proxy statements,
statements and other documents required to be filed by it with the SEC (other
than Section 16 ownership filings) pursuant to the reporting requirements of 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 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”).  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. 
Except as set forth on Schedule 3(m), 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 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 (including, without limitation, information
referred to in the disclosure schedules to this Agreement) 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.

 

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(n) 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 adverse change and no material adverse development in the
business, assets, liabilities, properties, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company or any
of its Subsidiaries.  Since the date of the Company’s most recent audited
financial statements contained in a Form 10-K, except as set forth on
Schedule 3(n) or 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, (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(l), “Insolvent”
means, (i) with respect to the Company and its Subsidiaries, 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.

 

(o) 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) except as set forth on Schedule 3(o), the Company
has received no communication, 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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(p) Foreign Corrupt Practices.  Neither the Company, any of the Company’s
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, 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.

 

(q) Sarbanes-Oxley Act.  Except as disclosed in the SEC Documents, the Company
and each Subsidiary is 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.

 

(r) Transactions With Affiliates.  Except as set forth on Schedule 3(r), 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 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, 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).

 

10

 

 

(s) 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, 91,153,943 are issued and outstanding and 25,256,163
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, all of which are issued and outstanding.  No shares of Common
Stock are held in the treasury of the Company.

 

(ii) Valid Issuance; Available Shares; Affiliates.  All of such outstanding
shares are duly authorized and have been, or upon issuance will be, validly
issued and are fully paid and nonassessable.  Schedule 3(s)(ii) sets forth the
number of shares of Common Stock that are (A) reserved for issuance pursuant to
Convertible Securities (other than the Convertible Notes) and (B) that are, as
of the date hereof, 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) and 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 “affiliates” for purposes of federal securities laws)
of the Company or any of its Subsidiaries.  Except as set forth on Schedule
3(s)(ii), 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(s)(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
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.

 

11

 

 

(iv) Organizational Documents.  The Company has furnished to the Buyers true,
correct and complete copies of the Company’s Certificate of Incorporation, as
amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s bylaws, as amended and as in effect on the
date hereof (the “Bylaws”), and the terms of all Convertible Securities and the
material rights of the holders thereof in respect thereto.

 

(t) Indebtedness and Other Contracts.  Except as set forth on Schedule 3(t),
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.

 

12

 

 

(u) Litigation.  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, 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, except as set forth in Schedule 3(u). 
To the knowledge of the Company, 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, 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, the Company is not
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.

 

(v) 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.

 

13

 

 

(w) 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, 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
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.

 

(x) 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 is
material to the business of the Company (the “Real Property”).  Except as set
forth on Schedule 3(x), 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.

 

(y) 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 Subsidiary 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. Except as set forth on Schedule 3(y), 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.

 

14

 

 

(z) 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. 
Except as set forth on Schedule 3(z), the Company does not have any knowledge of
any infringement by the Company or its Subsidiaries of Intellectual Property
Rights of others.  Except as set forth on Schedule 3(z), there is no claim,
action or proceeding being made or brought, or to the knowledge of the Company
or any of its Subsidiaries, being threatened, against the Company or any of its
Subsidiaries regarding its Intellectual Property Rights, except where such
claim, action or proceeding is not reasonably likely to result in a Material
Adverse Effect.  Neither the Company nor any of its Subsidiaries has received
any notice alleging any such infringement or claim, action or proceeding.

 

(aa) 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 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 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 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.

 

(ii) No Hazardous Materials:

 

(A) to the Company’s knowledge, 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

 

(B) to the Company’s knowledge, are present on, over, beneath, in or upon any
Real Property or any portion thereof in quantities that would constitute a
violation of 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.

 

(iii) To the Company’s knowledge, neither the Company nor any of its
Subsidiaries knows of any other person who or entity 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.

 

15

 

 

(iv)  To the knowledge of the Company, none of the Real Property is on any
federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for
CERCLIS, nor subject to any environmental related Liens.

 

(bb) 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 that are material in amount, 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.

 

(cc) 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 be disclosed by the Company in the reports that it files
or submits under the 1934 Act is 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 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.

 

16

 

 

(dd) 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.

 

(ee) Investment Company Status.  The Company is not, and upon consummation of
the sale of the Securities will not be, an “investment company,”  or a company
controlled by an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.

 

(ff) Acknowledgement Regarding Buyers’ Trading Activity.  It is understood and
acknowledged by the Company 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 “derivative” securities based on securities issued
by the Company 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 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
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 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.

 

(gg) Manipulation of Price.  Neither the Company nor any of its Subsidiaries
has, and, to the knowledge of the Company, 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.

 

(hh) 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 Code, and the Company and each
Subsidiary shall so certify upon any Buyer’s request.

 

17

 

 

(ii) 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 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.

 

(jj) 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 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.

 

(kk) Shell Company Status.  The Company is not, and has never been, an issuer
identified in, or subject to, Rule 144(i).

 

(ll) Illegal or Unauthorized Payments; Political Contributions.  Neither the
Company nor any of its Subsidiaries nor, to the best of the Company’s 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.

 

18

 

 

(mm) 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, including, without limitation, the laws, regulations and
Executive Orders and sanctions programs administered by the U.S. Office of
Foreign Assets Control, including, but not limited, to (i) Executive Order 13224
of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg.
49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter
V.

 

(nn) Management.  During the past five year period, no current or former officer
or director, to the knowledge of the Company, has been the subject of:

 

(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 that do not relate to driving
while intoxicated or driving under the influence);

 

(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

 

19

 

 

(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.

 

(oo) Stock Option Plans.  Except as set forth on 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
Company’s knowledge, 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 Company and its Subsidiaries’ information technology
assets and equipment, computers, systems, networks, hardware, software,
websites, applications, and databases (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 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 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
Systems and Personal Data from unauthorized use, access, misappropriation or
modification.

 

20

 

 

(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, been inaccurate or in violation of any applicable laws and
regulatory rules or requirements in any material respect. The Company further
certifies that neither it nor any Subsidiary: (i) has received notice of any
actual or potential liability under or relating to, or actual or potential
violation of, any of the Privacy Laws, and has no knowledge of any event or
condition that would reasonably be expected to result in any such notice; (ii)
is currently conducting or paying for, in whole or in part, any investigation,
remediation, or other corrective action pursuant to any Privacy Law; or (iii) is
a party to any order, decree, or agreement that imposes any obligation or
liability under any Privacy Law.

 

(rr) No Additional Agreements.  The Company does not have 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 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 this
Agreement and the other Transaction Documents.  The Company 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 Company or any of its Subsidiaries to each Buyer pursuant to or in
connection with this Agreement and the other 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 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 (including
the related portions of the Schedules) and in Section 2 of the Security
Agreement, neither the Company 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.

 

21

 

 

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 6 of this Agreement.  The Company shall use its best efforts to timely
satisfy each of the covenants hereunder and conditions to be satisfied by it as
provided in Section 7 of this Agreement.

 

(b) Blue Sky.  The Company shall, on or before the Closing Date, take such
action as the Company 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 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 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 securities of the
Company or any of its Subsidiaries or (ii) the settlement of any outstanding
litigation that involves payment by the Company or $500,000 or more.

 

(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).

 

22

 

 

(e) Fees. The Company 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 Latham &
Watkins LLP, counsel to the lead Buyer, 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 Buyer, may be
withheld by the lead Buyer from its Purchase Price at the Closing; provided,
however, that the legal fees and expenses payable by the Company hereunder in
connection with the structuring, documentation, negotiation, and closing of the
transactions contemplated by the Transaction Documents shall not exceed $75,000.
The Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, transfer agent fees, fees of the Depository Trust
Company (“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 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 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 Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document.  The Company 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 the date of this Agreement, 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.  No later than
5:30 p.m., New York time, on the fourth (4th) Business Day after the date of
this Agreement, 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 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
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.

 

23

 

 

(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 shall not, and the Company shall cause each of its
Subsidiaries and each of its and their 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 to keep such information
confidential.  To the extent that the Company delivers any material, non-public
information to a Buyer without such Buyer’s prior written consent, the Company
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, its
Subsidiaries 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 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 shall not (and shall cause each of its Subsidiaries and
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 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.

 

24

 

 

(h) Additional Issuance of Securities. 

 

(i) So long as any Convertible Notes remain outstanding, the Company will not,
without the prior written consent of the Required Holders (as defined below),
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.  The Company agrees that for the period
commencing on the date hereof and ending on the date immediately following the
45th calendar day after the Closing Date (the “Restricted Period”), neither the
Company nor any of its Subsidiaries shall directly or indirectly (i) 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 any equity-linked or related
security (including, without limitation, any “equity security” (as that term is
defined under Rule 405 promulgated under the 1933 Act), any Convertible
Securities, any preferred stock or any purchase rights) (any such issuance,
offer, sale, grant, disposition or announcement (whether occurring during the
Restricted Period or at any time thereafter) is referred to as a “Subsequent
Placement”) or (ii) submit or file any registration statement under the 1933 Act
in respect of any of the foregoing.  Notwithstanding the foregoing, this
Section 4(h)(i) shall not apply during the Restricted Period in respect of the
issuance of (i) 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 (i) 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; (ii) 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;
(iii) shares of the Company’s capital stock issuable pursuant to shareholder
rights plans; (iv) shares of Common Stock issued as matching contributions under
the Company’s 401(k) plan; (v) shares of Common Stock issued by the Company at a
per share purchase price greater than one hundred fifty percent (150%) of the
Conversion Price (as defined in the Convertible Notes); and (vi) the Conversion
Shares.  In addition, notwithstanding the foregoing, the Company may file a
prospectus supplement with the SEC and enter into a sales agreement relating to
an at-the-market offering program, provided that no shares may be offered or
sold pursuant to such at-the-market offering during the Restricted Period.
“Approved Stock Plan” means any stock option plans, equity incentive plans or
employee benefit plans 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. 
“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.

 

25

 

 

(ii) 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 (i)
issues or sells any Convertible Securities either (A) 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 (B) 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 (ii) 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);
provided that neither the Company nor any Subsidiary may offer or sell shares
pursuant to an at-the-market offering during the Restricted Period.

 

(iii) 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, no less than a number of
shares of Common Stock equal to two hundred percent (200%) of a fraction, the
numerator of which shall be (x) the then outstanding Principal Amount (as
defined in the Convertible Notes) of the Convertible Notes and the denominator
of which shall be (y) the Market Stock Payment Price (as defined in the
Convertible Notes) then in effect (the “Required Reserve Amount”); 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. 
If at any time the number of shares of Common Stock authorized and reserved for
issuance is not sufficient to meet the Required Reserve Amount, the Company will
promptly take all corporate action necessary to authorize and reserve a
sufficient number of shares, including, without limitation, calling a special
meeting of stockholders to authorize additional shares to meet the Company’s
obligations pursuant to the Transaction Documents, in the case of an
insufficient number of authorized shares, obtain stockholder approval (if
required) of an increase in such authorized number of shares, and voting the
management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is
sufficient to meet the Required Reserve Amount.

 

26

 

 

(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.

 

(k) Passive Foreign Investment Company.  The Company shall conduct its business,
and shall cause its Subsidiaries to conduct their respective businesses, in such
a manner as will ensure that the Company will not be deemed to constitute a
passive foreign investment company within the meaning of Section 1297 of the
Code.

 

(l) Restriction on Redemption and Cash Dividends.  Except for dividends required
by the Company’s Class B Preferred Stock as of the date of this Agreement, so
long as any of the Convertible Notes are outstanding, the Company shall not,
directly or indirectly, redeem, or declare or pay any cash dividend or
distribution on, any securities of the Company without the prior express written
consent of the Buyers (other than as required by the Convertible Notes or as
required by the terms thereof as in effect on the date hereof).

 

(m) 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 is in compliance with the applicable
provisions governing Fundamental Changes set forth in the Convertible Notes.

 

(n) 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 the Required
Holders, 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.

 

(o) 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.

 

(p) Regulation M.  The Company will not take any action prohibited by Regulation
M under the 1934 Act, in connection with the distribution of the Securities
contemplated hereby.

 

(q) Integration.  None of the Company, any of its affiliates (as defined in
Rule 501(b) under the 1933 Act), or any person acting on behalf of the Company
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 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.

 

27

 

 

(r) Closing Documents.  On or prior to fourteen (14) calendar days after the
Closing Date, the Company agrees to deliver, or cause to be delivered, to each
Buyer and Latham & Watkins 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 7 hereof or otherwise (which may be
in photocopies or pdf versions of executed copies).

 

(s) Stockholder Approval. Following the Closing, the Company agrees to use best
efforts to obtain, at the next annual meeting of the stockholders of the Company
(at which a quorum is present), but in no event later than November 25, 2020
(the “Stockholder Meeting”), the Requisite Stockholder Approval. The Company
will prepare and file with the SEC a proxy statement to be sent to the Company’s
stockholders in connection with the Stockholder Meeting (the “Proxy Statement”).
The Proxy Statement shall include the Board of Directors’ recommendation that
the holders of shares of the Company’s Common Stock vote in favor of the
Requisite Stockholder Approval. If the Requisite Stockholder Approval is not
obtained at or prior to the Stockholder Meeting, the Company will hold a special
meeting of the stockholders of the Company for the purposes of obtaining such
Requisite Stockholder Approval no less often than every ninety (90) days
following the date of the Stockholder Meeting until the Requisite Stockholder
Approval is obtained, and the Board of Directors will recommend that the holders
of shares of the Company’s Common Stock vote in favor of the Requisite
Stockholder Approval at each such meeting.

 

(t) Legends. Certificates and any other instruments evidencing the Securities
shall not bear any restrictive or other legend.

 

(u) Voting Agreements. The Company may not amend, modify or waive the terms of
the Voting Agreements in any respect without the prior written consent of the
Required Holders.

 

5.REGISTER; TRANSFER AGENT INSTRUCTIONS.

 

(a) Register.  The Company shall maintain at its principal executive offices (or
such other office or agency of the Company as it may designate by notice to each
holder of Securities), a register for the Securities in which the Company shall
record the name and address of the Person in whose name the Purchased Securities
have been issued (including the name and address of each transferee), the
aggregate number of the Convertible Notes held by such Person, the number of
Conversion Shares issuable pursuant to the terms of the Convertible Notes held
by such Person.  The Company shall keep the register open and available at all
times during business hours for inspection of any Buyer or its legal
representatives.

 

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(b) Transfer Agent Instructions.  The Company shall issue irrevocable
instructions to its transfer agent and any subsequent transfer agent (as
applicable) (the “Transfer Agent”) in a form acceptable to each of the Buyers
(the “Irrevocable Transfer Agent Instructions”) to credit shares to each such
Buyer’s (or its designee’s) account at DTC through its Deposit/Withdrawal At
Custodian (“DWAC”) System or, if the DWAC System is not available, to issue
certificates to the applicable balance accounts at DTC, registered in the name
of each Buyer or its respective nominee(s), for the Conversion Shares in such
amounts as specified from time to time by each Buyer to the Company upon
conversion of the Convertible Notes.  The Company represents and warrants that
no instruction other than the Irrevocable Transfer Agent Instructions referred
to in this Section 5(b) will be given by the Company to the Transfer Agent with
respect to the Securities, and that the Securities shall otherwise be freely
transferable on the books and records of the Company, as applicable, to the
extent provided in this Agreement and the other Transaction Documents.  If a
Buyer effects a sale, assignment or transfer of the Securities, the Company
shall permit the transfer and shall promptly instruct the Transfer Agent to
issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment.  The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
a Buyer.  Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5(b) will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 5(b), that a Buyer shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.  Any fees
(with respect to the Transfer Agent, counsel to the Company or otherwise)
associated with the removal of any legends on any of the Securities shall be
borne by the Company.

 

(c) 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.

 

6.CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL THE PURCHASED SECURITIES.

 

(a) The obligation of the Company hereunder to issue and sell the Purchased
Securities 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 Company’s sole benefit and may be waived by the
Company at any time in its 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.

 

(ii) Such Buyer and each other Buyer shall have delivered to the Company the
Purchase Price for the Purchased Securities 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.

 

29

 

 

7.CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE the purchased securities.

 

(a) The obligation of each Buyer hereunder to purchase its Purchased Securities
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 may be waived by such Buyer at any time in its sole
discretion by providing the Company with prior written notice thereof:

 

(i) The Company and each Subsidiary (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 Company shall have duly executed and delivered to such
Buyer in accordance with Section 1(a) the Purchased Securities as set forth
across from such Buyer’s name in column (3) of the Schedule of Buyers 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, the Company’s counsel, dated as of the Closing Date, in the form acceptable
to such Buyer.

 

(iii) The Company shall have delivered to such Buyer a copy of the Irrevocable
Transfer Agent Instructions, in the form acceptable to such Buyer, which
instructions shall have been delivered to and acknowledged in writing by the
Transfer Agent.

 

(iv) The Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company 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.

 

(v) The Company shall have delivered to such Buyer a certified copy of the
Certificate of Incorporation as certified by the Delaware Secretary of State
within ten (10) days of the Closing Date.

 

(vi) The Company shall have delivered to such Buyer a certificate, in the form
acceptable to such Buyer, executed by the Secretary of the Company and dated as
of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as
adopted by the Company’s board of directors in a form reasonably acceptable to
such Buyer, (ii) the Certificate of Incorporation of the Company and (iii) the
Bylaws of the Company, each as in effect at the Closing.

 

30

 

 

(vii) Each and every representation and warranty of the Company 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 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 at or prior to the Closing Date.  Such Buyer shall
have received a certificate, duly executed by the Chief Executive Officer of the
Company, 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.

 

(viii) 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.

 

(ix) 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.

 

(x) The Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Purchased
Securities, including without limitation, those required by the Principal
Market, if any.

 

(xi) 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.

 

(xii) 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.

 

(xiii) The Company shall have obtained approval of the Principal Market to list
or designate for quotation (as the case may be) the Conversion Shares and
confirmation from the Principal Market that no stockholder vote or other
conditions under the rules of the Principal Market shall apply to the sale of
the Purchased Securities or the issuance of the Conversion Shares.

 

(xiv) 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”).

 

(xv) The Company and its Subsidiaries 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.

 

31

 

 

(xvi) The Company 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 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 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.

 

(xvii) The Company shall have delivered to Buyer a duly completed and executed
perfection certificate in the form attached hereto as Exhibit D.

 

(xviii) The Company shall have delivered to such Buyer executed copies of the
Voting Agreements executed by each of the officers and directors of the Company
and Stephen S. Burns.

 

(xix) The Company shall have entered into an intercreditor agreement with the
secured party under the Workhorse Group Inc. Senior Secured Convertible Note due
2022 dated as of December 9, 2010 (the “Existing Note”) in form and substance
reasonably satisfactory to the Buyers.

 

(xx) The Company shall have entered into an amendment to the Existing Note to
include the Convertible Notes as “Permitted Indebtedness” under the Existing
Note, in form and substance reasonably satisfactory to the Buyers.

 

8.TERMINATION.

 

In the event that the Closing shall not have occurred with respect to a Buyer on
or before July 15, 2020, 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, (i) the right to terminate this Agreement under this
Section 8 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 (ii) the
abandonment of the sale and purchase of the Purchased Securities shall be
applicable only to such Buyer providing such written notice; provided further
that no such termination shall affect any obligation of the Company under this
Agreement to reimburse such Buyer for the expenses described in Section 4(e)
above.  In the event that the Closing shall not have occurred with respect to a
Buyer on or before July 30, 2020, then the Company shall have the right to
terminate its obligations under this Agreement with respect to such Buyer at any
time on or after the close of business on such date without liability of the
Company to any other party; provided however, the right to terminate this
Agreement under this Section 8 shall not be available to the Company if the
failure of the transactions contemplated by this Agreement to have been
consummated by such date is the result of the Company’s breach of this
Agreement; provided further that no such termination shall affect any obligation
of the Company under this Agreement to reimburse such Buyer for the expenses
described in Section 4(e) above. Nothing contained in this Section 8 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 specific performance by any other
party of its obligations under this Agreement or the other Transaction
Documents.

 

32

 

 

9.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 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 in any other
jurisdiction to collect on the Company’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.  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.

 

33

 

 

(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. Unless the context otherwise requires, references herein: (x) to
Articles, Sections, Schedules and Exhibits mean the Articles and Sections of,
and Schedules and Exhibits attached to, this Agreement; (y) to an agreement,
instrument or other document means such agreement, instrument or other document
as amended, supplemented and modified from time to time to the extent permitted
by the provisions thereof; and (z) to a statute means such statute as amended
from time to time and includes any successor legislation thereto and any
regulations promulgated thereunder.

 

(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 “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.

 

34

 

 

(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 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 and the
Required Holders, and any amendment to any provision of this Agreement made in
conformity with the provisions of this Section 9(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 the Required Holders 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 9(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 Purchased Securities.  From the date hereof and
while any Purchased Securities are outstanding, the Company shall not be
permitted to receive any consideration from a Buyer or a holder of Purchased
Securities that is not otherwise contemplated by the Transaction Documents in
order to, directly or indirectly, induce the Company or any Subsidiary (i) to
treat such Buyer or holder of Purchased Securities in a manner that is more
favorable than to other similarly situated Buyers or holders of Purchased
Securities, or (ii) to treat any Buyer(s) or holder(s) of Purchased Securities
in a manner that is less favorable than the Buyer or holder of Purchased
Securities 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.  The Company has not, 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 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 Subsidiary or
otherwise.  As a material inducement for each Buyer to enter into this
Agreement, the Company 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 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 representations and
warranties contained in this Agreement or any other Transaction Document. 
“Required Holders” means (I) prior to the Closing Date, each Buyer entitled to
purchase Purchased Securities at the Closing and (II) on or after the Closing
Date, holders of a majority of the Conversion Shares in the aggregate as of such
time issued or issuable hereunder or pursuant to the Convertible Notes.

 

35

 

 

(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 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:

 

(i)Workhorse Group Inc.
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

 

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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 the Schedule of Buyers,
with copies to such Buyer’s representatives as set forth on the Schedule of
Buyers and (ii) to Eric Helenek, High Trail Capital, 221 River Street, 9th
Floor, Hoboken, NJ 07030 (telephone: (917) 414-1733)

 

with a copy (for informational purposes only) to:

 

Latham & Watkins LLP
12670 High Bluff Drive
San Diego, CA 92130
Telephone:  (858) 523-5400
Facsimile:  (858) 523-5450
Attention:  Michael E. Sullivan, Esq.
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 clause (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 Purchased Securities.  The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Required Holders, including, without limitation, by
way of a Fundamental Change (as defined in the Convertible Notes) (unless the
Company 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, provided 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 9(k). 

 

37

 

 

(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 other obligations under the Transaction Documents, the Company shall
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 (i) any misrepresentation or breach of any
representation or warranty made by the Company or any Subsidiary in any of the
Transaction Documents, (ii) any breach of any covenant, agreement or obligation
of the Company or any Subsidiary contained in any of the Transaction Documents
or (iii) 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 (A) the execution,
delivery, performance or enforcement of any of the Transaction Documents, or
(B) the status of such Buyer or holder of the Securities either as an investor
in the Company pursuant to the transactions contemplated by the Transaction
Documents or as a party to this Agreement (including, without limitation, as a
party in interest or otherwise in any action or proceeding for injunctive or
other equitable relief); provided, however, that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arise primarily out of or is based primarily upon the inaccuracy of any
representations and warranties made by such Buyer herein or the gross negligence
or willful misconduct of such Buyer.  To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. 

 

38

 

 

(ii) Promptly after receipt by an Indemnitee under this Section 9(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 9(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 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 9(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 9(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. 

 

39

 

 

(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 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 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
recognizes that in the event that it or any Subsidiary fails to perform,
observe, or discharge any or all of its or such Subsidiary’s (as the case may
be) obligations under the Transaction Documents, any remedy at law would be
inadequate relief to the Buyers.  The Company therefore agrees 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 Subsidiary does not timely perform
its 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 Subsidiary (as the case may be), any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.

 

40

 

 

(o) Payment Set Aside; Currency.  To the extent that the Company 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, 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 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 9(p) referred to as the
“Judgment Currency”) an amount due in U.S. 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 9(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 9(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 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.

 

41

 

 

(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 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 the Company shall not assert any such
claim with respect to such obligations or the transactions contemplated by the
Transaction Documents or any matters, and the Company acknowledges that the
Buyers are not acting in concert or as a group, and the Company shall not 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 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 and each
Buyer confirms that each Buyer has independently participated with the Company
and its Subsidiaries 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, not the action or decision of
any Buyer, and was done solely for the convenience of the Company and its
Subsidiaries 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
this Agreement and in each other Transaction Document is between the Company,
each Subsidiary and a Buyer, solely, and not between the Company, its
Subsidiaries 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 agrees 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]

 

42

 

 

IN WITNESS WHEREOF, each Buyer and the Company have 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

 

43

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

 

BUYER:       HT INVESTMENTS MA, LLC         By:       Name:    Eric Helenek    
Title:   Authorized Signatory

 

 

44

 

 

SCHEDULE OF BUYERS

 

(1)  (2)   (3)   (4)  (5) Buyer  Address and Facsimile Number   Aggregate
Principal Amount of Convertible Notes    Aggregate Purchase Price of Convertible
Notes   Legal Representative’s Address and Facsimile Number HT Investments MA,
LLC 

High Trail Capital

221 River Street, 9th Floor

Hoboken, NJ 07030

Attn: Eric Helenek

E-Mail: notices@hightrailcap.com

  $70,000,000   $69,000,000   Latham & Watkins LLP 12670 High Bluff Drive
San Diego, CA 92130
Telephone: (858) 523-5400
Facsimile: (858) 523-5450
Attention: Michael E. Sullivan, Esq. TOTAL     $70,000,000   $69,000,000    

 

45

 

 

Exhibit A

 

Form of Senior Secured Convertible Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B

 

Form of Security Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit C

 

Form of Voting Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit D

 

Form of Perfection Certificate