Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of November 21,
2019, 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. The Company has authorized the issuance of Warrants to purchase Common Stock
in the form attached hereto as Exhibit B (the “Warrants”), which Warrants shall
be exercisable upon a redemption of the Convertible Notes for shares of Common
Stock in accordance with the terms thereof (such underlying shares of Common
Stock issuable upon exercise of a Warrant, collectively, the “Warrant Shares”
and, together with the Conversion Shares, the “Underlying Shares”).
D. 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.
E. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement, a Warrant.
F. At the Closing (as defined below), the parties hereto shall execute and
deliver a Security Agreement, in the form attached hereto as Exhibit C (the
“Security Agreement”), pursuant to which the Company has agreed to grant a first
priority security interest to the holders of the Convertible Notes in
substantially all of its assets.
G. 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 D (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).

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H. The Convertible Notes, Warrants, Conversion Shares and Warrant Shares are
collectively referred to herein as the “Securities.”
I. 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. 333-213100) (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.
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 following Securities
(collectively, the “Purchased Securities”):
(i) the aggregate principal amount of Convertible Notes as is set forth opposite
such Buyer’s name in column (3) on the Schedule of Buyers; and
(ii) a Warrant exercisable for a number of Warrant Shares calculated in
accordance with the terms of such Warrant.
(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 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); provided that in no event shall the Closing Date be later than December
9, 2019 (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 to remain closed.

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(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 (6) 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) and column (5) on the Schedule of Buyers on the
Closing Date, as applicable, by wire transfer of immediately available funds in
accordance with the Flow of Funds Letter (as defined below) and (ii) the Company
shall:
(A) 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; and
(B) deliver to each Buyer a Warrant, duly executed on behalf of the Company and
registered in the name of such Buyer or its designee.
(e) Purchase Price Allocation.  Each Buyer and the Company agree that the
Convertible Notes and the Warrants constitute an “investment unit” for purposes
of Section 1273(c)(2) of the Code. The Buyers and the Company mutually agree
that the allocation of the issue price of such investment unit between the
Convertible Notes and the Warrants in accordance with Section 1273(c)(2) of the
Code and Treasury Regulation Section 1.1273-2(h) shall be as set forth on the
Schedule of Buyers, and neither the Buyers nor the Company shall take any
position inconsistent with such allocation in any tax return or in any judicial
or administrative proceeding in respect of taxes.
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.

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(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, 2018 (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.
(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
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(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.
(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.
(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
Warrants, the reservation for issuance and issuance of the Underlying Shares
issuable upon conversion of the Convertible Notes and Warrants, as applicable)
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
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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
Warrants, 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 are duly authorized
and when issued and delivered in accordance with the terms of the Transaction
Documents 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 40,000,000 shares for issuance upon the issuance of
the Underlying Shares.  Upon issuance, conversion or exercise in accordance with
the Convertible Notes or Warrants, as applicable, the Underlying 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 issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.
(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, Warrants and the Underlying Shares and the reservation
for issuance of the Underlying 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) other than the Credit Agreement, 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
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(ii) and (iii), the making of the Required Filings and except in the case of
(ii) and (iii), 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 with respect to the Credit Agreement 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.
(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.

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(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 Underlying Shares will increase in certain circumstances.  The Company
further acknowledges that its obligation to issue the Warrants and Underlying
Shares pursuant to the terms of the Convertible Notes and Warrants 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. 
(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
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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.
(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. 
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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.
(p) Foreign Corrupt Practices.  Neither the Company, the Company’s subsidiary 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
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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).
(s) Equity Capitalization.

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(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, 66,858,608 are issued and outstanding and 37,399,278
shares are reserved for issuance pursuant to Convertible Securities (as defined
below) (other than the Convertible Notes and Warrants) 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 Warrants) 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
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no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act;
(D) there are no outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (E) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; and (F) neither the Company nor any
Subsidiary has any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement.
(iv) Organizational Documents.  The Company 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
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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.
(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 Subsidiary 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.

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(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.

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(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.
(i) 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.

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(ii) 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.
(iii) 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
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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.
(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.

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(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.
(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 Underlying Shares upon
conversion or exercise of the Convertible Notes or Warrants, as applicable, 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 Underlying 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
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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.
(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

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(3) Engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of securities laws or
commodities laws;
(iv) any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any authority barring, suspending or otherwise limiting for more
than sixty (60) days the right of any such person to engage in any activity
described in the preceding sub paragraph, or to be associated with persons
engaged in any such activity;
(v) a finding by a court of competent jurisdiction in a civil action or by the
SEC or other authority to have violated any securities law, regulation or decree
and the judgment in such civil action or finding by the SEC or any other
authority has not been subsequently reversed, suspended or vacated; or
(vi) a finding by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding has not been subsequently
reversed, suspended or vacated.
(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
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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.
(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
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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.
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 repayment of all of its outstanding indebtedness under that
certain Credit Agreement, dated December 31, 2018, by and among the Company, as
the Borrower, Marathon Structured Product Strategies Fund, LP, Marathon Blue
Grass Credit Fund, LP, Marathon Centre Street Partnership, L.P. and TRS Credit
Fund, LP, as the Lenders, and Wilmington Trust, National Association, as the
Agent (as amended, the “Credit Agreement”), and, to the extent
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that any net proceeds from the sale of the Securities are remaining after
repayment of the Credit Agreement, for 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 Underlying 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 Underlying Shares from
time to time issuable under the terms of the Transaction Documents on such
national securities exchange or automated quotation system.  The Company shall
maintain the Common Stock’s listing or authorization for quotation (as the case
may be) on the Principal Market, The New York Stock Exchange, the NYSE American,
the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible
Market”).  Neither the Company nor any of its Subsidiaries shall take any action
which could be reasonably expected to result in the delisting or suspension of
the Common Stock on an Eligible Market.  The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(d).
(e) Fees. The Company 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
$150,000. 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
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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.
(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
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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.
(h) Additional Issuance of Securities. 
(i) So long as any Convertible Notes or Warrants remain outstanding, the Company
will not, without the prior written consent of the Required Holders (as defined
below), issue any Convertible Notes or Warrants (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 or Warrants.  The
Company agrees that for the period commencing on the date hereof and ending on
the date immediately following the 90th 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
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(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; and (v) the Underlying Shares.  “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.
(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 or an “at-the-market” offering) whereby the Company or
any Subsidiary may sell securities at a future
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determined price (other than standard and customary “preemptive” or
“participation” rights).
(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 or Warrants
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 the
greater of (i) the product of (a) 40,000,000 multiplied by (b) the outstanding
face amount of the Convertible Notes divided by $41,000,000 and (ii) 100% of the
maximum number of shares of Common Stock issuable upon (A) conversion of all the
Convertible Notes then outstanding (assuming for purposes hereof that (x) the
Convertible Notes are convertible at the then current Event of Default
Conversion Price, (y) interest on the Convertible Notes shall accrue through
November 1, 2022 and will be paid in shares of Common Stock at a price equal to
the Event of Default Conversion Price and (z) any such conversion shall not take
into account any limitations on the conversion of the Convertible Notes set
forth in the Convertible Notes) and (B) exercise of all Warrants then
outstanding, as applicable (collectively, 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, or the exercise of the Warrants.  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.
(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
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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 or Warrants remain
outstanding, the Company shall not be party to any Fundamental Change (as
defined in the Convertible Notes) or a Fundamental Transaction (as defined in
the Warrants) unless the Company is in compliance with the applicable provisions
governing Fundamental Changes set forth in the Convertible Notes and the
applicable provisions governing Fundamental Transactions set forth in the
Warrants.
(n) Stock Splits.  Until the Convertible Notes and Warrants 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 / Exercise Procedures.  The form of conversion notice included in
the Convertible Notes and form of exercise notice included in the Warrants, as
applicable, set forth the totality of the procedures required of the Buyers in
order to convert the Convertible Notes or exercise the Warrants, respectively. 
No additional legal opinion, other information or instructions shall be required
of the Buyers to convert their Convertible Notes or exercise their Warrants, as
applicable.  The Company shall honor conversions of the Convertible Notes and
exercises of the Warrants, and shall deliver the Underlying Shares in accordance
with the terms, conditions and time periods set forth in the Convertible Notes
and Warrants, as applicable.
(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.
(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).

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(s) Stockholder Approval. Following the Closing, the Company agrees to use best
efforts to obtain, at a special meeting of the stockholders of the Company (at
which a quorum is present) as soon as reasonably practical and in no event later
than March 1, 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.
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 and Warrants held by such Person, the
number of Conversion Shares issuable pursuant to the terms of the Convertible
Notes held by such Person and the number of Warrant Shares issuable pursuant to
the exercise of Warrants 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.
(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 Underlying Shares in such
amounts as specified from time to time by each Buyer to the Company upon
conversion of the Convertible Notes or the exercise of the Warrants, as
applicable.  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 Transfer Agent to issue one or more certificates or
credit shares to the
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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 or Warrants 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.
7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE THE PURCHASED SECURITIES.

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(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 a Warrant in accordance with Section 1(a) and 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.
(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,
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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 Underlying 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 Underlying 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 shall have repaid, or cause to be repaid, all of its
outstanding indebtedness under the Credit Agreement, and the Company shall have
obtained and delivered payoff letters and releases relating to the Credit
Agreement to such Buyer in form and substance satisfactory to such Buyer.

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(xvi) 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.
(xvii) 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.
(xviii) The Company shall have delivered to Buyer a duly completed and executed
perfection certificate in the form attached hereto as Exhibit E.
(xix) 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.
8. TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer on
or before December 9, 2019 (the “Outside Date”), then such Buyer shall have the
right to terminate its obligations under this Agreement with respect to itself
at any time on or after the close of business on such date without liability of
such Buyer to any other party; provided however, that if this Agreement is
terminated by the Buyers due to (i) the failure of the condition set forth in
Section 7(a)(xv) hereof to be satisfied by the Outside Date or (ii) the failure
of any other condition set forth in Section 7(a) hereof to be satisfied by the
Outside Date as a result of the failure of the Company to use reasonable best
efforts to cause the satisfaction of such conditions by such date, then the
Company shall pay to the Buyers (A) $400,000, which shall be allocated to the
Buyers according to the respective amount set forth opposite such Buyer’s name
in column (4) in proportion to the total amount in column (4), and (B) all costs
and expenses of the Buyers reasonably incurred as of such date (including,
without limitation, reasonable attorneys’ fees and expenses); provided further,
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.  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.

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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.
(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.

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(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.
(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
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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
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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 Underlying
Shares in the aggregate as of such time issued or issuable hereunder or pursuant
to the Convertible Notes or Warrants, as applicable.
(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
If to the Transfer Agent:
Empire Stock Transfer, Inc.
1859 Whitney Mesa Drive
Henderson, NV 89014

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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
885 Third Avenue
New York, NY 10022
Telephone:  (212) 906-1200
Facsimile:  (212) 751-4864
Attention:  Peter N. Handrinos, Esq.
E-mail:  peter.handrinos@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) or a
Fundamental Transaction (as defined in the Warrants) (unless the Company is in
compliance with the applicable provisions governing Fundamental Changes set
forth in the Convertible Notes and the provisions governing Fundamental
Transaction set forth in the Warrants).  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,
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nor may any provision hereof be enforced by, any other Person, other than the
Indemnitees referred to in Section 9(k). 
(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
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make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. 
(ii) Promptly after receipt by an Indemnitee under this Section 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
41

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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. 
(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
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
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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.
(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
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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.
(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.

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(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]

45

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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:/s/ Duane A. HughesName:Duane A.
HughesTitle:Chief Executive Officer

 

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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, LLCBy:/s/ Eric HelenekName:Eric HelenekTitle:Authorized
Signatory

 

 

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SCHEDULE OF BUYERS

(1)(2)(3)(4)(5)(6)(7)BuyerAddress and Facsimile NumberAggregate Principal Amount
of Convertible NotesAggregate Purchase Price of Convertible NotesWarrant
Purchase PriceAggregate Purchase PriceLegal Representative’s Address and
Facsimile NumberHT Investments MA, LLC
High Trail Capital
221 River Street, 9th Floor
Hoboken, NJ 07030
Attn: Eric Helenek
E-Mail: notices@hightrailcap.com
$41,000,000  $38,940,000  $10,000  $38,950,000  Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Telephone: (212) 906-1200
Facsimile: (212) 751-4864
Attention: Peter N. Handrinos,
Esq.TOTAL$41,000,000  $38,940,000  $10,000  $38,950,000  

 

48

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WORKHORSE GROUP INC.

Senior Secured Convertible Note due 2022

Certificate No. A-1

Workhorse Group Inc., a Nevada corporation, for value received, promises to pay
to HT Investments MA, LLC (the “Initial Holder”), or its registered assigns, one
hundred and twelve percent (112%) of the principal sum of forty-one million
dollars ($41,000,000) (such principal sum, the “Principal Amount,” and 112% of
such Principal Amount, the “Maturity Principal Amount”) on November 1, 2022, and
to pay interest thereon, as provided in this Note, in each case as provided in
and subject to the other provisions of this Note, including the earlier
redemption, repurchase or conversion of this Note.

Additional provisions of this Note are set forth on the other side of this Note.

[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]

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IN WITNESS WHEREOF, Workhorse Group Inc. has caused this instrument to be duly
executed as of the date set forth below.

WORKHORSE GROUP INC.

Date: [  • ], 2019     By:  
Name: 
Title: 

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WORKHORSE GROUP INC.

Senior Secured Convertible Note due 2022

This Note (this “Note” and, collectively with any Note issued in exchange
therefor or in substitution thereof, the “Notes”) is issued by Workhorse Group
Inc., a Nevada corporation (the “Company”), and designated as its “Senior
Secured Convertible Notes due 2022.”

Section 1.DEFINITIONS.
“Affiliate” has the meaning set forth in Rule 144 under the Securities Act.

"Attribution Parties" means, collectively, the following Persons and entities:
(i) any investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Issuance Date, directly or
indirectly managed or advised by the Holder's investment manager or any of its
Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be
acting as a “group” (within the meaning of Section 13(d)(3) of the Exchange Act)
together with the Holder or any of the foregoing and (iv) any other Persons
whose beneficial ownership of the Common Stock would or could be aggregated with
the Holder's and the other Attribution Parties for purposes of Section 13(d) of
the Exchange Act. For clarity, the purpose of the foregoing is to subject
collectively the Holder and all other Attribution Parties to the Maximum
Percentage.

“Authorized Denomination” means, with respect to the Notes, a Principal Amount
thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof.

“Bankruptcy Law” means Title 11, United States Code, or any similar U.S. federal
or state or non-U.S. law for the relief of debtors.

“Board of Directors” means the board of directors of the Company or a committee
of such board duly authorized to act on behalf of such board.

“Business Combination Event” has the meaning set forth in Section 10.

“Business Day” means any day other than a Saturday, a Sunday or any day on which
the Federal Reserve Bank of New York is authorized or required by law or
executive order to close or be closed.

“Capital Lease” means, with respect to any Person, any leasing or similar
arrangement conveying the right to use any property, whether real or personal
property, or a combination thereof, by that Person as lessee that, in conformity
with GAAP, is required to be accounted for as a capital lease on the balance
sheet of such Person.

“Capital Lease Obligation” means, at the time any determination is to be made,
the amount of the liability in respect of a Capital Lease that would at that
time be required to be

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capitalized on a balance sheet prepared in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
prepaid by the lessee without payment of a penalty.

“Capital Stock” of any Person means any and all shares of, interests in, rights
to purchase, warrants or options for, participations in, or other equivalents
of, in each case however designated, the equity of such Person, but excluding
any debt securities convertible into such equity.

“Cash” means all cash and liquid funds. 

“Cash Equivalents” means, as of any date of determination, any of the following:
(A) marketable securities (i) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government, or (ii) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one (1) year
after such date; (B) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one (1) year after
such date and having, at the time of the acquisition thereof, a rating of at
least A-1 from Standard & Poor’s Corporation or at least P-1 from Moody’s
Investors Service; (C) commercial paper maturing no more than one (1) year from
the date of creation thereof and having, at the time of the acquisition thereof,
a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 from
Moody’s Investors Service; (D) certificates of deposit or bankers’ acceptances
maturing within one (1) year after such date and issued or accepted by any
commercial bank organized under the laws of the United States of America or any
State thereof or the District of Columbia that (i) is at least “adequately
capitalized” (as defined in the regulations of its primary federal banking
regulator), and (ii) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (E) shares of any money market mutual fund that (i)
has substantially all of its assets invested continuously in the types of
investments referred to in clauses (A) and (B) above, (ii) has net assets of not
less than $500,000,000, and (iii) has the highest rating obtainable from either
Standard & Poor’s Corporation or Moody’s Investors Service. 

“Close of Business” means 5:00 p.m., New York City time.

“Collateral” has the meaning set forth in the Security Agreement.

“Collateral Agent” means HT Investments MA, LLC in its capacity as collateral
agent for the Holder and each Other Holder, together with any successor thereto
in such capacity.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Stock” means the common stock, $0.001 par value per share, of the
Company, subject to Section 8(J).

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“Common Stock Change Event” has the meaning set forth in Section 8(J).

“Company Redemption Base Price” means, with respect to a redemption of this Note
pursuant to Section 7(A), a cash amount equal to the greater of (A) the portion
of the then outstanding Maturity Principal Amount of such Note elected to be
redeemed by the Company; and (B) one hundred and fifteen percent (115%) of the
product of (i) the Conversion Rate in effect as of the Trading Day immediately
preceding the related Company Redemption Date; (ii) the Principal Amount of this
Note to be so redeemed divided by $1,000; and (iii) the Company Redemption Stock
Price for such redemption.

“Company Redemption Date” has the meaning set forth in Section 7(A).

“Company Redemption Excess Amount” means, with respect to a redemption of this
Note pursuant to Section 7(A), a cash amount equal to (A) one hundred and
fifteen percent (115%) of the product of (i) the Conversion Rate in effect as of
the Trading Day immediately preceding the related Company Redemption Date; (ii)
the Principal Amount of this Note to be so redeemed divided by $1,000; and (iii)
the Company Redemption Stock Price for such redemption; minus (B) the Maturity
Principal Amount of such Note; provided, that such Company Redemption Excess
Amount shall not be less than zero.

“Company Redemption Price” means the cash price payable by the Company to redeem
this Note pursuant to Section 7(A)(ii).

“Company Redemption Stock Price” means, with respect to any redemption of this
Note, the highest Daily VWAP per share of Common Stock occurring during the
thirty (30) consecutive days ending on, and including, the day immediately
before the related Company Redemption Date.

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (A) any
Indebtedness or other obligations of another Person, including any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted or
sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (B) any obligations with respect to
undrawn letters of credit, corporate credit cards or merchant services issued
for the account of that Person; and (C) all obligations arising under any
interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term “Contingent
Obligation” shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement 

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“Conversion Consideration” has the meaning set forth in Section 8(D)(i).

“Conversion Date” means, with respect to a Note, the first Business Day on which
the requirements set forth in Section 8(C)(i) to convert such Note are
satisfied.

“Conversion Price” means, as of any time, an amount equal to (A) one thousand
dollars ($1,000) divided by (B) the Conversion Rate in effect at such time.

“Conversion Rate” initially means 327.8689 shares of Common Stock per $1,000
Principal Amount of Notes; provided, however, that the Conversion Rate is
subject to adjustment pursuant to Section 8; provided, further, that whenever
this Note refers to the Conversion Rate as of a particular date without setting
forth a particular time on such date, such reference will be deemed to be to the
Conversion Rate immediately after the Close of Business on such date.

“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by the
Company or in which the Company now holds or hereafter acquires any interest.

“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States, any State thereof, or of any other
country.

“Covering Price” has the meaning set forth in Section 8(D)(v)(1).

“Certus” has the meaning set forth in the definition of “Permitted Investments”.

“Daily VWAP” means, for any VWAP Trading Day, the per share volume-weighted
average price of the Common Stock as displayed under the heading “Bloomberg
VWAP” on Bloomberg page “WKHS <EQUITY> VAP” (or, if such page is not available,
its equivalent successor page) in respect of the period from the scheduled open
of trading until the scheduled close of trading of the primary trading session
on such VWAP Trading Day (or, if such volume-weighted average price is
unavailable, the market value of one share of Common Stock on such VWAP Trading
Day, determined, using a volume-weighted average price method, by a nationally
recognized independent investment banking firm selected by the Company). The
Daily VWAP will be determined without regard to after-hours trading or any other
trading outside of the regular trading session.

“Default” means any event that is (or, after notice, passage of time or both,
would be) an Event of Default.

“Default Interest” has the meaning set forth in Section 4(B).

“Defaulted Amount” has the meaning set forth in Section 4(B).

“Defaulted Shares” has the meaning set forth in Section 8(D)(v).

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“Deferral Notice” has the meaning set forth in Section 7(B)(ii).

“Disqualified Stock” means, with respect to any Person, any Capital Stock that
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder) or upon the happening
of any event:

(A) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise;

(B) is convertible or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock convertible or exchangeable solely at the option of the
issuer or a Subsidiary; provided that any such conversion or exchange will be
deemed an incurrence of Indebtedness or Disqualified Stock, as applicable); or

(C) is redeemable at the option of the holder thereof, in whole or in part,

in the case of each of clauses (A), (B) and (C), at any point prior to the one
hundred eighty-first (181st) day after the Maturity Date. 

“DTC” means The Depository Trust Company.

“Early Redemption Date” means, with respect to a Note, (A) the first calendar
day of each month beginning on December 1, 2019; and (B) if not otherwise
included in clause (A), the Maturity Date.

“Early Redemption Payment” means, (A) with respect to Early Redemption Dates up
to and including March 1, 2020, zero dollars ($0), and (B) with respect to Early
Redemption Dates after March 1, 2020, up to one million six hundred eighty
thousand dollars ($1,680,000) on each such Early Redemption Date; provided, that
the Holder and the Company may agree to increase the size of any Early
Redemption Payment by mutual written consent; and provided further, that in no
event shall the amount of any Early Redemption Payment exceed one hundred and
twelve percent (112%) of the portion of the Principal Amount being redeemed as
of such Early Redemption Date.

“Early Redemption Stock Payment Date” has the meaning set forth in Section 5(C).

“Early Redemption Stock Payment Notice” has the meaning set forth in Section
5(C).

“Early Redemption Stock Payment Period” has the meaning set forth in Section
5(C).

“Eligible Exchange” means any of The New York Stock Exchange, The Nasdaq Capital
Market, The Nasdaq Global Market or The Nasdaq Global Select Market (or any of
their respective successors).

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“Equipment” means all “equipment” as defined in the UCC with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing. 

“Equity Conditions” will be deemed to be satisfied as of any date if all of the
following conditions are satisfied as of such date and on each of the twenty
(20) previous Trading Days: (A) the shares issuable upon conversion of this Note
are Freely Tradable; (B) the Holder is not in possession of any material
non-public information provided by or on behalf of the Company; (C) the issuance
of such shares will not be limited by Section 8(K); (D) the Company is in
compliance with Section 8(E)(i) and such shares will satisfy Section 8(E)(ii);
(E) no public announcement of a pending, proposed or intended Fundamental Change
has occurred that has not been abandoned, terminated or consummated; (F) the
Daily VWAP per share of Common Stock is not less than $1.50 (subject to
proportionate adjustments for events of the type set forth in Section
8(G)(i)(1)); (G) the daily dollar trading volume (as reported on Bloomberg) of
the Common Stock on the applicable Eligible Exchange is not less than six
hundred thousand dollars ($600,000); and (H) no Default or Event of Default will
have occurred or be continuing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

“Event of Default” has the meaning set forth in Section 11(A).

“Event of Default Acceleration Amount” means, with respect to the delivery of a
notice pursuant to Section 11(B)(ii) declaring this Note to be due and payable
immediately on account of an Event of Default, a cash amount equal to the
greater of (A) one hundred and ten percent (110%) of the then outstanding
principal portion of the Maturity Principal Amount of this Note; and (B) one
hundred and fifteen percent (115%) of the product of (i) the Conversion Rate in
effect as of the Trading Day immediately preceding the date such notice is so
delivered; (ii) the total then outstanding principal portion of the Principal
Amount (expressed in thousands) of this Note; and (iii) the greater of (x) the
highest Daily VWAP per share of Common Stock occurring during the thirty (30)
consecutive VWAP Trading Days ending on, and including, the VWAP Trading Day
immediately before the date such notice is so delivered and (y) the highest
Daily VWAP per share of Common Stock occurring during the thirty (30)
consecutive VWAP Trading Days ending on, and including, the VWAP Trading Day
immediately before the date the applicable Event of Default occurred.

“Event of Default Additional Shares” means, with respect to the conversion of
this Note (or any portion of this Note), an amount equal to the excess, if any,
of (A) the Event of Default Conversion Rate applicable to such conversion over
(B) the Conversion Rate that would otherwise apply to such conversion without
giving effect to Section 8(I). For the avoidance of doubt, the Event of Default
Additional Shares cannot be a negative number.

“Event of Default Conversion Period” means, with respect to an Event of Default,
the period beginning on, and including, the date such Event of Default occurs
and ending on later of

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(A) the twentieth (20th) Trading Day after the Holder’s receipt of an Event of
Default Notice and (B) the date such Event of Default is cured.

“Event of Default Conversion Price” means, with respect to the conversion of
this Note (or any portion of this Note), the lesser of (A) the Conversion Price
that would be in effect immediately after the Close of Business on the
Conversion Date for such conversion, without giving effect to Section 8(I); and
(B) seventy five percent (75%) of the lowest Daily VWAP per share of Common
Stock during the ten (10) consecutive VWAP Trading Days ending on, and
including, such Conversion Date (or, if such Conversion Date is not a VWAP
Trading Day, the immediately preceding VWAP Trading Day).

“Event of Default Conversion Rate” means, with respect to the conversion of this
Note (or any portion of this Note), an amount (rounded to the nearest 1/10,000th
of a share of Common Stock (with 5/100,000ths rounded upward)) equal to (A) one
thousand dollars ($1,000) divided by (B) the Event of Default Conversion Price
applicable to such conversion.

“Event of Default Notice” has the meaning set forth in Section 11(C).

“Ex-Dividend Date” means, with respect to an issuance, dividend or distribution
on the Common Stock, the first date on which shares of Common Stock trade on the
applicable exchange or in the applicable market, regular way, without the right
to receive such issuance, dividend or distribution (including pursuant to due
bills or similar arrangements required by the relevant stock exchange). For the
avoidance of doubt, any alternative trading convention on the applicable
exchange or market in respect of the Common Stock under a separate ticker symbol
or CUSIP number will not be considered “regular way” for this purpose.

“Excess Shares” has the meaning set forth in Section 8(K)(i).

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Expiration Date” has the meaning set forth in Section 8(G)(i)(5).

“Expiration Time” has the meaning set forth in Section 8(G)(i)(5).

“Forced Conversion” means the conversion of this Note pursuant to Section 8(G).

“Freely Tradable” means, with respect to any shares of Common Stock issued or
issuable upon conversion of this Note, that (A) such shares would be eligible to
be offered, sold or otherwise transferred by the Holder pursuant to Rule 144,
without any requirements as to volume, manner of sale, availability of current
public information (whether or not then satisfied) or notice under the
Securities Act and without any requirement for registration under any state
securities or “blue sky” laws; or (B) such shares are (or, when issued, will be)
(i) represented by book-entries at DTC and identified therein by an
“unrestricted” CUSIP number; (ii) not represented by any certificate that bears
a legend referring to transfer restrictions under the Securities Act or other
securities laws; and (iii) listed and admitted for trading, without

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suspension or material limitation on trading, on an Eligible Exchange; and (C)
no delisting or suspension by such Eligible Exchange has been threatened (with a
reasonable prospect of delisting occurring after giving effect to all applicable
notice, appeal, compliance and hearing periods) or reasonably likely to occur or
pending as evidenced by (x) a writing by such Eligible Exchange or (y) the
Company falling below the minimum listing maintenance requirements of such
Eligible Exchange.

“Fundamental Change” means any of the following events:
(A) a “person” or “group” (within the meaning of Section 13(d)(3) of the
Exchange Act), other than the Company or its Wholly Owned Subsidiaries, or the
employee benefit plans of the Company or its Wholly Owned Subsidiaries, files
any report with the Commission indicating that such person or group has become
the direct or indirect “beneficial owner” (as defined below) of shares of the
Company’s common equity representing more than fifty percent (50%) of the voting
power of all of the Company’s then-outstanding common equity;

(B) the consummation of (i) any sale, lease or other transfer, in one
transaction or a series of transactions, of all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole, to any Person
(other than solely to one or more of the Company’s Wholly Owned Subsidiaries);
or (ii) any transaction or series of related transactions in connection with
which (whether by means of merger, consolidation, share exchange, combination,
reclassification, recapitalization, acquisition, liquidation or otherwise) all
of the Common Stock is exchanged for, converted into, acquired for, or
constitutes solely the right to receive, other securities, cash or other
property (other than a subdivision or combination, or solely a change in par
value, of the Common Stock); provided, however, that any merger, consolidation,
share exchange or combination of the Company pursuant to which the Persons that
directly or indirectly “beneficially owned” (as defined below) all classes of
the Company’s common equity immediately before such transaction directly or
indirectly “beneficially own,” immediately after such transaction, more than
fifty percent (50%) of all classes of common equity of the surviving, continuing
or acquiring company or other transferee, as applicable, or the parent thereof,
in substantially the same proportions vis-à-vis each other as immediately before
such transaction will be deemed not to be a Fundamental Change pursuant to this
clause (B);

(C) the Company’s stockholders approve any plan or proposal for the liquidation
or dissolution of the Company; or

(D) the Common Stock ceases to be listed on any Eligible Exchange.

For the purposes of this definition, (x) any transaction or event described in
both clause (A) and in clause (B)(i) or (ii) above (without regard to the
proviso in clause (B)) will be deemed to occur solely pursuant to clause (B)
above (subject to such proviso); and (y) whether a Person is a “beneficial
owner” and whether shares are “beneficially owned” will be determined in
accordance with Rule 13d-3 under the Exchange Act.

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“Fundamental Change Redemption Date” means the date designated by the Holder for
redemption of this Note in connection with a Fundamental Change, as provided in
Section 6(F).

“Fundamental Change Base Repurchase Price” means, with respect to this Note (or
any portion of this Note) to be repurchased upon a Repurchase Upon Fundamental
Change, a cash amount equal to one hundred and ten percent (110%) of the
Maturity Principal Amount of such Note (or portion thereof) to be so
repurchased; provided, however, that if the Equity Conditions are not satisfied
on each day from, and including, the date when the Fundamental Change Notice for
the related Fundamental Change is sent and ending on, and including, the date
when such repurchase is completed, then, if higher, the Fundamental Change Base
Repurchase Price will instead be one hundred and fifteen percent (115%) of the
product of (A) the Conversion Rate in effect as of the Trading Day immediately
preceding the effective date of such Fundamental Change; (B) the Principal
Amount of this Note to be repurchased upon a Repurchase Upon Fundamental Change
divided by $1,000; and (C) the Fundamental Change Stock Price for such
Fundamental Change.

“Fundamental Change Notice” has the meaning set forth in Section 6(C).

“Fundamental Change Repurchase Date” means the date as of which this Note must
be repurchased for cash in connection with a Fundamental Change, as provided in
Section 6(B).

“Fundamental Change Repurchase Price” means the cash price payable by the
Company to repurchase this Note (or any portion of this Note) upon its
Repurchase Upon Fundamental Change, calculated pursuant to Section 6(D).

“Fundamental Change Stock Price” means, with respect to any Fundamental Change,
the highest Daily VWAP per share of Common Stock occurring during the thirty
(30) consecutive days ending on, and including, the day immediately before the
effective date of such Fundamental Change.

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time; provided the definitions set forth in
this Note and any financial calculations required by thereby shall be computed
to exclude any change to lease accounting rules from those in effect pursuant to
Financial Accounting Standards Board Accounting Standards Codification 840
(Leases) and other related lease accounting guidance as in effect on the date
hereof. 

“Holder” means the person in whose name this Note is registered on the books of
the Company, which initially is the Initial Holder.

The term “including” means “including without limitation,” unless the context
provides otherwise.

“Indebtedness” means, indebtedness of any kind, including, without duplication
(A) all indebtedness for borrowed money or the deferred purchase price of
property or services

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(excluding trade credit entered into in the ordinary course of business due
within ninety (90) days), including reimbursement and other obligations with
respect to surety bonds and letters of credit, (B) all obligations evidenced by
notes, bonds, debentures or similar instruments, (C) all Capital Lease
Obligations, (D) all Contingent Obligations, and (E) Disqualified Stock.

“Independent Investigator” has the meaning set forth in Section 9(Q).

“Initial Holder” has the meaning set forth in the cover page of this Note.

“Interest Payment Date” means, with respect to a Note, (A) each February 1, May
1, August 1 and November 1 of each calendar year, beginning on February 1, 2020;
and (B) if not otherwise included in clause (A), the Maturity Date.

“Intellectual Property” means all of the Company’s Copyrights; Trademarks;
Patents; Licenses; trade secrets and inventions; mask works; the Company’s
applications therefor and reissues, extensions, or renewals thereof; and the
Company’s goodwill associated with any of the foregoing, together with the
Company’s rights to sue for past, present and future infringement of
Intellectual Property and the goodwill associated therewith. 

“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of all, or
substantially all, of the assets of another Person or the purchase of any assets
of another Person for greater than the fair market value of such assets to
solely the extent of the amount in excess of the fair market value.

“Issue Date” means [ • ], 2019.

“Last Reported Sale Price” of the Common Stock for any Trading Day means the
closing sale price per share (or, if no closing sale price is reported, the
average of the last bid price and the last ask price per share or, if more than
one in either case, the average of the average last bid prices and the average
last ask prices per share) of Common Stock on such Trading Day as reported in
composite transactions for the principal U.S. national or regional securities
exchange on which the Common Stock is then listed. If the Common Stock is not
listed on a U.S. national or regional securities exchange on such Trading Day,
then the Last Reported Sale Price will be the last quoted bid price per share of
Common Stock on such Trading Day in the over-the-counter market as reported by
OTC Markets Group Inc. or a similar organization. If the Common Stock is not so
quoted on such Trading Day, then the Last Reported Sale Price will be the
average of the mid-point of the last bid price and the last ask price per share
of Common Stock on such Trading Day from a nationally recognized independent
investment banking firm selected by the Company.

“License” means any Copyright License, Patent License, Trademark License or
other written license of rights or interests.

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“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest; provided, that for the
avoidance of doubt, licenses, strain escrows and similar provisions in
collaboration agreements, research and development agreements that do not create
or purport to create a security interest, encumbrance, levy, lien or charge of
any kind shall not be deemed to be Liens for purposes of this Note. 

“Market Disruption Event” means, with respect to any date, the occurrence or
existence, during the one-half hour period ending at the scheduled close of
trading on such date on the principal U.S. national or regional securities
exchange or other market on which the Common Stock is listed for trading or
trades, of any material suspension or limitation imposed on trading (by reason
of movements in price exceeding limits permitted by the relevant exchange or
otherwise) in the Common Stock or in any options contracts or futures contracts
relating to the Common Stock.

“Market Stock Payment Price” means, with respect to any Interest Payment Date,
Early Redemption Stock Payment Date, Fundamental Change Redemption Date or
Company Redemption Date, as applicable, an amount equal ninety percent (90%) of
the lesser of (i) the Daily VWAP on the VWAP Trading Day immediately prior to
such Interest Payment Date, Early Redemption Stock Payment Date, Fundamental
Change Redemption Date or Company Redemption Date, as applicable, and (ii) the
average of the lowest two (2) Daily VWAPs during the five (5) VWAP Trading Day
period ending on, (x) with respect to an Interest Payment Date, Fundamental
Change Redemption Date or Company Redemption Date, as applicable, the VWAP
Trading Day immediately prior to such Interest Payment Date, Fundamental Change
Redemption Date or Company Redemption Date, as applicable, and, (y) with respect
to an Early Redemption Stock Payment Date, such Early Redemption Stock Payment
Date.

“Maturity Date” means November 1, 2022.

“Maturity Principal Amount” has the meaning set forth in the cover page of this
Note.

“Maximum Percentage” has the meaning set forth in Section 8(K)(i).

“Open of Business” means 9:00 a.m., New York City time.

The term “or” is not exclusive, unless the context expressly provides otherwise.

“Other Holder” means any person in whose name any Other Note is registered on
the books of the Company.

“Other Notes” means any Notes that are of the same class of this Note and that
are represented by one or more certificates other than the certificate
representing this Note.

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“Patents” means all letters patent of, or rights corresponding thereto, in the
United States or in any other country, and all applications for letters patent
of, or rights corresponding thereto, in the United States or any other country.

“Patent License” means any written agreement granting any right with respect to
any invention covered by a Patent that is in existence or a Patent application
that is pending, in which agreement the Company now holds or hereafter acquires
any interest.

“Permitted Indebtedness” means (A) Indebtedness evidenced by this Note; (B)
Indebtedness deemed to be disclosed pursuant to the Securities Purchase
Agreement, as in effect as of the Issue Date (including all other Indebtedness
accrued in the balance sheet included in the Company’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2019); (C) Indebtedness of up to five
million dollars ($5,000,000) outstanding at any time secured by a Lien described
in clause (G) of the defined term “Permitted Liens,” provided such Indebtedness
does not exceed the cost of the Equipment and related expenses financed with
such Indebtedness; (D) Indebtedness to trade creditors incurred in the ordinary
course of business, including Indebtedness incurred in the ordinary course of
business with corporate credit cards; (E) Indebtedness that also constitutes a
Permitted Investment; (F) Subordinated Indebtedness of the Company; (G)
reimbursement obligations in connection with letters of credit or similar
instruments that are secured by Cash or Cash Equivalents and issued on behalf of
the Company or a Subsidiary thereof in an aggregate amount not to exceed
$1,000,000 at any time outstanding; (H) other unsecured Indebtedness of the
Company, so long as such Indebtedness does not have (i) a final maturity date,
amortization payment, sinking fund, mandatory redemption or other repurchase
obligation or put right at the option of the lender or holder of such
Indebtedness earlier than one hundred eighty-one (181) days following the
Maturity Date, or (ii) any other material terms more favorable to the holder of
such Indebtedness than this Note, including applicable interest rates; (I)
Indebtedness in respect of a Qualified Debt Financing in aggregate amount not to
exceed one hundred million dollars ($100,000,000); (J) Contingent Obligations
that are guarantees of Indebtedness described in clauses (A) through (E) and (G)
and (I); (K) extensions, refinancings and renewals of any items of Permitted
Indebtedness (other than any Indebtedness repaid with the proceeds of this
Note), provided that the principal amount is not increased or the terms modified
to impose materially more burdensome terms upon the Company or its Subsidiaries,
as the case may be, and provided further, that if the lender of any such
proposed extension, refinancing or renewal of Permitted Indebtedness incurred
hereunder is different from the lender of the Permitted Indebtedness to be so
extended, refinanced or renewed then, in addition to the foregoing proviso, such
Permitted Indebtedness shall also not have a final maturity date, amortization
payment, sinking fund, mandatory redemption or other repurchase obligation
earlier than one hundred eighty-one (181) days following the Maturity Date.

“Permitted Intellectual Property Licenses” means Intellectual Property (A)
licenses in existence at the Issue Date, including those listed on the Schedules
to the Security Agreement, and (B) non-perpetual licenses granted in the
ordinary course of business on arm’s length terms consisting of the licensing of
technology, the development of technology or the providing of technical support
which may include licenses with unlimited renewal options solely to the extent
such options require mutual consent for renewal or are subject to financial or
other conditions as

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to the ability of licensee to perform under the license; provided such license
was not entered into during continuance of a Default or an Event of Default.

“Permitted Investment” means: (A) Investments deemed to be disclosed pursuant to
the Securities Purchase Agreement, as in effect as of the Issue Date; (B) (i)
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or any agency or any State thereof maturing within one year
from the date of acquisition thereof, (ii) commercial paper maturing no more
than one year from the date of creation thereof and currently having a rating of
at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (iii) certificates of deposit issued by any bank with assets
of at least $500,000,000 maturing no more than one year from the date of
investment therein, and (iv) money market accounts; (C) Investments accepted in
connection with Permitted Transfers; (D) Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
customers or suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers arising in the ordinary course of the
Company’s business; (E) Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions, to customers and suppliers in the
ordinary course of business and consistent with past practice, provided that
this subparagraph (E) shall not apply to Investments of the Company in any
Subsidiary; (F) Investments consisting of loans not involving the net transfer
on a substantially contemporaneous basis of cash proceeds to employees, officers
or directors relating to the purchase of capital stock of the Company pursuant
to employee stock purchase plans or other similar agreements approved by the
Company’s Board of Directors; (G) Investments consisting of travel advances in
the ordinary course of business; (H) (i) Investments in wholly-owned
Subsidiaries and (ii) Investments in a 50/50 joint venture with Moog Inc. formed
as Certus Unmanned Aerial Systems LLC, a Delaware limited liability company
(“Certus”) (provided that there shall be no amendment, restatement, supplement
or modification to that certain Asset Purchase Agreement dated October 1, 2019
by and among Moog Inc., Surefly, Inc. and the Company, as amended by Amendment
No. 1 dated October 4, 2019, that (i) results in any additional obligations of
the Company (provided however that such restrictions shall not prohibit an
amendment to such Asset Purchase Agreement that extends the closing date
thereunder by thirty (30) days or less) or (ii) require any additional
consideration from the Company or its Subsidiaries (in cash, equity,
indebtedness or otherwise); (I) Permitted Intellectual Property Licenses; (J)
additional Investments that do not exceed fifty thousand dollars ($50,000) in
the aggregate in any twelve (12) month period.

“Permitted Liens” means any and all of the following: (A) Liens in favor of
Holder or the Collateral Agent; (B) Liens deemed to be disclosed pursuant to the
Securities Purchase Exchange Agreement, as in effect as of the Issue Date; (C)
Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings; provided, that the Company maintains adequate reserves therefor in
accordance with GAAP; (D) Liens securing claims or demands of materialmen,
artisans, mechanics, carriers, warehousemen, landlords and other like Persons
arising in the ordinary course of business; provided, that the payment thereof
is not yet required; (E) Liens arising from judgments, decrees or attachments in
circumstances which do not constitute a Default or an Event of Default
hereunder; (F) the following deposits, to the extent made in the ordinary course

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of business: deposits under workers’ compensation, unemployment insurance,
social security and other similar laws, or to secure the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure indemnity, performance or other similar bonds for the performance of
bids, tenders or contracts (other than for the repayment of borrowed money) or
to secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds; (G) Liens on Equipment or software or other
intellectual property constituting purchase money Liens and Liens in connection
with Capital Leases securing Indebtedness permitted in clause (C) of “Permitted
Indebtedness”; (H) leasehold interests in leases or subleases and licenses
granted in the ordinary course of the Company’s business and not interfering in
any material respect with the business of the licensor; (I) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
custom duties that are promptly paid on or before the date they become due; (J)
Liens on insurance proceeds securing the payment of financed insurance premiums
that are promptly paid on or before the date they become due (provided that such
Liens extend only to such insurance proceeds and not to any other property or
assets); (K) statutory and common law rights of set-off and other similar rights
as to deposits of cash and securities in favor of banks, other depository
institutions and brokerage firms; (L) easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business so long as they do not materially
impair the value or marketability of the related property; (M) Liens on Cash or
Cash Equivalents securing obligations permitted under clause (D) and (G) of the
definition of Permitted Indebtedness; (N) Liens securing obligations related to
Indebtedness in respect of a Qualified Debt Financing permitted under clause (I)
of the definition of Permitted Indebtedness; and (O) Liens incurred in
connection with the extension, renewal or refinancing of the Indebtedness
secured by Liens of the type described in clauses (A) through (N) above (other
than any Indebtedness repaid with the proceeds of this Note); provided, that any
extension, renewal or replacement Lien shall be limited to the property
encumbered by the existing Lien and the principal amount of the Indebtedness
being extended, renewed or refinanced (as may have been reduced by any payment
thereon) does not increase. 

“Permitted Transfers” means (A) dispositions of inventory sold, and Permitted
Intellectual Property Licenses entered into, in each case, in the ordinary
course of business, (B) dispositions of worn-out, obsolete or surplus property
at fair market value in the ordinary course of business; (C) dispositions of
accounts or payment intangibles (each as defined in the UCC) resulting from the
compromise or settlement thereof in the ordinary course of business for less
than the full amount thereof; (D) transfers consisting of Permitted Investments
in wholly-owned Subsidiaries and Certus under clause (H) of Permitted
Investments; (E) the sale of assets of Surefly, Inc. pursuant to that certain
Asset Purchase Agreement dated October 1, 2019 by and among Moog Inc., Surefly,
Inc. and the Company, as may be amended, restated, supplemented or modified from
time to time (provided that any such amendment, restatement, supplement or
modification does not (i) result in any additional obligations of the Company or
(ii) require any additional consideration from the Company or its Subsidiaries
(in cash, equity, indebtedness or otherwise), and (F) other transfers of assets
to any Person other than to a joint venture and which have a fair market value
of not more than fifty thousand dollars ($50,000) in the aggregate in any fiscal
year.

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“Person” or “person” means any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.

“Principal Amount” has the meaning set forth in the cover page of this Note;
provided, however, that the Principal Amount of this Note will be subject to
reduction (A) pursuant to Section 6, Section 7, and Section 8 and (B) by an
amount equal to (i) the sum of all Early Redemption Payments made prior to date
of determination of the Principal Amount of the Note then outstanding, divided
by (ii) one and twelve-hundredths (1.12).

“Qualified Debt Financing” means non-convertible debt (or similar instruments)
resulting in net proceeds to the Company of no less than forty million dollars
($40,000,000) with (A) annual interest of no greater than LIBOR plus 8.00%, (B)
no redemption provisions prior to the Maturity Date, (C) no original issue
discount, (D) no make-whole interest or payments and (E) the purpose of which is
to fund working capital for truck production.

“Reference Property” has the meaning set forth in Section 8(J)(i).

“Reference Property Unit” has the meaning set forth in Section 8(J)(i).

“Related Parties” has the meaning set forth in Section 22(B).

“Reported Outstanding Share Number” has the meaning set forth in Section
8(K)(i).

“Repurchase Upon Fundamental Change” means the repurchase of any Note by the
Company pursuant to Section 6.

“Requisite Stockholder Approval” means the stockholder approval contemplated by
Nasdaq Listing Standard Rule 5635(d) with respect to the issuance of shares of
Common Stock upon conversion of this Note in excess of the limitations imposed
by such rule; provided, however, that the Requisite Stockholder Approval will be
deemed to be obtained if, due to any amendment or binding change in the
interpretation of the applicable listing standards of The Nasdaq Capital Market,
such stockholder approval is no longer required for the Company to settle all
conversions of this Note by delivering shares of Common Stock without limitation
pursuant to Section 8(K)(ii).

“Scheduled Trading Day” means any day that is scheduled to be a Trading Day on
the principal U.S. national or regional securities exchange on which the Common
Stock is then listed or, if the Common Stock is not then listed on a U.S.
national or regional securities exchange, on the principal other market on which
the Common Stock is then traded. If the Common Stock is not so listed or traded,
then “Scheduled Trading day” means a Business Day.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

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“Securities Purchase Agreement” means that certain Securities Purchase
Agreement, dated as of November 21, 2019, between the Company and HT Investments
MA, LLC providing for the issuance of this Note.

“Security Agreement” means that certain Security Agreement, dated as of [ • ],
2019, between the Company and the Collateral Agent.

“Security Document” has the meaning set forth in the Security Agreement.

“Significant Subsidiary” means, with respect to any Person, any Subsidiary of
such Person that constitutes a “significant subsidiary” (as defined in Rule
1-02(w) of Regulation S-X under the Exchange Act) of such Person.

“Spin-Off” has the meaning set forth in Section 8(G)(i)(3)(b).

“Spin-Off Valuation Period” has the meaning set forth in Section 8(G)(i)(3)(b).

“Stated Interest Rate” means, as of any date, a rate per annum equal to 4.50%.

“Subordinated Indebtedness” means Indebtedness subordinated to the Notes in
amounts and on terms and conditions satisfactory to the Holder in its sole
discretion.

“Stock Payment Notice” has the meaning set forth in Section 5(B).

“Subsidiary” means, with respect to any Person, (A) any corporation, association
or other business entity (other than a partnership or limited liability company)
of which more than fifty percent (50%) of the total voting power of the Capital
Stock entitled (without regard to the occurrence of any contingency, but after
giving effect to any voting agreement or stockholders’ agreement that
effectively transfers voting power) to vote in the election of directors,
managers or trustees, as applicable, of such corporation, association or other
business entity is owned or controlled, directly or indirectly, by such Person
or one or more of the other Subsidiaries of such Person; and (B) any partnership
or limited liability company where (i) more than fifty percent (50%) of the
capital accounts, distribution rights, equity and voting interests, or of the
general and limited partnership interests, as applicable, of such partnership or
limited liability company are owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of such Person, whether in
the form of membership, general, special or limited partnership or limited
liability company interests or otherwise; and (ii) such Person or any one or
more of the other Subsidiaries of such Person is a controlling general partner
of, or otherwise controls, such partnership or limited liability company.

“Successor Corporation” has the meaning set forth in Section 10(A).

“Successor Person” has the meaning set forth in Section 8(J)(i).

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“Tender/Exchange Offer Valuation Period” has the meaning set forth in Section
8(G)(i)(5).

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by the
Company or in which the Company now holds or hereafter acquires any interest.

“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof.

“Trading Day” means any day on which (A) trading in the Common Stock generally
occurs on the principal U.S. national or regional securities exchange on which
the Common Stock is then listed or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, on the principal other market on
which the Common Stock is then traded; and (B) there is no Market Disruption
Event. If the Common Stock is not so listed or traded, then “Trading Day” means
a Business Day.

“Transaction Documents” has the meaning set forth in the Securities Purchase
Agreement.

“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of New York.

“VWAP Market Disruption Event” means, with respect to any date, (A) the failure
by the principal U.S. national or regional securities exchange on which the
Common Stock is then listed, or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, the principal other market on
which the Common Stock is then traded, to open for trading during its regular
trading session on such date; or (B) the occurrence or existence, for more than
one half hour period in the aggregate, of any suspension or limitation imposed
on trading (by reason of movements in price exceeding limits permitted by the
relevant exchange or otherwise) in the Common Stock or in any options contracts
or futures contracts relating to the Common Stock, and such suspension or
limitation occurs or exists at any time before 1:00 p.m., New York City time, on
such date.

“VWAP Trading Day” means a day on which (A) there is no VWAP Market Disruption
Event; provided that the Holder, by written notice to the Company, may waive any
such VWAP Market Disruption Event; and (B) trading in the Common Stock generally
occurs on the principal U.S. national or regional securities exchange on which
the Common Stock is then listed or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, on the principal other market on
which the Common Stock is then traded. If the Common Stock is not so listed or
traded, then “VWAP Trading Day” means a Business Day.

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“Wholly Owned Subsidiary” of a Person means any Subsidiary of such Person all of
the outstanding Capital Stock or other ownership interests of which (other than
directors’ qualifying shares) are owned by such Person or one or more Wholly
Owned Subsidiaries of such Person.

“Withheld Shares” has the meaning set forth in Section 8(K)(ii).

Section 2. PERSONS DEEMED OWNERS.
The Holder of this Note will be treated as the owner of this Note for all
purposes.

Section 3. REGISTERED FORM.
This Note, and any Note issued in exchange therefor or in substitution thereof,
will be in registered form, without coupons.

Section 4. ACCRUAL OF INTEREST; DEFAULTED AMOUNTS.
(A) Accrual of Stated Interest. This Note will accrue interest (the “Stated
Interest”) at a rate per annum equal to the Stated Interest Rate. Stated
Interest on this Note will (i) accrue on the Principal Amount of this Note; (ii)
accrue from, and including, the most recent date to which Stated Interest has
been paid or duly provided for (or, if no Stated Interest has theretofore been
paid or duly provided for, the Issue Date) to, but excluding, the date of
payment of such Stated Interest; (iii) be payable quarterly in arrears on each
Interest Payment Date; and (iv) be computed on the basis of a 360-day year
comprised of twelve 30-day months.
(B) Defaulted Amounts. If (i) the Company fails to pay any amount payable on
this Note on or before the due date therefor as provided in this Note, then,
regardless of whether such failure constitutes an Event of Default, or (ii) a
Default or Event of Default occurs, then in each case, such amount payable or
the Principal Amount outstanding as of such Default or Event of Default, (as
applicable, a “Defaulted Amount”), to the extent lawful, interest (“Default
Interest”) will accrue on such Defaulted Amount at a rate per annum equal to
eighteen percent (18.0%), from, and including, such due date or the date of such
Default or Event of Default, as applicable, to, but excluding, the date of
payment of such Defaulted Amount and Default Interest or the date such Default
or Event of Default is cured, as applicable.
Section 5. METHOD OF PAYMENT; WHEN PAYMENT DATE IS NOT A BUSINESS DAY.
(A) Method of Payment. Except as set forth in Section 5(B), the Company will pay
all cash amounts due under this Note by check mailed to the address of the
Holder of this Note entitled to such payment as set forth in the books of the
Company (or, if such Holder provides the Company, at least five (5) Business
Days before the date such amount is due, with written notice of an account of
such Holder within the United States, by wire transfer of immediately available
funds to such account).

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(B) Company’s Election to Pay Stated Interest or Company Redemption Excess
Amounts in Cash or Common Stock. At least ten (10) Trading Days (but no more
than twenty (20) Trading Days) prior to an Interest Payment Date or, with
respect to a redemption of this Note pursuant to Section 7(A), the Company
Redemption Date (if any), the Company, if it desires to elect to make a payment
of Stated Interest due on such Interest Payment Date or the Company Redemption
Excess Amount (if any) due on such Company Redemption Date, as applicable, in
shares of Common Stock, shall deliver to the Holder a written notice of such
election (a “Stock Payment Notice”) (and such election shall be irrevocable as
to such Interest Payment Date or Company Redemption Date, as applicable).
Failure to timely deliver such written notice to the Holder shall be deemed an
election by the Company to pay the Stated Interest or Company Redemption Excess
Amount (if any) on such Interest Payment Date or Company Redemption Date, as
applicable, in cash. With respect to any Interest Payment Date or applicable
Company Redemption Date for which the Company has elected to make a payment of
Stated Interest or the Company Redemption Excess Amount (if any) in shares of
Common Stock in accordance with this Section 5(B), the Company shall issue to
the Holder, in lieu of such payment in cash of Stated Interest or the Company
Redemption Excess Amount (if any), as applicable, a number of validly issued,
fully paid and Freely Tradable shares of Common Stock equal to the quotient
(rounded up to the closest whole number) obtained by dividing such payment of
Stated Interest or the Company Redemption Excess Amount (if any), as applicable,
by the Market Stock Payment Price for such payment of Stated Interest or the
Company Redemption Excess Amount (if any), as applicable. Notwithstanding
anything herein to the contrary, the Company will not have the right to, and
will not, make any payment of Stated Interest or pay any Company Redemption
Excess Amount in shares of Common Stock if the Equity Conditions are not
satisfied for each VWAP Trading Day occurring between the day of the delivery of
the Stock Payment Notice and the applicable Interest Payment Date or Company
Redemption Date, and such payment of Stated Interests or Company Redemption
Amount shall instead be paid in cash in accordance with Section 5(A), unless
such failure of the Equity Conditions to be so satisfied is waived in writing by
the Holder, which waiver may be granted or withheld by the Holder in its sole
discretion.
(C) Company’s Election to Pay Early Redemption Payments in Cash or Common Stock.
At least ten (10) Trading Days (but no more than twenty (20) Trading Days) prior
to an Early Redemption Date, the Company, if it desires to elect to make an
Early Redemption Payment with respect to such Early Redemption Date, entirely or
partially, in shares of Common Stock, shall deliver to the Holder a written
notice of such election stating which portion thereof the Company has elected to
pay in shares of Common Stock (an “Early Redemption Stock Payment Notice”) (and
such election shall be irrevocable as to such Early Redemption Date). Failure to
timely deliver such written notice to the Holder shall be deemed an election by
the Company to pay the Early Redemption Payment with respect to such Early
Redemption Date in cash. With respect to any Early Redemption Date for which the
Company has elected to make an Early Redemption Payment (or any applicable
portion thereof) in shares of Common Stock in accordance with this Section 5(C),
(i) the Holder shall have the right to allocate all or any portion of the
applicable Early Redemption Payment to up to three (3) different Scheduled
Trading Days (any such date, an “Early Redemption Stock Payment Date”) during
the period beginning on, and including, the applicable Early Redemption Date and
ending on, and

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including, the Scheduled Trading Day immediately before the subsequent Early
Redemption Date (the “Early Redemption Stock Payment Period”) or defer such
Early Redemption Payment (or applicable portion thereof) to any future Early
Redemption Date selected by the Holder; and (ii) the Company shall issue to the
Holder, a number of validly issued, fully paid and Freely Tradable shares of
Common Stock equal to the quotient (rounded up to the closest whole number)
obtained by dividing such Early Redemption Payment (or any applicable portion
thereof) by the Market Stock Payment Price as of such Early Redemption Stock
Payment Date. The Holder must provide notice to the Company of its election of
any Early Redemption Stock Payment Date and the applicable portion of the Early
Redemption Payment it is electing to receive on each such Early Redemption Stock
Payment Date no later than 4:30 p.m. New York Time on such Early Redemption
Stock Payment Date. Notwithstanding anything herein to the contrary, the Company
will not have the right to, and will not, make any Early Redemption Payment (or
any applicable portion thereof) in shares of Common Stock if the Equity
Conditions are not satisfied for each VWAP Trading Day occurring between the
Early Redemption Stock Payment Notice and the applicable Early Redemption Date,
and such Early Redemption Payment (or any applicable portion thereof) shall
instead be paid in cash in accordance with Section 5(A), unless such failure of
the Equity Conditions to be so satisfied is waived in writing by the Holder,
which waiver may be granted or withheld by the Holder in its sole discretion.
Any portion of the Early Redemption Payment not paid in shares of Common Stock
because the Holder did not elect to receive shares of Common Stock for such
Early Redemption Payment (or applicable portion thereof) or because the Holder
elected to defer the receipt of such shares to a future Early Redemption Date
during the applicable Early Redemption Stock Payment Period will be
automatically deferred to the next Early Redemption Date or such future Early
Redemption Date as was elected by the Holder, as applicable. Any such shares of
Common Stock will be delivered by the Company to the Holder on or before the
second (2nd) Business Day following the applicable Early Redemption Stock
Payment Date.
(D) Delay of Payment when Payment Date is Not a Business Day. If the due date
for a payment on this Note as provided in this Note is not a Business Day, then,
notwithstanding anything to the contrary in this Note, such payment may be made
on the immediately following Business Day and no interest will accrue on such
payment as a result of the related delay.
Section 6. REQUIRED REPURCHASE OF NOTE UPON A FUNDAMENTAL CHANGE.
(A) Repurchase Upon Fundamental Change. Subject to the other terms of this
Section 6, if a Fundamental Change occurs, then the Holder will have the right
to require the Company to repurchase this Note (or any portion of this Note in
an Authorized Denomination) on the Fundamental Change Repurchase Date for such
Fundamental Change for a cash purchase price equal to the Fundamental Change
Repurchase Price.
(B) Fundamental Change Repurchase Date. The Fundamental Change Repurchase Date
for any Fundamental Change will be a Business Day of the Holder’s choosing that
is no more than twenty (20) Business Days after the later of (x) the date the
Company delivers to the

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Holder the related Fundamental Change Notice pursuant to Section 6(C); and (y)
the effective date of such Fundamental Change.
(C) Fundamental Change Notice. No later than the fifth (5th) Business Day before
the occurrence of any Fundamental Change, the Company will send to the Holder a
written notice (the “Fundamental Change Notice”) thereof, stating the expected
date such Fundamental Change will occur.
(D) Fundamental Change Repurchase Price. The Fundamental Change Repurchase Price
for this Note (or any portion of this Note) to be repurchased upon a Repurchase
Upon Fundamental Change following a Fundamental Change is an amount in cash
equal to the Fundamental Change Base Repurchase Price for such Fundamental
Change plus accrued and unpaid interest on this Note (or such portion of this
Note) to, but excluding, the Fundamental Change Repurchase Date for such
Fundamental Change. For the avoidance of doubt, if such Fundamental Change
Repurchase Date is on an Interest Payment Date, then the interest otherwise
payable on this Note (or such portion of this Note) on such Interest Payment
Date will be paid as part of the Fundamental Change Repurchase Price, in
satisfaction of the Company’s obligation to pay such interest on such Interest
Payment Date.
(E) Effect of Repurchase. If this Note (or any portion of this Note) is to be
repurchased upon a Repurchase Upon Fundamental Change, then, from and after the
date the related Fundamental Change Repurchase Price is paid in full, this Note
(or such portion) will cease to be outstanding and interest will cease to accrue
on this Note (or such portion).
(F) Fundamental Change Redemption. Notwithstanding anything in this Section 6 to
the contrary, at the Holder’s sole discretion following receipt of a Fundamental
Change Notice, in lieu of receiving the Fundamental Change Repurchase Price (or
any portion thereof), the Holder may require the Company to redeem this Note (or
any portion of this Note in an Authorized Denomination) in exchange for a number
of validly issued, fully paid and Freely Tradable shares of Common Stock equal
to the quotient (rounded up to the closest whole number) obtained by dividing
the Fundamental Change Repurchase Price (or applicable portion thereof) by the
Market Stock Payment Price. The Fundamental Change Redemption Date for any
Fundamental Change will be a Business Day of the Holder’s choosing that is no
more than twenty (20) Business Days after the later of (x) the date the Company
delivers to the Holder the related Fundamental Change Notice pursuant to Section
6(C); and (y) the effective date of such Fundamental Change. Any such shares of
Common Stock will be delivered by the Company to the Holder on or before the
second (2nd) Business Day following a Fundamental Change Redemption Date.
Section 7. REDEMPTION OF THIS NOTE.
(A) Company Redemption of this Note.
(i) Company Redemption Election. The Company may redeem all of the then
outstanding Principal Amount of this Note (or any portion thereof in an amount
equal to at least $5,000,000) on a date (any such date a “Company Redemption
Date”) to be

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determined by the Company, for a cash redemption price equal to the Company
Redemption Price; provided, that the Company must provide notice of at least
five (5) Trading Days prior to any Company Redemption Date. For the avoidance of
doubt, redemptions pursuant to Section 9(R) shall not be subject to the
$5,000,000 minimum redemption amount contained in this Section 7(A).
(ii) Company Redemption Price. The Company Redemption Price for this Note to be
redeemed pursuant to Section 7(A)(i) is an amount in cash equal to the Company
Redemption Base Price plus accrued and unpaid interest on such amount to, but
excluding, the related Company Redemption Date. For the avoidance of doubt, if
such Company Redemption Date is on an Interest Payment Date, then the interest
otherwise payable on this Note on such Interest Payment Date will be paid as
part of the Company Redemption Price, in satisfaction of the Company’s
obligation to pay such interest on such Interest Payment Date. If the Company
elects to pay the Company Redemption Excess Amount in shares of Common Stock
pursuant to Section 5(B), the cash amount payable pursuant to this Section
7(A)(ii) will be reduced by such Company Redemption Excess Amount.
(i) Effect of Redemption. If this Note is to be redeemed in full pursuant to
Section 7(A)(i), then, from and after the date the related Company Redemption
Price is paid in full, this Note will cease to be outstanding and interest will
cease to accrue on this Note.
(A) Early Redemption Payments.
(i) Subject to Section 7(B)(ii), at the Holder’s election, in its sole
discretion, the Company shall be required to redeem a portion of this Note equal
to the applicable Early Redemption Payment on each Early Redemption Date;
provided, however, that the Holder may, in its sole discretion, defer any Early
Redemption Payment to any subsequent Early Redemption Date. The Holder shall
deliver to the Company a written notice of any such election under this Section
7(B)(i) at least eight (8) Business Days prior to the applicable Early
Redemption Date in order to make an effective election; provided, that the
Holder may, in its sole discretion, defer any Early Redemption Payment to any
subsequent Early Redemption Date in accordance with the immediately preceding
sentence at any time prior to the applicable Early Redemption Date.
(ii) Subject to Section 5(C), if the Equity Conditions are satisfied as of the
applicable Early Redemption Date, the Company may elect to defer up to one
million six hundred eighty thousand dollars ($1,680,000) of a redemption elected
by the Holder in accordance with Section 7(B)(i) until the earlier of (1) a
subsequent Early Redemption Date not later than the third (3rd) subsequent Early
Redemption Date after the Early Redemption Date for which such election was made
and (2) the Maturity Date by providing written notice of such election (a
“Deferral Notice”) to the Holder at least ten (10) Trading Days (but no more
than twenty (20) Trading Days) prior to the applicable Early Redemption Date;
provided, that the Company must make aggregate Early Redemption Payments equal
to six million seven hundred and twenty thousand dollars

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($6,720,000) on or prior to July 1, 2020, if such Early Redemption Payments have
been elected to be paid by the Holder on or prior to such date in accordance
with Section 7(B)(i); provided further, that a Deferral Notice cannot be
provided with respect to any Early Redemption Payment (or any portion thereof)
for which the Company has previously elected to issue shares in accordance with
Section 5(C); and provided further, that the Company may not provide a Deferral
Notice to the Holder pursuant to this Section 7(B)(ii) more than three (3) times
in the aggregate. Any portion of any Early Redemption Payment not covered by a
Deferral Notice that is timely delivered in accordance with this Section
7(B)(ii) will be automatically deemed payable as of the Early Redemption Date if
timely elected by the Holder in accordance with Section 7(B)(i).
Section 8. CONVERSION.
(A) Right to Convert.
(i) Generally. Subject to the provisions of this Section 8, the Holder may, at
its option, convert this Note, including any portion constituting an Early
Redemption Payment required to be paid by the Company on the next Early
Redemption Date or Early Redemption Stock Payment Date, as applicable, or a
deferred Early Redemption Payment, into Conversion Consideration.
(ii) Conversions in Part. Subject to the terms of this Section 8, this Note may
be converted in part, but only in an Authorized Denomination. Provisions of this
Section 8 applying to the conversion of this Note in whole will equally apply to
conversions of any permitted portion of this Note.
(A) When this Note May Be Converted.
(i) Generally. The Holder may convert this Note at any time until the Close of
Business on the second (2nd) Scheduled Trading Day immediately before the
Maturity Date; provided that, with respect to the conversion of any Early
Redemption Payment, the Holder must provide notice of such conversion no later
than the Close of Business on the second (2nd) Scheduled Trading Day immediately
preceding the date such Early Redemption Payment is due in accordance with the
terms of this Note, and any such conversion will not reduce the amount of future
Early Redemption Payments. For the avoidance of doubt, the Holder’s right to
convert this Note shall not be impacted by a prior notice or election to defer
any Early Redemption Payment delivered by the Holder electing pursuant to
Section 7(B)(i) hereof.
(ii) Limitations and Closed Periods. Notwithstanding anything to the contrary in
this Section 8, (x) if this Note (or any portion of this Note) is to be redeemed
pursuant to Section 7(A), then in no event may this Note (or such portion) be
converted after the Close of Business on the Scheduled Trading Day immediately
before the related Company Redemption Date; and (y) if this Note (or any portion
of this Note) is to be repurchased upon a Repurchase Upon Fundamental Change
pursuant to Section 6, then in no event may this Note (or such portion) be
converted after the Close of Business on

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the Scheduled Trading Day immediately before the related Fundamental Change
Repurchase Date.
(C) Conversion Procedures.
(i) Generally. To convert this Note, the Holder must (1) complete, manually sign
and deliver to the Company the conversion notice attached to this Note or a
facsimile or portable document format (.pdf) version of such conversion notice
(at which time such conversion will become irrevocable); and (2) pay any amounts
due pursuant to Section 8(C)(iii). For the avoidance of doubt, the conversion
notice may be delivered by e-mail in accordance with Section 14. If the Company
fails to deliver, by the related Conversion Settlement Date, any shares of
Common Stock forming part of the Conversion Consideration of the conversion of
this Note, the Holder, by written notice to the Company, may rescind all or any
portion of the corresponding conversion notice at any time until such Defaulted
Shares are delivered.
(ii) Holder of Record of Conversion Shares. The person in whose name any shares
of Common Stock is issuable upon conversion of this Note will be deemed to
become the holder of record of such shares as of the Close of Business on the
Conversion Date for such conversion, conferring, as of such time, upon such
person, without limitation, all voting and other rights appurtenant to such
shares.
(iii) Taxes and Duties. If the Holder converts a Note, the Company will pay any
documentary, stamp or similar issue or transfer tax or duty due on the issue of
any shares of Common Stock upon such conversion; provided, however, that if any
tax or duty is due because such Holder requested such shares to be issued in a
name other than that of such Holder, then such Holder will pay such tax or duty
and, until having received a sum sufficient to pay such tax or duty, the Company
may refuse to deliver any such shares to be issued in a name other than that of
such Holder.
(D) Settlement upon Conversion.
(i) Generally. The consideration (the “Conversion Consideration”) due in respect
of each $1,000 Principal Amount of this Note, including any portion constituting
an Early Redemption Payment required to be paid by the Company on the next Early
Redemption Date or Early Redemption Stock Payment Date, as applicable, or any
outstanding deferred Early Redemption Payment, to be converted will consist of
the following:
(1) subject to Section 8(D)(ii), a number of shares of Common Stock equal to the
Conversion Rate in effect on the Conversion Date for such conversion; and
(2) cash in an amount equal to the aggregate accrued and unpaid interest on this
Note to, but excluding, the Conversion Settlement Date for such conversion.

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(ii) Fractional Shares. The total number of shares of Common Stock due in
respect of any conversion of this Note, including any portion constituting an
Early Redemption Payment required to be paid by the Company on the next Early
Redemption Date or Early Redemption Stock Payment Date, as applicable, or any
outstanding deferred Early Redemption Payment, will be determined on the basis
of the total Principal Amount of this Note to be converted with the same
Conversion Date; provided, however, that if such number of shares of Common
Stock is not a whole number, then such number will be rounded up to the nearest
whole number.
(iii) Delivery of the Conversion Consideration. The Company will pay or deliver,
as applicable, the Conversion Consideration due upon the conversion of this
Note, including any portion constituting an Early Redemption Payment required to
be paid by the Company on the next Early Redemption Date or Early Redemption
Stock Payment Date, as applicable, or any outstanding deferred Early Redemption
Payment, to the Holder on or before the second (2nd) Business Day (or, if
earlier, the standard settlement period for the primary Eligible Exchange on
which the Common Stock is traded) immediately after the Conversion Date for such
conversion (the “Conversion Settlement Date”).
(iv) Effect of Conversion. If this Note is converted, then, from and after the
date the Conversion Consideration therefor is issued or delivered in settlement
of such conversion, this Note will cease to be outstanding and interest will
cease to accrue on this Note.
(v) Conversion Settlement Defaults. If (x) the Company fails to deliver, by the
related Conversion Settlement Date, any shares of Common Stock (the “Defaulted
Shares”) forming part of the Conversion Consideration of the conversion of this
Note, including any portion constituting an Early Redemption Payment required to
be paid by the Company on the next Early Redemption Date or Early Redemption
Stock Payment Date, as applicable, or any outstanding deferred Early Redemption
Payment; and (y) the Holder (whether directly or indirectly, including by any
broker acting on the Holder’s behalf or acting with respect to such Defaulted
Shares) purchases any shares of Common Stock (whether in the open market or
otherwise) to cover any such Defaulted Shares (whether to satisfy any settlement
obligations with respect thereto of the Holder or otherwise), then, without
limiting the Holder’s right to pursue any other remedy available to it (whether
hereunder, under applicable law or otherwise), the Holder will have the right,
exercisable by written notice to the Company, to cause the Company to either:
(1) pay, on or before the second (2nd) Business Day after the date such notice
is delivered, cash to the Holder in an amount equal to the aggregate purchase
price (including any brokerage commissions and other out-of-pocket costs)
incurred to purchase such shares (such aggregate purchase price, the “Covering
Price”); or
(2) promptly deliver, to the Holder, such Defaulted Shares in accordance with
this Note, together with cash in an amount equal to the excess, if any, of the
Covering Price over the product of (x) the number of such Defaulted Shares; and
(y)

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the Daily VWAP per share of Common Stock on the Conversion Date relating to such
conversion.
To exercise such right, the Holder must deliver written notice of such exercise
to the Company, specifying whether the Holder has elected clause (1) or (2)
above to apply. If the Holder has elected clause (1) to apply, then the
Company’s obligation to deliver the Defaulted Shares in accordance with this
Note will be deemed to have been satisfied and discharged to the extent the
Company has paid the Covering Price in accordance with clause (1).

(E) Reserve and Status of Common Stock Issued upon Conversion.
(i) Stock Reserve. At all times when this Note is outstanding, the Company will
reserve, out of its authorized but unissued and unreserved shares of Common
Stock, a number of shares of Common Stock equal to three hundred percent (300%)
of that which is sufficient to permit the conversion of this Note.
(ii) Status of Conversion Shares; Listing. Each share of Common Stock delivered
upon conversion of this Note will be a newly issued or treasury share and will
be duly and validly issued, fully paid, non-assessable, free from preemptive
rights and free of any lien or adverse claim (except to the extent of any lien
or adverse claim created by the action or inaction of the Holder or the Person
to whom such share will be delivered). If the Common Stock is then listed on any
securities exchange, or quoted on any inter-dealer quotation system, then the
Company will cause each share of Common Stock issued upon conversion of this
Note, when delivered upon such conversion, to be admitted for listing on such
exchange or quotation on such system.
(i) Transferability of Conversion Shares. Any shares of Common Stock issued upon
conversion of this Note will be issued in the form of book-entries at the
facilities of DTC, identified therein by an “unrestricted” CUSIP number.
(F) Forced Conversion.
(i) Generally. If (1) the Daily VWAP per share of Common Stock exceeds one
hundred and fifty percent (150%) of the Conversion Price on each of fifteen (15)
consecutive VWAP Trading Days beginning after the Issue Date; and (2) the Equity
Conditions are satisfied on each of such fifteen (15) consecutive VWAP Trading
Days, then the Company may provide written notice to the Holder electing to
convert the entire Principal Amount of this Note on the Conversion Date into
Conversion Consideration no later than the fifth (5th) Business Day following
such last VWAP Trading Day; provided that no Forced Conversion will be effected
unless (x) the Daily VWAP per share of Common Stock exceeds one hundred and
fifty percent (150%) of the Conversion Price and (y) the Equity Conditions are
satisfied on each VWAP Trading Day from the date of such notice until the
corresponding Conversion Consideration is delivered. The Conversion Date with
respect to any such Forced Conversion will be deemed to occur on the second
(2nd) Business Day after such written notice to the Holder. Solely for

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purposes of the preceding sentence, the Conversion Price will be calculated
without giving effect to any adjustments pursuant to Section 8(I).
(ii) Effect of Forced Conversion. A Forced Conversion will have the same effect
as a conversion of the entire then outstanding Principal Amount of this Note
effected at the Holder’s election pursuant to Section 8(A)(i) with a Conversion
Date occurring on the Business Day referred to in Section 8(F)(i) (for the
avoidance of doubt, without the need for the Holder to deliver a conversion
notice); provided, however, that the Company will not be obligated to deliver
the Conversion Consideration until the Holder has complied, if applicable, with
its obligations under Section 8(C)(iii).
(G) Adjustments to the Conversion Rate.
(i) Events Requiring an Adjustment to the Conversion Rate. The Conversion Rate
will be adjusted from time to time as follows:
(1) Stock Dividends, Splits and Combinations. If the Company issues solely
shares of Common Stock as a dividend or distribution on all or substantially all
shares of the Common Stock, or if the Company effects a stock split or a stock
combination of the Common Stock (in each case excluding an issuance solely
pursuant to a Common Stock Change Event, as to which Section 8(J) will apply),
then the Conversion Rate will be adjusted based on the following formula:
OS1
CR1 = CR0 ×
OS0

where:
CR0 = the Conversion Rate in effect immediately before the Open of Business on
the Ex-Dividend Date for such dividend or distribution, or immediately before
the Open of Business on the effective date of such stock split or stock
combination, as applicable;

CR1 = the Conversion Rate in effect immediately after the Open of Business on
such Ex-Dividend Date or the Open of Business on such effective date, as
applicable;

OS0 = the number of shares of Common Stock outstanding immediately before the
Open of Business on such Ex-Dividend Date or effective date, as applicable,
without giving effect to such dividend, distribution, stock split or stock
combination; and

OS1 = the number of shares of Common Stock outstanding immediately after giving
effect to such dividend, distribution, stock split or stock combination.

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If any dividend, distribution, stock split or stock combination of the type
described in this Section 8(G)(i)(1) is declared or announced, but not so paid
or made, then the Conversion Rate will be readjusted, effective as of the date
the Board of Directors determines not to pay such dividend or distribution or to
effect such stock split or stock combination, to the Conversion Rate that would
then be in effect had such dividend, distribution, stock split or stock
combination not been declared or announced.

(2) Rights, Options and Warrants. If the Company distributes, to all or
substantially all holders of Common Stock, rights, options or warrants (other
than rights issued or otherwise distributed pursuant to a stockholder rights
plan, as to which the provisions set forth in Sections 8(G)(i)(3)(a) and 8(G)(v)
will apply) entitling such holders, for a period of not more than sixty (60)
calendar days after the record date of such distribution, to subscribe for or
purchase shares of Common Stock at a price per share that is less than the
average of the Last Reported Sale Prices per share of Common Stock for the ten
(10) consecutive Trading Days ending on, and including, the Trading Day
immediately before the date such distribution is announced, then the Conversion
Rate will be increased based on the following formula:

OS + X
CR1 = CR0 ×
OS + Y

where:
CR0 = the Conversion Rate in effect immediately before the Open of Business on
the Ex-Dividend Date for such distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on
such Ex-Dividend Date;

OS = the number of shares of Common Stock outstanding immediately before the
Open of Business on such Ex-Dividend Date;

X = the total number of shares of Common Stock issuable pursuant to such rights,
options or warrants; and

Y = a number of shares of Common Stock obtained by dividing (x) the aggregate
price payable to exercise such rights, options or warrants by (y) the average of
the Last Reported Sale Prices per share of Common Stock for the ten (10)
consecutive Trading Days ending

--------------------------------------------------------------------------------

on, and including, the Trading Day immediately before the date such distribution
is announced.

To the extent that shares of Common Stock are not delivered after the expiration
of such rights, options or warrants (including as a result of such rights,
options or warrants not being exercised), the Conversion Rate will be readjusted
to the Conversion Rate that would then be in effect had the increase to the
Conversion Rate for such distribution been made on the basis of delivery of only
the number of shares of Common Stock actually delivered upon exercise of such
rights, option or warrants. To the extent such rights, options or warrants are
not so distributed, the Conversion Rate will be readjusted to the Conversion
Rate that would then be in effect had the Ex-Dividend Date for the distribution
of such rights, options or warrants not occurred.

For purposes of this Section 8(G)(i)(2), in determining whether any rights,
options or warrants entitle holders of Common Stock to subscribe for or purchase
shares of Common Stock at a price per share that is less than the average of the
Last Reported Sale Prices per share of Common Stock for the ten (10) consecutive
Trading Days ending on, and including, the Trading Day immediately before the
date the distribution of such rights, options or warrants is announced, and in
determining the aggregate price payable to exercise such rights, options or
warrants, there will be taken into account any consideration the Company
receives for such rights, options or warrants and any amount payable on exercise
thereof, with the value of such consideration, if not cash, to be determined by
the Board of Directors in good faith.

(3) Spin-Offs and Other Distributed Property.
(a) Distributions Other than Spin-Offs. If the Company distributes shares of its
Capital Stock, evidences of its indebtedness or other assets or property of the
Company, or rights, options or warrants to acquire Capital Stock of the Company
or other securities, to all or substantially all holders of the Common Stock,
excluding:
(v) dividends, distributions, rights, options or warrants for which an
adjustment to the Conversion Rate is required pursuant to Section 8(G)(i)(1) or
Section 8(G)(i)(2);

(w) dividends or distributions paid exclusively in cash for which an adjustment
to the Conversion Rate is required pursuant to Section 8(G)(i)(4);

(x) rights issued or otherwise distributed pursuant to a stockholder rights
plan, except to the extent provided in Section 8(G)(v);

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(y) Spin-Offs for which an adjustment to the Conversion Rate is required
pursuant to Section 8(G)(i)(3)(b); and

(z) a distribution solely pursuant to a Common Stock Change Event, as to which
Section 8(J) will apply,

then the Conversion Rate will be increased based on the following formula:

SP
CR1 = CR0 ×
SP - FMV

where:
CR0 = the Conversion Rate in effect immediately before the Open of Business on
the Ex-Dividend Date for such distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on
such Ex-Dividend Date;

SP = the average of the Last Reported Sale Prices per share of Common Stock for
the ten (10) consecutive Trading Days ending on, and including, the Trading Day
immediately before such Ex-Dividend Date; and

FMV = the fair market value (as determined by the Board of Directors in good
faith), as of such Ex-Dividend Date, of the shares of Capital Stock, evidences
of indebtedness, assets, property, rights, options or warrants distributed per
share of Common Stock pursuant to such distribution;

provided, however, that if FMV is equal to or greater than SP, then, in lieu of
the foregoing adjustment to the Conversion Rate, the Holder will receive, for
each $1,000 Principal Amount of this Note held by this Holder on the record date
for such distribution, at the same time and on the same terms as holders of
Common Stock, the amount and kind of shares of Capital Stock, evidences of
indebtedness, assets, property, rights, options or warrants that such Holder
would have received if such Holder had owned, on such record date, a number of
shares of Common Stock equal to the Conversion Rate in effect on such record
date.

To the extent such distribution is not so paid or made, the Conversion Rate will
be readjusted to the Conversion Rate that would then be in effect had

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the adjustment been made on the basis of only the distribution, if any, actually
made or paid.

(b) Spin-Offs. If the Company distributes or dividends shares of Capital Stock
of any class or series, or similar equity interest, of or relating to an
Affiliate, a Subsidiary or other business unit of the Company to all or
substantially all holders of the Common Stock (other than solely pursuant to a
Common Stock Change Event, as to which Section 8(J) will apply), and such
Capital Stock or equity interest is listed or quoted (or will be listed or
quoted upon the consummation of the transaction) on a U.S. national securities
exchange (a “Spin-Off”), then the Conversion Rate will be increased based on the
following formula:

FMV + SP
CR1 = CR0 ×
SP

where:
CR0 = the Conversion Rate in effect immediately before the Open of Business on
the Ex-Dividend Date for such Spin-Off;

CR1 = the Conversion Rate in effect immediately after the Open of Business on
such Ex-Dividend Date;

FMV = the product of (x) the average of the Last Reported Sale Prices per share
or unit of the Capital Stock or equity interests distributed in such Spin-Off
over the ten (10) consecutive Trading Day period (the “Spin-Off Valuation
Period”) beginning on, and including, such Ex-Dividend Date (such average to be
determined as if references to Common Stock in the definitions of Last Reported
Sale Price, Trading Day and Market Disruption Event were instead references to
such Capital Stock or equity interests); and (y) the number of shares or units
of such Capital Stock or equity interests distributed per share of Common Stock
in such Spin-Off; and

SP = the average of the Last Reported Sale Prices per share of Common Stock for
each Trading Day in the Spin-Off Valuation Period.

The adjustment to the Conversion Rate pursuant to this Section 8(G)(i)(3)(b)
will be calculated as of the Close of Business on the last Trading Day of the
Spin-Off Valuation Period but will be given effect immediately after

--------------------------------------------------------------------------------

the Open of Business on the Ex-Dividend Date for the Spin-Off, with retroactive
effect. If a Note is converted and the Conversion Date occurs during the
Spin-Off Valuation Period, then, notwithstanding anything to the contrary in
this Note, the Company will, if necessary, delay the settlement of such
conversion until the second (2nd) Business Day after the last day of the
Spin-Off Valuation Period.

To the extent any dividend or distribution of the type set forth in this Section
8(G)(i)(3)(b) is declared but not made or paid, the Conversion Rate will be
readjusted to the Conversion Rate that would then be in effect had the
adjustment been made on the basis of only the dividend or distribution, if any,
actually made or paid.

(4) Cash Dividends or Distributions. If any cash dividend or distribution is
made to all or substantially all holders of Common Stock, then the Conversion
Rate will be increased based on the following formula:

SP
CR1 = CR0 ×
SP - D

where:
CR0 = the Conversion Rate in effect immediately before the Open of Business on
the Ex-Dividend Date for such dividend or distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on
such Ex-Dividend Date;

SP = the Last Reported Sale Price per share of Common Stock on the Trading Day
immediately before such Ex-Dividend Date; and

D = the cash amount distributed per share of Common Stock in such dividend or
distribution;

provided, however, that if D is equal to or greater than SP, then, in lieu of
the foregoing adjustment to the Conversion Rate, the Holder will receive, for
each $1,000 Principal Amount of this Note held by the Holder on the record date
for such dividend or distribution, at the same time and on the same terms as
holders of Common Stock, the amount of cash that such Holder would have received
if such Holder had owned, on such record date, a number of shares of Common
Stock equal to the Conversion Rate in effect on such record date.

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To the extent such dividend or distribution is declared but not made or paid,
the Conversion Rate will be readjusted to the Conversion Rate that would then be
in effect had the adjustment been made on the basis of only the dividend or
distribution, if any, actually made or paid.

(5) Tender Offers or Exchange Offers. If the Company or any of its Subsidiaries
makes a payment in respect of a tender offer or exchange offer for shares of
Common Stock (other than solely pursuant to an odd-lot tender offer pursuant to
Rule 13e-4(h)(5) under the Exchange Act), and the value (determined as of the
Expiration Time by the Board of Directors in good faith) of the cash and other
consideration paid per share of Common Stock in such tender or exchange offer
exceeds the Last Reported Sale Price per share of Common Stock on the Trading
Day immediately after the last date (the “Expiration Date”) on which tenders or
exchanges may be made pursuant to such tender or exchange offer (as it may be
amended), then the Conversion Rate will be increased based on the following
formula:

AC + (SP x OS1)
CR = CR0 ×
SP x OS0

where:
CR0 = the Conversion Rate in effect immediately before the time (the “Expiration
Time”) such tender or exchange offer expires;

CR1 = the Conversion Rate in effect immediately after the Expiration Time;

AC = the aggregate value (determined as of the Expiration Time by the Board of
Directors in good faith) of all cash and other consideration paid for shares of
Common Stock purchased or exchanged in such tender or exchange offer;

OS0 = the number of shares of Common Stock outstanding immediately before the
Expiration Time (including all shares of Common Stock accepted for purchase or
exchange in such tender or exchange offer);

OS1 = the number of shares of Common Stock outstanding immediately after the
Expiration Time (excluding all shares of Common Stock accepted for purchase or
exchange in such tender or exchange offer); and

SP = the average of the Last Reported Sale Prices per share of Common Stock over
the ten (10) consecutive Trading Day period (the

--------------------------------------------------------------------------------

“Tender/Exchange Offer Valuation Period”) beginning on, and including, the
Trading Day immediately after the Expiration Date;

provided, however, that the Conversion Rate will in no event be adjusted down
pursuant to this Section 8(G)(i)(5), except to the extent provided in the
immediately following paragraph. The adjustment to the Conversion Rate pursuant
to this Section 8(G)(i)(5) will be calculated as of the Close of Business on the
last Trading Day of the Tender/Exchange Offer Valuation Period but will be given
effect immediately after the Expiration Time, with retroactive effect. If a Note
is converted and the Conversion Date occurs on the Expiration Date or during the
Tender/Exchange Offer Valuation Period, then, notwithstanding anything to the
contrary in this Note, the Company will, if necessary, delay the settlement of
such conversion until the second (2nd) Business Day after the last day of the
Tender/Exchange Offer Valuation Period.

To the extent such tender or exchange offer is announced but not consummated
(including as a result of the Company being precluded from consummating such
tender or exchange offer under applicable law), or any purchases or exchanges of
shares of Common Stock in such tender or exchange offer are rescinded, the
Conversion Rate will be readjusted to the Conversion Rate that would then be in
effect had the adjustment been made on the basis of only the purchases or
exchanges of shares of Common Stock, if any, actually made, and not rescinded,
in such tender or exchange offer.

(ii) No Adjustments in Certain Cases.
(1) Where the Holder Participates in the Transaction or Event Without
Conversion. Notwithstanding anything to the contrary in Section 8(G)(i), the
Company will not be obligated to adjust the Conversion Rate on account of a
transaction or other event otherwise requiring an adjustment pursuant to Section
8(G)(i) (other than a stock split or combination of the type set forth in
Section 8(G)(i)(1) or a tender or exchange offer of the type set forth in
Section 8(G)(i)(5)) if the Holder participates, at the same time and on the same
terms as holders of Common Stock, and solely by virtue of being the Holder of
this Note, in such transaction or event without having to convert this Note and
as if the Holder held a number of shares of Common Stock equal to the product of
(i) the Conversion Rate in effect on the related record date; and (ii) the
aggregate Principal Amount (expressed in thousands) of this Note held by this
Holder on such date.
(2) Certain Events. The Company will not be required to adjust the Conversion
Rate except as provided in Section 8(G), Section 8(H) or Section 8(I). Without
limiting the foregoing, the Company will not be obligated to adjust the
Conversion Rate on account of:

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(a) except as otherwise provided in Section 8(G), the sale of shares of Common
Stock for a purchase price that is less than the market price per share of
Common Stock or less than the Conversion Price;
(b) the issuance of any shares of Common Stock pursuant to any present or future
plan providing for the reinvestment of dividends or interest payable on the
Company’s securities and the investment of additional optional amounts in shares
of Common Stock under any such plan;
(c) the issuance of any shares of Common Stock, restricted stock, or options or
rights to purchase shares of Common Stock pursuant to any present or future
employee, director or consultant benefit plan or program of, or assumed by, the
Company or any of its Subsidiaries;
(d) the issuance of any shares of Common Stock pursuant to any option, warrant,
right or convertible or exchangeable security of the Company outstanding as of
the Issue Date (other than an adjustment pursuant to Section 8(G)(i)(3)(a) in
connection with the separation of rights under the Company’s stockholder rights
plan existing, if any, as of the Issue Date);
(e) solely a change in the par value of the Common Stock; or
(f) accrued and unpaid interest on this Note.
(iii) Adjustments Not Yet Effective. Notwithstanding anything to the contrary in
this Note, if:
(1) this Note is to be converted;
(2) the record date, effective date or Expiration Time for any event that
requires an adjustment to the Conversion Rate pursuant to Section 8(G)(i) has
occurred on or before the Conversion Date for such conversion, but an adjustment
to the Conversion Rate for such event has not yet become effective as of such
Conversion Date;
(3) the Conversion Consideration due upon such conversion includes any whole
shares of Common Stock; and
(4) such shares are not entitled to participate in such event (because they were
not held on the related record date or otherwise),
then, solely for purposes of such conversion, the Company will, without
duplication, give effect to such adjustment on such Conversion Date. In such
case, if the date on which the Company is otherwise required to deliver the
consideration due upon such conversion is before the first date on which the
amount of such adjustment can be determined, then the

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Company will delay the settlement of such conversion until the second (2nd)
Business Day after such first date.

(iv) Conversion Rate Adjustments where the Converting Holder Participates in the
Relevant Transaction or Event. Notwithstanding anything to the contrary in this
Note, if:
(1) a Conversion Rate adjustment for any dividend or distribution becomes
effective on any Ex-Dividend Date pursuant to Section 8(G)(i);
(2) a Note is to be converted;
(3) the Conversion Date for such conversion occurs on or after such Ex-Dividend
Date and on or before the related record date;
(4) the Conversion Consideration due upon such conversion includes any whole
shares of Common Stock based on a Conversion Rate that is adjusted for such
dividend or distribution; and
(5) such shares would be entitled to participate in such dividend or
distribution (including pursuant to Section 8(C)(ii)),
then (x) such Conversion Rate adjustment will not be given effect for such
conversion; (y) the shares of Common Stock issuable upon such conversion based
on such unadjusted Conversion Rate will not be entitled to participate in such
dividend or distribution; and (z) there will be added, to the Conversion
Consideration otherwise due upon such conversion, the same kind and amount of
consideration that would have been delivered in such dividend or distribution
with respect to such shares of Common Stock had such shares been entitled to
participate in such dividend or distribution.

(v) Stockholder Rights Plans. If any shares of Common Stock are to be issued
upon conversion of any Note and, at the time of such conversion, the Company has
in effect any stockholder rights plan, then the Holder of such Note will be
entitled to receive, in addition to, and concurrently with the delivery of, the
Conversion Consideration otherwise payable under this Note upon such conversion,
the rights set forth in such stockholder rights plan, unless such rights have
separated from the Common Stock at such time, in which case, and only in such
case, the Conversion Rate will be adjusted pursuant to Section 8(G)(i)(3)(a) on
account of such separation as if, at the time of such separation, the Company
had made a distribution of the type referred to in such Section to all holders
of the Common Stock, subject to readjustment in accordance with such Section if
such rights expire, terminate or are redeemed.
(vi) Limitation on Effecting Transactions Resulting in Certain Adjustments. The
Company will not engage in or be a party to any transaction or event that would
require the Conversion Rate to be adjusted pursuant to Section 8(G)(i), Section
8(H) or

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Section 8(I) to an amount that would result in the Conversion Price per share of
Common Stock being less than the par value per share of Common Stock.
(vii) Equitable Adjustments to Prices. Whenever any provision of this Note
requires the Company to calculate the average of the Last Reported Sale Prices,
or any function thereof, over a period of multiple days (including to calculate
an adjustment to the Conversion Rate), the Company will make proportionate
adjustments, if any, to such calculations to account for any adjustment to the
Conversion Rate pursuant to Section 8(G)(i) that becomes effective, or any event
requiring such an adjustment to the Conversion Rate where the Ex-Dividend Date
or effective date, as applicable, of such event occurs, at any time during such
period.
(viii) Calculation of Number of Outstanding Shares of Common Stock. For purposes
of this Section 8(G), the number of shares of Common Stock outstanding at any
time will (i) include shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock; and (ii) exclude shares of Common
Stock held in the Company’s treasury (unless the Company pays any dividend or
makes any distribution on shares of Common Stock held in its treasury).
(ix) Calculations. All calculations with respect to the Conversion Rate and
adjustments thereto will be made to the nearest 1/10,000th of a share of Common
Stock (with 5/100,000ths rounded upward).
(x) Notice of Conversion Rate Adjustments. Upon the effectiveness of any
adjustment to the Conversion Rate pursuant to Section 8(G)(i), the Company will
promptly send notice to the Holder containing (i) a brief description of the
transaction or other event on account of which such adjustment was made; (ii)
the Conversion Rate in effect immediately after such adjustment; and (iii) the
effective time of such adjustment.
(H) Voluntary Adjustments.
(i) Generally. To the extent permitted by law and applicable stock exchange
rules, the Company, from time to time, may (but is not required to) increase the
Conversion Rate by any amount if (i) the Board of Directors determines in good
faith that such increase is either (x) in the best interest of the Company; or
(y) advisable to avoid or diminish any income tax imposed on holders of Common
Stock or rights to purchase Common Stock as a result of any dividend or
distribution of shares (or rights to acquire shares) of Common Stock or any
similar event; and (ii) such increase is irrevocable during such period. The
Company and the Holder agree that any such voluntary adjustment to the
Conversion Rate and any conversion of any portion of the Note based upon any
such voluntary adjustment shall not constitute material non-public information
with respect to the Company.
(ii) Notice of Voluntary Increases. If the Board of Directors determines to
increase the Conversion Rate pursuant to Section 8(H)(i), then, no later than
the first Business Day following such determination, the Company will send
notice to the Holder

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of such increase, the amount thereof and the period during which such increase
will be in effect.
(I) Adjustments to the Conversion Rate in Connection with an Event of Default.
If an Event of Default occurs and the Conversion Date for the conversion of a
Note occurs during the related Event of Default Conversion Period, then, subject
to Section 8(K), the Conversion Rate applicable to such conversion will be
increased by a number of shares equal to the Event of Default Additional Shares.
(J) Effect of Certain Recapitalizations, Reclassifications, Consolidations,
Mergers and Sales.
(i) Generally. If there occurs:
(1) recapitalization, reclassification or change of the Common Stock (other than
(x) changes solely resulting from a subdivision or combination of the Common
Stock, (y) a change only in par value or from par value to no par value or no
par value to par value and (z) stock splits and stock combinations that do not
involve the issuance of any other series or class of securities);
(2) consolidation, merger, combination or binding or statutory share exchange
involving the Company;
(3) sale, lease or other transfer of all or substantially all of the assets of
the Company and its Subsidiaries, taken as a whole, to any Person; or
(4) other similar event,
and, in each case, as a result of such occurrence, the Common Stock is converted
into, or is exchanged for, or represents solely the right to receive, other
securities or other property (including cash or any combination of the
foregoing) (such an event, a “Common Stock Change Event,” and such other
securities or other property, the “Reference Property,” and the amount and kind
of Reference Property that a holder of one (1) share of Common Stock would be
entitled to receive on account of such Common Stock Change Event (without giving
effect to any arrangement not to issue fractional shares of securities or other
property), a “Reference Property Unit”), then, notwithstanding anything to the
contrary in this Note, at the effective time of such Common Stock Change Event,
(x) the Conversion Consideration due upon conversion of any Note will be
determined in the same manner as if each reference to any number of shares of
Common Stock in this Section 8 (or in any related definitions) were instead a
reference to the same number of Reference Property Units; (y) for purposes of
Section 8(A), each reference to any number of shares of Common Stock in such
Section (or in any related definitions) will instead be deemed to be a reference
to the same number of Reference Property Units; and (z) for purposes of the
definition of “Fundamental Change,” the term “Common Stock” and “common equity”
will be deemed to mean the common equity, if any, forming part of such Reference
Property. For these purposes, (I)

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the Daily VWAP of any Reference Property Unit or portion thereof that consists
of a class of common equity securities will be determined by reference to the
definition of “Daily VWAP,” substituting, if applicable, the Bloomberg page for
such class of securities in such definition; and (II) the Daily VWAP of any
Reference Property Unit or portion thereof that does not consist of a class of
common equity securities, and the Last Reported Sale Price of any Reference
Property Unit or portion thereof that does not consist of a class of securities,
will be the fair value of such Reference Property Unit or portion thereof, as
applicable, determined in good faith by the Company (or, in the case of cash
denominated in U.S. dollars, the face amount thereof).

If the Reference Property consists of more than a single type of consideration
to be determined based in part upon any form of stockholder election, then the
composition of the Reference Property Unit will be deemed to be the weighted
average of the types and amounts of consideration actually received, per share
of Common Stock, by the holders of Common Stock. The Company will notify the
Holder of such weighted average as soon as practicable after such determination
is made.

At or before the effective date of such Common Stock Change Event, the Company
and the resulting, surviving or transferee Person (if not the Company) of such
Common Stock Change Event (the “Successor Person”) will execute and deliver such
instruments or agreements that (x) provides for subsequent conversions of this
Note in the manner set forth in this Section 8(J); (y) provides for subsequent
adjustments to the Conversion Rate pursuant to Section 8(G), Section 8(H) and
Section 8(I) in a manner consistent with this Section 8(J); and (z) contains
such other provisions as the Company reasonably determines are appropriate to
preserve the economic interests of the Holder and to give effect to the
provisions of this Section 8(J). If the Reference Property includes shares of
stock or other securities or assets of a Person other than the Successor Person,
then such other Person will also execute such instruments or agreements and such
instruments or agreements will contain such additional provisions the Company
reasonably determines are appropriate to preserve the economic interests of the
Holder.

(ii) Notice of Common Stock Change Events. As soon as practicable after learning
the anticipated or actual effective date of any Common Stock Change Event, the
Company will provide written notice to the Holder of such Common Stock Change
Event, including a brief description of such Common Stock Change Event, its
anticipated effective date and a brief description of the anticipated change in
the conversion right of this Note.
(iii) Compliance Covenant. The Company will not become a party to any Common
Stock Change Event unless its terms are consistent with this Section 8(J).
(A) Limitations on Conversions.
(i) Beneficial Ownership Limitation. Notwithstanding anything to the contrary
contained herein, the Company shall not effect the conversion of any portion of

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this Note, and the Holder shall not have the right to convert any portion of
this Note, pursuant to the terms and conditions of this Note and any such
conversion shall be null and void and treated as if never made, to the extent
that after giving effect to such conversion, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of 4.99% (the
"Maximum Percentage") of the number of shares of Common Stock outstanding
immediately after giving effect to such conversion. For purposes of the
foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by the Holder and the other Attribution Parties shall include the number
of shares of Common Stock held by the Holder and all other Attribution Parties
plus the number of shares of Common Stock issuable upon conversion of this Note
with respect to which the determination of such sentence is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(A) conversion of the remaining, unconverted portion of this Note beneficially
owned by the Holder or any of the other Attribution Parties and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company (including, without limitation, any convertible notes or convertible
preferred stock or warrants) beneficially owned by the Holder or any other
Attribution Party subject to a limitation on conversion or exercise analogous to
the limitation contained in this Section 8(K)(i). For purposes of this Section
8(K)(i), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act. For purposes of this Note, in determining the number
of outstanding shares of Common Stock the Holder may acquire upon the conversion
of this Note without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the
Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Current Report on Form 8-K or other public filing with the Commission, as the
case may be, (y) a more recent public announcement by the Company or (3) any
other written notice by the Company or the Transfer Agent (as defined in the
Securities Purchase Agreement) setting forth the number of shares of Common
Stock outstanding (the "Reported Outstanding Share Number"). If the Company
receives a conversion notice from the Holder at a time when the actual number of
outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall (i) promptly notify the Holder in writing of the
number of shares of Common Stock then outstanding and, to the extent that such
conversion notice would otherwise cause the Holder's beneficial ownership, as
determined pursuant to this Section 8(K)(i), to exceed the Maximum Percentage,
the Holder must notify the Company of a reduced number of conversion shares to
be issued pursuant to such conversion notice. For any reason at any time, upon
the written or oral request of the Holder, the Company shall within one (1)
Trading Day confirm in writing or by electronic mail to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Note, by the Holder and
any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of shares of Common
Stock to the Holder upon conversion of this Note results in the Holder and the
other Attribution Parties being deemed to beneficially own, in the aggregate,
more than the Maximum Percentage of the number of outstanding shares of

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Common Stock (as determined under Section 13(d) of the Exchange Act), the number
of shares so issued by which the Holder's and the other Attribution Parties'
aggregate beneficial ownership exceeds the Maximum Percentage (the "Excess
Shares") shall be deemed null and void and shall be cancelled ab initio, and the
Holder shall not have the power to vote or to transfer the Excess Shares. Upon
delivery of a written notice to the Company, the Holder may from time to time
increase or decrease the Maximum Percentage to any other percentage not in
excess of 9.99% as specified in such notice; provided that (i) any such increase
in the Maximum Percentage will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company and (ii) any such increase or
decrease will apply only to the Holder and the other Attribution Parties and not
to any other holder of Notes that is not an Attribution Party of the Holder. For
purposes of clarity, the shares of Common Stock issuable pursuant to the terms
of this Note in excess of the Maximum Percentage shall not be deemed to be
beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. No prior inability to
convert this Note pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of convertability. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 8(K)(i) to the extent necessary to correct this
paragraph or any portion of this paragraph which may be defective or
inconsistent with the intended beneficial ownership limitation contained in this
Section 8(K)(i) or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitation contained in this
paragraph may not be waived and shall apply to a successor holder of this Note.
(ii) Stock Exchange Limitations. Notwithstanding anything to the contrary in
this Note, until the Requisite Stockholder Approval is obtained, in no event
will the number of shares of Common Stock issuable upon conversion of this Note
pursuant to Section 8(I), together with all other shares, if any, theretofore
issued upon conversion of this Note, including any portion constituting an Early
Redemption Payment, exceed [insert # representing one share less share than 20%
of the outstanding shares] shares in the aggregate. If any one or more shares of
Common Stock are not delivered upon conversion of this Note as a result of the
operation of the preceding sentence (such shares, the “Withheld Shares”), then
on the Conversion Settlement Date for such conversion, the Company will pay to
the Holder, in addition to the Conversion Consideration otherwise due upon such
conversion, cash in an amount equal to the product of (x) the number of such
Withheld Shares; and (y) the Daily VWAP per share of Common Stock on the
Conversion Date for such conversion.
Section 9. AFFIRMATIVE AND NEGATIVE COVENANTS.
(A) Stay, Extension and Usury Laws. To the extent that it may lawfully do so,
the Company (A) agrees that it will not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law (wherever or whenever enacted or in force) that may
affect the covenants or the performance of this Note; and

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(B) expressly waives all benefits or advantages of any such law and agrees that
it will not, by resort to any such law, hinder, delay or impede the execution of
any power granted to the Holder by this Note, but will suffer and permit the
execution of every such power as though no such law has been enacted.
(B) Corporate Existence. Subject to Section 9(A), the Company will cause to
preserve and keep in full force and effect:
(i) its corporate existence in accordance with the organizational documents of
the Company; and
(ii) the material rights (charter and statutory), licenses and franchises of the
Company and its Subsidiaries;
provided, however, that the Company need not preserve or keep in full force and
effect any such license or franchise if the Board of Directors determines in
good faith that (x) the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole;
and (y) the loss thereof is not, individually or in the aggregate, materially
adverse to the Holder.
(C) Ranking. All payments due under this Note shall rank (i) pari passu with all
Other Notes and, except as set forth in clause (ii) of this paragraph, all
unsecured indebtedness of the Company, (ii) effectively senior to all unsecured
indebtedness of the Company to the extent of the value of the Collateral
securing the Notes for so long as the Collateral so secures the Notes in
accordance with the terms hereof and (iii) senior to any Subordinated
Indebtedness.
(D) Indebtedness; Amendments to Indebtedness. The Company shall not and shall
not permit any Subsidiary to: (a) create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, other than Permitted
Indebtedness; (b) prepay any Indebtedness except for (i) by the conversion of
Indebtedness into equity securities and the payment of cash in lieu of
fractional shares in connection with such conversion, or (ii) a refinancing of
the entire amount of such Indebtedness which does not impose materially more
burdensome terms upon the Company or its Subsidiaries than exist in such
Indebtedness prior to such refinancing, but with a maturity date which is later
than one hundred eighty-one (181) days following the Maturity Date; or (c) amend
or modify any documents or notes evidencing any Indebtedness in any manner which
shortens the maturity date or any amortization, redemption or interest payment
date thereof or otherwise imposes materially more burdensome terms upon the
Company or its Subsidiaries than exist in such Indebtedness prior to such
amendment or modification without the prior written consent of Holder.
(E) Liens. The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind on any asset now owned or hereafter acquired, except Permitted Liens.

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(F)  Investments. The Company shall not directly or indirectly acquire or own,
or make any Investment in or to any Person, or permit any of its Subsidiaries so
to do, other than Permitted Investments.
(G) Distributions. The Company shall not, and shall not allow any Subsidiary to,
(a) repurchase or redeem any class of stock or other equity interest other than
pursuant to employee, director or consultant repurchase plans or other similar
agreements provided under plans approved by the Board of Directors, or (b)
except with respect to the Company’s Series B Preferred Stock outstanding as of
the Issue Date, declare or pay any cash dividend or make a cash distribution on
any class of stock or other equity interest, except that a Subsidiary or Certus
may pay dividends or make distributions to the Company or a parent company that
is a direct or indirect wholly owned Subsidiary of the Company), or (c) lend
money to any employees, officers or directors (except as permitted under clauses
(F) or (G) of the definition of Permitted Investment), or guarantee the payment
of any such loans granted by a third party in excess of fifty thousand dollars
($50,000) in the aggregate or (d) waive, release or forgive any Indebtedness
owed by any employees, officers or directors in excess of fifty thousand dollars
$50,000 in the aggregate.
(H)  Transfers. Except for Permitted Transfers and Permitted Investments, the
Company shall not, and shall not allow any Subsidiary to, voluntarily or
involuntarily transfer, sell, lease, license, lend or in any other manner convey
any equitable, beneficial or legal interest in any material portion of its
assets.
(I)   Taxes. The Company and its Subsidiaries shall pay when due all taxes, fees
or other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against the Company and its
Subsidiaries or their respective assets or upon their ownership, possession,
use, operation or disposition thereof or upon their rents, receipts or earnings
arising therefrom. The Company and its Subsidiaries shall file on or before the
due date therefor all personal property tax returns. Notwithstanding the
foregoing, the Company and its Subsidiaries may contest, in good faith and by
appropriate proceedings, taxes for which they maintain adequate reserves
therefor in accordance with GAAP.
(J) Minimum Liquidity. The Company shall have at all times liquidity calculated
as unrestricted, unencumbered Cash and Cash Equivalents in one or more deposit
accounts located in the United States and subject to a Control Agreement (as
defined in the Security Agreement) in favor of the Collateral Agent in a minimum
amount equal to eight million dollars ($8,000,000).
(K) Change in Nature of Business. The Company shall not, and the Company shall
cause each of its Subsidiaries to not, directly or indirectly, engage in any
material line of business substantially different from those lines of business
conducted by or publicly contemplated to be conducted by the Company and each of
its Subsidiaries on the Issue Date or any business substantially related or
incidental thereto. The Company shall not, and the Company shall cause each of
its Subsidiaries to not, directly or indirectly, modify its or their corporate
structure or purpose.

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(L) Maintenance of Properties, Etc. The Company shall maintain and preserve all
of its properties which are necessary or useful (as determined by the Company in
good faith) in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted, and comply at all times in all
material respects with the provisions of all leases to which it is a party as
lessee or under which it occupies property, so as to prevent any loss or
forfeiture thereof or thereunder.
(M) Maintenance of Intellectual Property. The Company will take all action
necessary or advisable to maintain all of the Intellectual Property Rights (as
defined in the Securities Purchase Agreement) of the Company that are necessary
or material (as determined by the Company in good faith) to the conduct of its
business in full force and effect.
(N) Maintenance of Insurance. The Company shall maintain insurance with
reputable insurance companies or associations (including, without limitation,
comprehensive general liability, hazard, rent and business interruption
insurance) with respect to its properties (including all real properties leased
or owned by it) and business, in such amounts and covering such risks as is
required by any governmental authority having jurisdiction with respect thereto
or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated.
(O) Transactions with Affiliates. The Company shall not enter into, renew,
extend or be a party to, any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with
any affiliate, except transactions for fair consideration and on terms no less
favorable to it than would be obtainable in a comparable arm’s length
transaction with a Person that is not an affiliate thereof.
(P) Restricted Issuances. The Company shall not, directly or indirectly, without
the prior written consent of the holders of a majority in aggregate principal
amount of the Notes then outstanding, (i) issue any Notes (other than as
contemplated by the Securities Purchase Agreement and the Notes) or (ii) issue
any other securities or incur any Indebtedness that would cause a breach or
Default under the Notes or that by its terms would prohibit or restrict the
performance of any of the Company’s obligations under the Notes, including
without limitation, the payment of interest and principal thereon.
(Q) Independent Investigation. At the request of the Holder at any time when an
Event of Default has occurred and is continuing, the Company shall hire an
independent, reputable investment bank selected by the Company and approved by
the Holder to investigate as to whether any breach of this Note has occurred
(the “Independent Investigator”). If the Independent Investigator determines
that such breach of this Note has occurred, the Independent Investigator shall
notify the Company of such breach and the Company shall deliver written notice
to the Holder of such breach. In connection with such investigation, the
Independent Investigator may, during normal business hours and upon signing a
confidentiality agreement in a form reasonably acceptable to the Company,
inspect all contracts, books, records, personnel, offices and other facilities
and properties of the Company and its Subsidiaries and, to the extent available
to the Company after the Company uses reasonable efforts to obtain them, the
records

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of its accountants (including the accountants’ work papers) and any books of
account, records, reports and other papers not contractually required of the
Company to be confidential or secret, or subject to attorney-client or other
evidentiary privilege, and the Independent Investigator may make such copies and
inspections thereof as the Independent Investigator may reasonably request. The
Company shall furnish the Independent Investigator with such financial and
operating data and other information with respect to the business and properties
of the Company as the Independent Investigator may reasonably request. The
Company shall permit the Independent Investigator to discuss the affairs,
finances and accounts of the Company with, and to make proposals and furnish
advice with respect thereto to, the Company’s officers, directors, key employees
and independent public accountants or any of them (and by this provision the
Company authorizes said accountants to discuss with such Independent
Investigator the finances and affairs of the Company and any Subsidiaries;
provided that the Company’s chief financial officer and chief executive officer
shall also be invited to attend any discussion with a key employee or the
independent public accountants), all at such reasonable times, upon reasonable
notice, and as often as may be reasonably requested.
(R) If at least two million five hundred thousand dollars ($2,500,000) of the
Principal Amount of this Note has not been converted under Section 8 hereof on
or prior to February 1, 2020, then the Company shall redeem on such date the
portion of such amount not so converted pursuant to Section 7(A) hereof.
Additionally, if at least five million dollars ($5,000,000) (less all amounts
converted or redeemed on or prior to February 1, 2020 pursuant to the prior
sentence) of the Principal Amount of this Note has not been converted under
Section 8 hereof during the period beginning on February 2, 2020 and ending on
April 1, 2020, then the Company shall redeem on such date the portion of such
amount not so converted pursuant to Section 7(A) hereof. For the avoidance of
doubt, any amounts converted or redeemed pursuant to this Section 9(R) shall not
count towards any Early Redemption Payment or be taken into account for purposes
of calculating the required aggregate Early Redemption Payments set forth in
Section 7(B)(ii) and any Early Redemption Payments shall not count towards any
redemption obligation pursuant to this Section 9(R).
(S) Upon delivery by the Company to the Holder (or receipt by the Company from
the Holder) of any notice in accordance with the terms of this Note, unless the
Company has in good faith determined that the matters relating to such notice do
not constitute material, non-public information relating to the Company or any
of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city
time on the Business Day immediately following such notice delivery date,
publicly disclose such material, non-public information on a Form 8-K or
otherwise. In the event that the Company believes that a notice contains
material, non-public information relating to the Company or any of its
Subsidiaries, the Company so shall indicate to the Holder explicitly in writing
in such notice (or immediately upon receipt of notice from the Holder, as
applicable), and in the absence of any such written indication in such notice
(or notification from the Company immediately upon receipt of notice from the
Holder), the Holder shall be entitled to presume that information contained in
the notice does not constitute material, non-public information relating to the
Company or any of its Subsidiaries. Nothing contained in this Section 9(S) shall
limit any obligations of the Company, or any rights of the Holder, under the
Securities Purchase Agreement.

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(T) The Company acknowledges and agrees that the Holder is not a fiduciary or
agent of the Company and that the Holder shall have no obligation to (a)
maintain the confidentiality of any information provided by the Company or (b)
refrain from trading any securities while in possession of such information in
the absence of a written non-disclosure agreement signed by an officer of the
Holder that explicitly provides for such confidentiality and trading
restrictions. In the absence of such an executed, written non-disclosure
agreement, the Company acknowledges that the Holder may freely trade in any
securities issued by the Company, may possess and use any information provided
by the Company in connection with such trading activity, and may disclose any
such information to any third party.
Section 10. SUCCESSORS.
The Company will not consolidate with or merge with or into, or (directly, or
indirectly through one or more of its Subsidiaries) sell, lease or otherwise
transfer, in one transaction or a series of transactions, all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, to
another Person, other than the Holder or any of its Affiliates (a “Business
Combination Event”), unless:

(A) the resulting, surviving or transferee Person either (x) is the Company or
(y) if not the Company, is a corporation (the “Successor Corporation”) duly
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia that expressly assumes (by executing and
delivering to the Holder, at or before the effective time of such Business
Combination Event, a supplement to this instrument) all of the Company’s
obligations under this Note; and
(A) immediately after giving effect to such Business Combination Event, no
Default or Event of Default will have occurred and be continuing.
At the effective time of any Business Combination Event, the Successor
Corporation (if not the Company) will succeed to, and may exercise every right
and power of, the Company under this Note with the same effect as if such
Successor Corporation had been named as the Company in this Note, and, except in
the case of a lease, the predecessor Company will be discharged from its
obligations under this Note.

Section 11. DEFAULTS AND REMEDIES
(A) Events of Default. “Event of Default” means the occurrence of any of the
following:
(i) a default in the payment when due of the Principal Amount, Maturity
Principal Amount, Fundamental Change Repurchase Price, Company Redemption Price
or Early Redemption Payment of this Note;
(ii) a default for two (2) Business Days in the payment when due of interest on
this Note;

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(iii) a default in the Company’s obligation to convert this Note in accordance
with Section 8 upon the exercise of the conversion right with respect thereto or
upon Forced Conversion;
(iv) a default in the Company’s obligation to deliver a Fundamental Change
Notice pursuant to Section 6(C), and such default continues for three (3)
Business Days;
(v) a materially false or inaccurate certification (including a false or
inaccurate deemed certification) by the Company (A) that the Equity Conditions
are satisfied, (B) that there has been no failure of the Equity Conditions, or
(C) as to whether any Event of Default has occurred;
(vi) a default in any of the Company’s obligations or agreements under this Note
or the Transaction Documents (in each case, other than a default set forth in
clause (i), (ii) or (iii) of this Section 11(A)), or a breach of any
representation or warranty in any material respect (other than representations
or warranties subject to material adverse effect or materiality, which may not
be breached in any respect) of the Securities Purchase Agreement; provided,
however, that if such default or breach can be cured, then such default or
breach will not be an Event of Default unless the Company has failed to cure
such default within ten (10) days after its occurrence;
(vii) any provision of any Transaction Document at any time for any reason
(other than pursuant to the express terms thereof) ceases to be valid and
binding on or enforceable against the parties thereto, or the validity or
enforceability thereof is contested, directly or indirectly, by the Company or
any of its Subsidiaries, or a proceeding is commenced by the Company or any of
its Subsidiaries or any governmental authority having jurisdiction over any of
them, seeking to establish the invalidity or unenforceability thereof;
(viii) a breach of any representation or warranty in any material respect (other
than representations or warranties subject to material adverse effect or
materiality, which may not be breached in any respect) of any Transaction
Document;
(ix) at any time, this Note or any shares of Common Stock issuable upon
conversion of this Note are not Freely Tradable;
(x) any breach or default by the Company under Section 4(s) of the Securities
Purchase Agreement;
(xi) the Company fails to comply with Section 9(J) of this Note.
(xii) the suspension from trading or failure of the Common Stock to be trading
or listed on an Eligible Exchange for a period of ten (10) consecutive Trading
Days;

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(xiii) any breach or default by the Company under any Transaction Document
except, in the case of a breach of a covenant or other term or condition that is
curable, only if such breach remains uncured for a period of ten (10)
consecutive days;
(xiv) a default by the Company or any of its Subsidiaries with respect to any
Indebtedness of at least two hundred fifty thousand dollars ($250,000) (or its
foreign currency equivalent) in the aggregate of the Company or any of its
Subsidiaries, whether such Indebtedness exists as of the Issue Date or is
thereafter created, subject to the lapse of any applicable notice or cure period
provided therein; provided, however that for the avoidance of doubt this Section
11(A)(xiv) shall not apply to Capital Leases;
(xv) one or more final judgments, orders or awards (or any settlement of any
litigation or other proceeding that, if breached, could result in a judgment,
order or award) for the payment of at least two hundred fifty thousand dollars
($250,000) (or its foreign currency equivalent) in the aggregate (excluding any
amounts covered by insurance pursuant to which the insurer has been notified and
has not denied coverage), is rendered against the Company or any of its
Subsidiaries and remains unsatisfied and (i) enforcement proceedings shall have
been commenced by any creditor upon any such judgment, order, award or
settlement or (ii) there shall be a period of ten (10) consecutive Trading Days
after entry thereof during which (A) a stay of enforcement thereof is not in
effect or (B) the same is not vacated, discharged, stayed or bonded pending
appeal;
(xvi) (A) the Company fails to timely file its quarterly reports on Form 10-Q or
its annual reports on Form 10-K with the Commission in the manner and within the
time periods required by the Exchange Act, or (B) the Company withdraws or
restates any such quarterly report or annual report previously filed with the
Commission in a manner that results in (A) the Company failing for any reason to
satisfy the requirements of Rule 144(c)(1) under the Securities Act, including,
without limitation, the failure to satisfy the current public information
requirement under Rule 144(c) or (B) if the Company is or becomes an issuer as
described in Rule 144(i)(1)(i), the Company failing to satisfy any condition set
forth in Rule 144(i)(2);
(xvii) any Security Document shall for any reason fail or cease to create a
separate valid and perfected and, except to the extent permitted by the terms
hereof or thereof, first priority Lien on the Collateral in favor of the
Collateral Agent or any material provision of any Security Document shall at any
time for any reason cease to be valid and binding on or enforceable against the
Company or the validity or enforceability thereof shall be contested by any
party thereto, or a proceeding shall be commenced by the Company or any
governmental authority having jurisdiction over the Company, seeking to
establish the invalidity or unenforceability thereof;
(xviii) any material damage to, or loss, theft or destruction of, any material
portion of the Collateral (provided that any damage, loss, theft or destruction
of the Collateral that reduces the value of such Collateral by $250,000 or more
shall be deemed to be material), whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty which causes, for more than

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sixty (60) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of the Company or any Subsidiary, if any
such event or circumstance could reasonably be expected have a Material Adverse
Effect (as defined in the Securities Purchase Agreement). For clarity, an Event
of Default under this Section 11(A)(xviii) will not require any curtailment of
revenue;
(xix) the Company fails to remove any restrictive legend on any certificate or
any shares of Common Stock issued to the Holder upon conversion or exercise (as
the case may be) of any Securities (as defined in the Securities Purchase
Agreement) acquired by the Holder under the Securities Purchase Agreement
(including this Note) as and when required by such Securities or the Securities
Purchase Agreement, unless otherwise then prohibited by applicable federal
securities laws, and any such failure remains uncured for at least five (5)
Trading Days;
(xx) the Company or any of its Significant Subsidiaries, pursuant to or within
the meaning of any Bankruptcy Law, either:
(1) commences a voluntary case or proceeding;
(2) consents to the entry of an order for relief against it in an involuntary
case or proceeding;
(3) consents to the appointment of a custodian of it or for any substantial part
of its property;
(4) makes a general assignment for the benefit of its creditors;
(5) takes any comparable action under any foreign Bankruptcy Law; or
(6) generally is not paying its debts as they become due; or
(xxi) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that either:
(1) is for relief against Company or any of its Significant Subsidiaries in an
involuntary case or proceeding;
(2) appoints a custodian of the Company or any of its Significant Subsidiaries,
or for any substantial part of the property of the Company or any of its
Significant Subsidiaries;
(3) orders the winding up or liquidation of the Company or any of its
Significant Subsidiaries; or
(4) grants any similar relief under any foreign Bankruptcy Law,

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and, in each case under this Section 11(A)(xxi), such order or decree remains
unstayed and in effect for at least thirty (30) days.

(A) Acceleration.
(i) Automatic Acceleration in Certain Circumstances. If an Event of Default set
forth in Section 11(A)(xx) or (xxi) occurs with respect to the Company (and not
solely with respect to a Significant Subsidiary of the Company), then the then
outstanding portion of the Maturity Principal Amount of, and all accrued and
unpaid interest on, this Note will immediately become due and payable without
any further action or notice by any Person.
(ii) Optional Acceleration. If an Event of Default (other than an Event of
Default set forth in Section 11(A)(xx) or (xxi) with respect to the Company and
not solely with respect to a Subsidiary of the Company) occurs and is
continuing, then the Holder, by notice to the Company, may declare this Note to
become due and payable immediately for cash in an amount equal to the Event of
Default Acceleration Amount plus all accrued and unpaid interest on this Note.
(C) Notice of Events of Default. Promptly, but in no event later than two (2)
Business Days after an Event of Default, the Company will provide written notice
of such Event of Default (an “Event of Default Notice”) to the Holder, which
Event of Default Notice shall include (i) a reasonable description of the
applicable Event of Default, (ii) a certification as to whether, in the opinion
of the Company, such Event of Default is capable of being cured and, if
applicable, a reasonable description of any existing plans of the Company to
cure such Event of Default and (iii) a certification as to the date the Event of
Default occurred and, if cured on or prior to the date of such Event of Default
Notice, the date of such cure.
Section 12. RANKING.
The indebtedness represented by this Note will constitute the senior secured
obligations of the Company; provided, that upon the consummation of a Qualified
Debt Financing, indebtedness represented by this Note will be secured on a
second priority basis to the liens securing the Indebtedness in respect of a
Qualified Debt Financing and will constitute the junior secured obligations of
the Company.

Section 13. REPLACEMENT NOTES.
If the Holder of this Note claims that this Note has been mutilated, lost,
destroyed or wrongfully taken, then the Company will issue, execute and deliver
a replacement Note upon surrender to the Company of such mutilated Note, or upon
delivery to the Company of evidence of such loss, destruction or wrongful taking
reasonably satisfactory to the Company. In the case of a lost, destroyed or
wrongfully taken Note, the Company may require the Holder to provide such
security or an indemnity that is reasonably satisfactory to the Company to
protect the Company from any loss that it may suffer if this Note is replaced.

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Section 14. NOTICES.
Any notice or communication to the Company will be deemed to have been duly
given if in writing and delivered in person or by first class mail (registered
or certified, return receipt requested), facsimile transmission, electronic
transmission (including e-mail) or other similar means of unsecured electronic
communication or overnight air courier guaranteeing next day delivery, or to the
other’s address, which initially is as follows:

Workhorse Group Inc.
100 Commerce Drive
Loveland, Ohio 45140
Attention: Chief Financial Officer
Email address: [__]

The Company, by notice to the Holder, may designate additional or different
addresses for subsequent notices or communications.

Any notice or communication to the Holder will be by email to its email address,
which initially are as set forth in the Securities Purchase Agreement. The
Holder, by notice to the Company, may designate additional or different
addresses for subsequent notices or communications.

If a notice or communication is mailed in the manner provided above within the
time prescribed, it will be deemed to have been duly given, whether or not the
addressee receives it.

Section 15. SUCCESSORS.
All agreements of the Company in this Note will bind its successors.

Section 16. SEVERABILITY.
If any provision of this Note is invalid, illegal or unenforceable, then the
validity, legality and enforceability of the remaining provisions of this Note
will not in any way be affected or impaired thereby.

Section 17. HEADINGS, ETC.
The headings of the Sections of this Note have been inserted for convenience of
reference only, are not to be considered a part of this Note and will in no way
modify or restrict any of the terms or provisions of this Note.

Section 18. AMENDMENTS
This Note may not be amended or modified unless in writing by the Company and
the Required Holders (as defined in the Securities Purchase Agreement), and no
condition herein

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(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit.

Section 19. GOVERNING LAW; WAIVER OF JURY TRIAL.
THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE
THIS NOTE. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE.

Section 20. SUBMISSION TO JURISDICTION.
The Company (A) agrees that any suit, action or proceeding against it arising
out of or relating to this Note may be instituted in any U.S. federal court with
applicable subject matter jurisdiction sitting in The City of New York; (B)
waives, to the fullest extent permitted by applicable law, (i) any objection
that it may now or hereafter have to the laying of venue of any such suit,
action or proceeding; and (ii) any claim that it may now or hereafter have that
any such suit, action or proceeding in such a court has been brought in an
inconvenient forum; and (C) submits to the nonexclusive jurisdiction of such
courts in any such suit, action or proceeding.

Section 21. ENFORCEMENT FEES.
The Company agrees to pay all costs and expenses of the Holder incurred as a
result of enforcement of this Note and the collection of any amounts owed to the
Holder hereunder (whether in cash, Common Stock or otherwise), including,
without limitation, reasonable attorneys’ fees and expenses.

Section 22. COLLATERAL AGENT.
(A) Appointment; Authorization. The Holder hereby irrevocably appoints,
designates and authorizes HT Investments MA, LLC as collateral agent to take
such action on its behalf under the provisions of this Note and each Security
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of each Security Document, together with such
powers as are reasonably incidental thereto. The provisions of this Section 22
are solely for the benefit of the Collateral Agent, and the Company shall not
have rights as a third-party beneficiary of any of such provisions. It is
understood and agreed that the use of the term “agent” herein or in any Security
Document (or any other similar term) with reference to the Collateral Agent is
not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead such term is used
as a matter of market custom, and is intended to create or reflect only an
administrative relationship between contracting parties. Notwithstanding any
provision to the contrary contained elsewhere in this Note, any Security
Document or any other agreement, instrument or document related hereto or
thereto, the Collateral Agent shall not have any duty or responsibility except
those expressly set forth herein, and no implied covenants, functions,
responsibilities, duties,

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obligations or liabilities shall be read into this Note, any Security Document
or any other agreement, instrument or document related hereto or thereto or
otherwise exist against the Collateral Agent.
(B) Delegation of Duties. The Collateral Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any Security
Document by or through any one or more sub-agents appointed by the Collateral
Agent. The Collateral Agent and any such sub-agent may perform any and all of
its duties and exercise its rights and powers by or through its Affiliates,
partners, directors, officers, employees, agents, trustees, administrators,
managers, advisors and representatives, or the partners, directors, officers,
employees, agents, trustees, administrators, managers, advisors and
representatives of any of its Affiliates (collectively, the “Related Parties”).
The exculpatory provisions of this Section 22 shall apply to any such sub-agent
and to the Related Parties of the Collateral Agent and any such sub-agent. The
Collateral Agent shall not be responsible for the negligence or misconduct of
any sub-agents except to the extent that a court of competent jurisdiction
determines in a final and non-appealable judgment that the Collateral Agent
acted with gross negligence or willful misconduct in the selection of such
sub-agents.
(C) Exculpatory Provisions.
(i) The Collateral Agent shall not have any duties or obligations except those
expressly set forth in the Security Documents, and its duties shall be
administrative in nature. Without limiting the generality of the foregoing, the
Collateral Agent: (i) shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default or Event of Default has occurred and is
continuing; (ii) shall not have any duty to take any discretionary action or
exercise any discretionary powers; and (iii) shall not, except as expressly set
forth in the Security Documents, have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Company or
any of its Affiliates that is communicated to or obtained by the Collateral
Agent or any of its Affiliates in any capacity.
(ii) The Collateral Agent shall not be liable for any action taken or not taken
by it in the absence of its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction by final and non-appealable
judgment. The Collateral Agent shall be deemed not to have knowledge of any
Default or Event of Default unless and until notice describing such Default or
Event of Default is given to the Collateral Agent in writing by the Company.
(iii) The Collateral Agent shall not be responsible for or have any duty to
ascertain or inquire into (a) any statement, warranty or representation made in
or in connection with this Note, any Security Document or any other agreement,
instrument or document related hereto or thereto, (b) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (c) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default or Event of Default, (d) the validity,
enforceability, effectiveness or genuineness of this Note, any

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Security Document or any other agreement, instrument or document related hereto
or thereto, or (e) any failure of the Company or any other party to this Note,
any Security Agreement or any other agreement, instrument or document related
hereto or thereto to perform its obligations hereunder or thereunder. The
Collateral Agent shall not be under any obligation to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Note, any Security Document or any other agreement,
instrument or document related hereto or thereto, or to inspect the properties,
books or records of the Company or any Affiliate of the Company.
(D) Reliance by Collateral Agent. The Collateral Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. The Collateral Agent also may rely
upon any statement made to it orally or by telephone and believed by it to have
been made by the proper Person, and shall not incur any liability for relying
thereon. The Collateral Agent may consult with legal counsel, independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
(E) Successor Agent. The Collateral Agent may resign as the Collateral Agent at
any time upon ten (10) days’ prior notice to the Holder and each Other Holder
and the Company. If the Collateral Agent resigns under this Note, the Holder and
each Other Holder shall appoint a successor agent. If no successor agent is
appointed prior to the effective date of the resignation of the Collateral
Agent, the Collateral Agent may appoint a successor Collateral Agent on behalf
of the Holder and each Other Holder after consulting with the Holder and each
other Holder. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Collateral Agent and the term “the Collateral Agent”
shall mean such successor agent, and the retiring Agent’s appointment, powers
and duties as the Collateral Agent shall be terminated. After the Collateral
Agent’s resignation hereunder as the Collateral Agent, the provisions of
this Section 22 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Collateral Agent. If no successor
agent has accepted appointment as the Collateral Agent by the date which is
thirty (30) days following a retiring Collateral Agent’s notice of resignation,
a retiring Collateral Agent’s resignation shall nevertheless thereupon become
effective and the Holder, together with each Other Holder, shall perform all of
the duties of the Collateral Agent hereunder until such time as the Holder and
each Other Holder shall appoint a successor agent as provided for above.
(F) Non-Reliance on the Collateral Agent. The Holder acknowledges that it has,
independently and without reliance upon the Collateral Agent or any of its
Related Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Note.
The Holder also acknowledges that it will, independently and without reliance
upon the Collateral Agent or any of its Related Parties and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Note,

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any Security Document or any related agreement or any document furnished
hereunder or thereunder.
(G) Collateral Matters. The Holder irrevocably authorizes the Collateral Agent
to release any Lien granted to or held by the Collateral Agent under any
Security Document (i) when all Obligations (as defined in the Security
Agreement) have been paid in full or a Qualified Debt Financing is consummated;
(ii) constituting property sold or to be sold or disposed of as part of or in
connection with any sale or other disposition permitted under this Note and each
other agreement, instrument or document related hereto (it being agreed and
understood that the Collateral Agent may conclusively rely without further
inquiry on a certificate of an officer of the Company as to the sale or other
disposition of property being made in compliance with this Note and each other
agreement, instrument or document related hereto); or (iii) if approved,
authorized or ratified in writing by the Holder and each Other Holder. The
Collateral Agent shall have the right, in accordance with the Security Documents
to sell, lease or otherwise dispose of any Collateral (as defined in the
Security Agreement) for cash, credit or any combination thereof, and the
Collateral Agent may purchase any Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of the purchase price, may credit
bid and setoff the amount of such price against the Obligations.
(H) Reimbursement by Holder and Other Holders. To the extent that the Company
for any reason fails to indefeasibly pay any amount required under  Sections
4(e) or 9(k) of the Securities Purchase Agreement to be paid by it to the
Collateral Agent (or any sub-agent thereof) or any Related Party of the
Collateral Agent (or any sub-agent thereof), the Holder hereby agrees, jointly
and severally with each Other Holder, to pay to the Collateral Agent (or any
such sub-agent) or such Related Party of the Collateral Agent (or any sub-agent
thereof), as the case may be, such unpaid amount.
(I) Marshaling; Payments Set Aside. Neither the Collateral Agent nor the Holder
shall be under any obligation to marshal any assets in favor of the Company or
any other Person or against or in payment of any or all of the Obligations. To
the extent that the Company makes a payment or payments to the Collateral Agent,
or the Collateral Agent enforces its Liens or exercises its rights of set-off,
and such payment or payments or the proceeds of such enforcement or set-off or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Collateral Agent in its discretion) to be repaid to a
trustee, receiver or any other party in connection with any bankruptcy,
insolvency or similar proceeding, or otherwise, then (i) to the extent of such
recovery, the obligation hereunder 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 set-off had not occurred and
(ii) the Holder agrees to pay to the Collateral Agent upon demand its share of
the total amount so recovered from or repaid by the Collateral Agent to the
extent paid to the Holder.

* * *

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CONVERSION NOTICE

WORKHORSE GROUP INC.

Senior Secured Convertible Note due 2022

Subject to the terms of this Note, by executing and delivering this Conversion
Notice, the undersigned Holder of this Note directs the Company to convert the
following Principal Amount of this Note: $    ,000 in accordance with the
following details.

o Check if the Conversion Date occurs during an Event of Default Conversion
Period.

Shares of Common Stock to be delivered:

____________________________
Accrued interest amount:

____________________________
DTC Participant Number:

___________________________
DTC Participant Name: 

____________________________
DTC Participant Phone Number: 

____________________________
DTC Participant Contact Email: 

____________________________

Date: ____________________________   ____________________________
(Legal Name of Holder)

By: ____________________________
Name:
Title:

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o Check if the Conversion Rate is at a rate other than is otherwise currently
applicable (counter signature by the Company is not required unless a Conversion
Rate other than the currently applicable Conversion Rate is requested).

Requested Conversion Rate: 

____________________________

Date: ____________________________   ____________________________
WORKHORSE GROUP INC.

By: ____________________________
Name:
Title:

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Exhibit A

Form of Company Redemption Warrant

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FORM OF WARRANT
WORKHORSE GROUP INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.:    
Number of Shares of Common Stock: Warrant Amount (as defined herein)
Date of Issuance: [___], 2019 (“Issuance Date”)
Workhorse Group Inc., a company organized under the laws of Nevada (the
“Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, HT Investments MA,
LLC, the registered holder hereof or its permitted assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company, at
the Exercise Price (as defined below) then in effect, at any time or times on or
after the Issuance Date during an Exercise Period (as defined below), but not
after 11:59 p.m., New York time, on last day of an Exercise Period, a number of
fully paid non-assessable shares of Common Stock (as defined below) equal to the
Warrant Amount (as defined herein), subject to adjustment as provided herein
(the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in
this Warrant to Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, this “Warrant”), shall
have the meanings set forth in Section 16. This Warrant is one of the Warrants
to Purchase Common Stock (the “Warrants”) issued pursuant to (i) that certain
Securities Purchase Agreement (the “Purchase Agreement”), dated as of November
21, 2019 (the “Subscription Date”) by and between the Company and each of the
investors listed on the Schedule of Buyers attached thereto, (ii) the Company’s
Registration Statement on Form S-3 (File number 333-213100) (the “Registration
Statement”) and (iii) the Company’s prospectus supplement dated as of November
21, 2019.
1.EXERCISE OF WARRANT.

(a) Exercisability. The Warrant may not be exercised prior to there having been
a redemption (in whole or in part) of that certain 4.50% Senior Secured
Convertible Note of the Company issued to the Holder in accordance with the
Purchase Agreement (the “Note”) in accordance with Section 7(A) thereof. This
Warrant shall be exercisable for a number of shares of Common Stock (the
“Warrant Amount”) equal to (a) one hundred fifteen percent (115%) of the total
principal amount of the Convertible Note redeemed at such time (each such time a
“Company Note Redemption Time”) in accordance with Section 7(A) of the
Convertible Note; divided by (b) the Conversion Price (as defined in the Note)
as of such Company Note Redemption Time; provided, however, that in the event
that there are one or more partial redemptions of the Note, the Warrant Amount
shall be sum of the number of shares resulting from the performance of the
calculation set forth in this Section 1(a) for each such partial redemption. For
purposes of this Warrant, a redemption of the Note pursuant to Section

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9(R) of the Note shall not be deemed to be a Company Note Redemption Time and
the Warrant Amount shall not be increased as a result of any redemption of the
Note pursuant to Section 9(R) of the Note.
(b) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(b)), this
Warrant may be exercised by the Holder at any time or times during an Exercise
Period, in whole or in part, by delivery (whether via facsimile, electronic mail
or otherwise) of a written notice, in the form attached hereto as Exhibit A (the
“Exercise Notice”), of the Holder’s election to exercise this Warrant. Within
one (1) Trading Day following the delivery of the Exercise Notice, the Holder
shall make payment to the Company of an amount equal to the Exercise Price in
effect on the date of such exercise multiplied by the number of Warrant Shares
as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in
cash by wire transfer of immediately available funds or, if the provisions of
Section 1(d) are applicable, by notifying the Company that this Warrant is being
exercised pursuant to a Cashless Exercise (as defined in Section 1(d)). The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder, nor shall any ink-original signature or medallion
guarantee (or other type of guarantee or notarization) with respect to any
Exercise Notice be required. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares and the Holder
shall not be required to physically surrender this Warrant to the Company until
the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within three (3) Trading Days of
the date on which the final Exercise Notice is delivered to the Company. On or
before the first (1st) Trading Day following the date on which the Holder has
delivered the applicable Exercise Notice, the Company shall transmit by
facsimile or electronic mail an acknowledgment of confirmation of receipt of the
Exercise Notice, in the form attached to the Exercise Notice, to the Holder and
the Company’s transfer agent (the “Transfer Agent”). So long as the Holder
delivers the Aggregate Exercise Price (or notice of a Cashless Exercise, if
applicable) on or prior to the first (1st) Trading Day following the date on
which the Exercise Notice has been delivered to the Company, then on or prior to
the earlier of (i) the second (2nd) Trading Day and (ii) the number of Trading
Days comprising the Standard Settlement Period, in each case following the date
on which the Exercise Notice has been delivered to the Company, or, if the
Holder does not deliver the Aggregate Exercise Price (or notice of a Cashless
Exercise, if applicable) on or prior to the first (1st) Trading Day following
the date on which the Exercise Notice has been delivered to the Company, then on
or prior to the first (1st) Trading Day following the date on which the
Aggregate Exercise Price (or notice of a Cashless Exercise, if applicable) is
delivered (such earlier date, or if later, the earliest day on which the Company
is required to deliver Warrant Shares pursuant to this Section 1(a), the “Share
Delivery Date”, the Company shall (X) provided that the Transfer Agent is
participating in The Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, credit such aggregate number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit / Withdrawal At Custodian system,
or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and

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dispatch by overnight courier to the address as specified in the Exercise
Notice, a certificate, registered in the name of the Holder or its designee, for
the number of Warrant Shares to which the Holder is entitled pursuant to such
exercise. The Company shall be responsible for all fees and expenses of the
Transfer Agent and all fees and expenses with respect to the issuance of Warrant
Shares via DTC, if any, including without limitation for same day processing.
Upon delivery of the Exercise Notice, the Holder shall be deemed for all
corporate purposes to have become the holder of record and beneficial owner of
the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date such Warrant Shares are credited to the Holder’s DTC
account or the date of delivery of the certificates evidencing such Warrant
Shares, as the case may be. If this Warrant is physically delivered to the
Company in connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise, then
the Company shall as soon as practicable and in no event later than three (3)
Trading Days after any exercise and at its own expense, issue and deliver to the
Holder (or its designee) a new Warrant (in accordance with Section 7(d))
representing the right to purchase the number of Warrant Shares issuable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No fractional
Warrant Shares are to be issued upon the exercise of this Warrant, but rather
the number of Warrant Shares to be issued shall be rounded to the nearest whole
number. The Company shall pay any and all transfer, stamp, issuance and similar
taxes, costs and expenses (including, without limitation, fees and expenses of
the Transfer Agent) which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant. The Company’s
obligations to issue and deliver Warrant Shares in accordance with the terms and
subject to the conditions hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination; provided, however, that the Company shall
not be required to deliver Warrant Shares with respect to an exercise prior to
the Holder’s delivery of the Aggregate Exercise Price (or notice of a Cashless
Exercise) with respect to such exercise.
(c) Exercise Price. For purposes of this Warrant, “Exercise Price” means, as of
a Company Note Redemption Time, an amount per share equal to the greater of (x)
the Conversion Price (as defined in the Note) as of such Company Note Redemption
Time and (y) the Company Redemption Stock Price (as defined in the Note) as of
such Company Note Redemption Time, in each case subject to adjustment as
provided herein; provided, however, that in the event that there are one or more
partial redemptions of the Note, the Exercise Price for the shares for which
this Warrant shall be exercisable as a result of any particular partial
redemption shall be the Exercise Price as of the Company Note Redemption Time
for such partial redemption.
(d) Company’s Failure to Timely Deliver Securities. If either (I) the Company
shall fail for any reason or for no reason to issue to the Holder on or prior to
the applicable Share Delivery Date, if (x) the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, a
certificate for the number of shares of Common Stock

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to which the Holder is entitled and register such Common Stock on the Company’s
share register or (y) the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program, to credit the Holder’s balance account
with DTC, for such number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise of this Warrant or (II) a registration
statement (which may be the Registration Statement) covering the issuance or
resale of the Warrant Shares that are the subject of the Exercise Notice (the
“Exercise Notice Warrant Shares”) is not available for the issuance or resale,
as applicable, of such Exercise Notice Warrant Shares and (x) the Company fails
to promptly, but in no event later than one (1) Business Day after such
registration statement becomes unavailable, to so notify the Holder and (y) the
Company is unable to deliver the Exercise Notice Warrant Shares electronically
without any restrictive legend by crediting such aggregate number of Exercise
Notice Warrant Shares to the Holder’s or its designee’s balance account with DTC
through its Deposit / Withdrawal At Custodian system (the event described in the
immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, an “Exercise
Failure”), then, in addition to all other remedies available to the Holder, if
on or prior to the applicable Share Delivery Date either (I) (x) if the Transfer
Agent is not participating in the DTC Fast Automated Securities Transfer
Program, the Company shall fail to issue and deliver a certificate to the Holder
and register such shares of Common Stock on the Company’s share register or (y),
if the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, the Company shall fall to credit the Holder’s balance account
with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise hereunder or pursuant to the Company’s
obligation pursuant to clause (ii) below, or (II) if a Notice Failure occurs,
and if after such date the Holder is required by its broker to purchase (in an
open market transaction or otherwise), or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the
amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the
exercise at issue multiplied by (2) the price at which the sell order giving
rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of
Warrant Shares for which such exercise was not honored (in which case such
exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of Common Stock
with an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as
required pursuant to the

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terms hereof. The Company’s current transfer agent participates in the DTC Fast
Automated Securities Transfer Program (“FAST”). In the event that the Company
changes transfer agents while this Warrant is outstanding, the Company shall use
commercially reasonable efforts to select a transfer agent that participates in
FAST. While this Warrant is outstanding, the Company shall request its transfer
agent to participate in FAST with respect to this Warrant. In addition to the
foregoing rights, (i) if the Company fails to deliver the applicable number of
Warrant Shares upon an exercise pursuant to Section 1 by the applicable Share
Delivery Date, then the Holder shall have the right to rescind such exercise in
whole or in part and retain and/or have the Company return, as the case may be,
any portion of this Warrant that has not been exercised pursuant to such
Exercise Notice; provided that the rescission of an exercise shall not affect
the Company’s obligation to make any payments that have accrued prior to the
date of such notice pursuant to this Section 1(c) or otherwise, and (ii) if a
registration statement (which may be the Registration Statement) covering the
issuance or resale of the Warrant Shares that are subject to an Exercise Notice
is not available for the issuance or resale, as applicable, of such Exercise
Notice Warrant Shares and the Holder has submitted an Exercise Notice prior to
receiving notice of the non-availability of such registration statement and the
Company has not already delivered the Warrant Shares underlying such Exercise
Notice electronically without any restrictive legend by crediting such aggregate
number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the Holder’s or its designee’s balance account with DTC through its
Deposit / Withdrawal At Custodian system, the Holder shall have the option, by
delivery of notice to the Company, to (x) rescind such Exercise Notice in whole
or in part and retain or have returned, as the case may be, any portion of this
Warrant that has not been exercised pursuant to such Exercise Notice; provided
that the rescission of an Exercise Notice shall not affect the Company’s
obligation to make any payments that have accrued prior to the date of such
notice pursuant to this Section 1(c) or otherwise, and/or (y) switch some or all
of such Exercise Notice from a cash exercise to a Cashless Exercise. In addition
to the foregoing, if the Company fails for any reason to deliver to the Holder
the Warrant Shares subject to an Exercise Notice by the Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and not as a
penalty, for each $1,000 of Warrant Shares subject to such exercise (based on
the Weighted Average Price of the Common Stock on the date of the applicable
Exercise Notice), $10 per Trading Day (increasing to $20 per Trading Day on the
fifth (5th) Trading Day after such liquidated damages begin to accrue) for each
Trading Day after the Share Delivery Date until such Warrant Shares are
delivered or Holder rescinds such exercise.
Cashless Exercise. Notwithstanding anything contained herein to the contrary,
the Holder may, in its sole discretion, exercise this Warrant in whole or in
part and, in lieu of making the cash payment otherwise contemplated to be made
to the Company upon such exercise in payment of the Aggregate Exercise Price,
elect instead to receive upon such exercise the “Net Number” of shares of Common
Stock determined according to the following formula (a “Cashless Exercise”):

(A x B) — (A x C)Net Number = B

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For purposes of the foregoing formula:

A = the total number of shares with respect to which this Warrant is then being
exercised.
B = as applicable: (i) the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the date of the applicable Exercise Notice if such
Exercise Notice is (1) both executed and delivered pursuant to Section 1(a)
hereof on a day that is not a Trading Day or (2) both executed and delivered
pursuant to Section 1(a) hereof on a Trading Day prior to the opening of
“regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, (ii) at the
option of the Holder, either (y) the Weighted Average Price on the Trading Day
immediately preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular trading hours” on a
Trading Day) pursuant to Section 1(a) hereof or (iii) the Closing Sale Price of
the Common Stock on the date of the applicable Exercise Notice if the date of
such Exercise Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(a) hereof after the close of “regular
trading hours” on such Trading Day.
C = the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.
If Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that in accordance with Section 3(a)(9) of the
Securities Act of 1933, as amended, the Warrant Shares shall take on the
registered characteristics of the Warrants being exercised, and the holding
period of the Warrants being exercised may be tacked on to the holding period of
the Warrant Shares. The Company agrees not to take any position contrary to this
Section 1(d).  Without limiting the rights of a Holder to receive Warrant Shares
on a “cashless exercise,” and to receive the cash payments contemplated pursuant
to Sections 1(c) and 4(b), in no event will the Company be required to net cash
settle a Warrant exercise.
(e) Disputes. In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are not disputed
and resolve such dispute in accordance with Section 11.

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(f) Beneficial Ownership. Notwithstanding anything to the contrary contained
herein, the Company shall not effect the exercise of any portion of this
Warrant, and the Holder shall not have the right to exercise any portion of this
Warrant, pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to the extent that
after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of 4.99% (the
“Maximum Percentage”) of the number of shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
the Holder and the other Attribution Parties shall include the number of shares
of Common Stock held by the Holder and all other Attribution Parties plus the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (A)
exercise of the remaining, unexercised portion of this Warrant beneficially
owned by the Holder or any of the other Attribution Parties and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company (including, without limitation, any convertible notes or convertible
preferred stock or warrants, including the other Warrants) beneficially owned by
the Holder or any other Attribution Party subject to a limitation on conversion
or exercise analogous to the limitation contained in this Section 1(f). For
purposes of this Section 1(f), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”). For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock the Holder may acquire upon the exercise of
this Warrant without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q
and Current Reports on Form 8-K or other public filing with the Securities and
Exchange Commission (the “SEC”), as the case may be, (y) a more recent public
announcement by the Company or (z) any other written notice by the Company or
the Transfer Agent setting forth the number of shares of Common Stock
outstanding (the “Reported Outstanding Share Number”). If the Company receives
an Exercise Notice from the Holder at a time when the actual number of
outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall (i) notify the Holder in writing of the number of
shares of Common Stock then outstanding and, to the extent that such Exercise
Notice would otherwise cause the Holder’s beneficial ownership, as determined
pursuant to this Section 1(f), to exceed the Maximum Percentage, the Holder must
notify the Company of a reduced number of Warrant Shares to be purchased
pursuant to such Exercise Notice (the number of shares by which such purchase is
reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the
Company shall return to the Holder any exercise price paid by the Holder for the
Reduction Shares. For any reason at any time, upon the written or oral request
of the Holder, the Company shall within one (1) Business Day confirm orally and
in writing or by electronic mail to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder and any other
Attribution Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of Common Stock to the
Holder upon exercise of this Warrant results in the Holder and the other

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Attribution Parties being deemed to beneficially own, in the aggregate, more
than the Maximum Percentage of the number of outstanding shares of Common Stock
(as determined under Section 13(d) of the 1934 Act), the number of shares so
issued by which the Holder’s and the other Attribution Parties’ aggregate
beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall
be deemed null and void and shall be cancelled ab initio, and the Holder shall
not have the power to vote or to transfer the Excess Shares. As soon as
reasonably practicable after the issuance of the Excess Shares has been deemed
null and void, the Company shall return to the Holder the exercise price paid by
the Holder for the Excess Shares. Upon delivery of a written notice to the
Company, the Holder may from time to time increase or decrease the Maximum
Percentage to any other percentage not in excess of 4.99% as specified in such
notice; provided that (i) any such increase in the Maximum Percentage will not
be effective until the sixty-first (61st) day after such notice is delivered to
the Company and (ii) any such increase or decrease will apply only to the Holder
and the other Attribution Parties and not to any other holder of Warrants that
is not an Attribution Party of the Holder. For purposes of clarity, the shares
of Common Stock issuable pursuant to the terms of this Warrant in excess of the
Maximum Percentage shall not be deemed to be beneficially owned by the Holder
for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of
the 1934 Act. No prior inability to exercise this Warrant pursuant to this
paragraph shall have any effect on the applicability of the provisions of this
paragraph with respect to any subsequent determination of exercisability. The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 1(f) to the
extent necessary to correct this paragraph or any portion of this paragraph
which may be defective or inconsistent with the intended beneficial ownership
limitation contained in this Section 1(f) or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The
limitation contained in this paragraph may not be waived and shall apply to a
successor holder of this Warrant.
(g) Required Reserve Amount.  So long as this Warrant remains outstanding, the
Company shall at all times keep reserved for issuance under this Warrant a
number of shares of Common Stock at least equal to 100% of the maximum number of
shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to
this Section 1(g) be reduced other than in connection with any exercise of
Warrants or such other event covered by Section 2(c) below.  The Required
Reserve Amount (including, without limitation, each increase in the number of
shares so reserved) shall be allocated pro rata among the holders of the
Warrants based on the number of shares of Common Stock issuable upon exercise of
Warrants held by each holder thereof on the Issuance Date (without regard to any
limitations on exercise) (the “Authorized Share Allocation”). In the event that
a holder shall sell or otherwise transfer any of such holder’s Warrants, each
transferee shall be allocated a pro rata portion of such holder’s Authorized
Share Allocation. Any shares of Common Stock reserved and allocated to any
Person which ceases to hold any Warrants shall be allocated to the remaining
holders of Warrants, pro rata based on the number of shares of Common Stock
issuable upon exercise of the Warrants then held by such holders thereof
(without regard to any limitations on exercise).

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(h) Insufficient Authorized Shares. If at any time while this Warrant remains
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an “Authorized Share Failure”), then the
Company shall promptly take all action reasonably necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for this Warrant then
outstanding. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its reasonable best efforts to
solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal. Notwithstanding the foregoing, if
any such time of an Authorized Share Failure, the Company is able to obtain the
written consent of a majority of the shares of its issued and outstanding shares
of Common Stock to approve the increase in the number of authorized shares of
Common Stock, the Company may satisfy this obligation by obtaining such consent
and submitting for filing with the SEC an Information Statement on Schedule 14C.
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and the number of Warrant Shares shall be adjusted from time to time as follows:
(a) Intentionally omitted.
(b) Voluntary Adjustment By Company. The Company may at any time during the term
of this Warrant reduce the then current Exercise Price to any amount and for any
period of time deemed appropriate by the Board of Directors of the Company.
(c) Adjustment Upon Subdivision or Combination of Common Stock. If the Company
at any time on or after the Subscription Date subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Subscription Date combines (by
combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately decreased.
Any adjustment under this Section 2(c) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(d) Other Events. If any event occurs of the type contemplated by the provisions
of this Section 2 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with

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equity features), then the Company’s Board of Directors will make an appropriate
adjustment in the Exercise Price and the number of Warrant Shares, as mutually
determined by the Company’s Board of Directors and the Required Holders, so as
to protect the rights of the Holder; provided that no such adjustment pursuant
to this Section 2(d) will increase the Exercise Price or decrease the number of
Warrant Shares as otherwise determined pursuant to this Section 2.
3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant
to Section 2 above, if, on or after the Subscription Date and on or prior to the
Expiration Date, the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin-off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, that
to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time or times as its right
thereto would not result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be
granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in
abeyance) to the same extent as if there had been no such limitation).
4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above,
if at any time on or after the Subscription Date and on or prior to the
Expiration Date the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the Holder could
have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be

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determined for the grant, issuance or sale of such Purchase Rights (provided,
however, that to the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (and shall not be entitled to
beneficial ownership of such Common Stock as a result of such Purchase Right
(and beneficial ownership) to such extent) and such Purchase Right to such
extent shall be held in abeyance for the benefit of the Holder until such time
or times as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be
held similarly in abeyance) to the same extent as if there had been no such
limitation).
(b) Fundamental Transaction. The Company shall not enter into or be party to a
Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance with the
provisions of this Section 4(b), including agreements to deliver to the Holder
in exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a corresponding number
of shares of capital stock equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and with
an exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental
Transaction). Upon the consummation of each Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for the Company (so that
from and after the date of the applicable Fundamental Transaction, the
provisions of this Warrant and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such Successor Entity had
been named as the Company herein. Upon consummation of each Fundamental
Transaction, the Successor Entity shall deliver to the Holder confirmation that
there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of this Warrant prior to the
applicable Fundamental Transaction, such shares of common stock (or its
equivalent) of the Successor Entity (including its Parent Entity) which the
Holder would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the
applicable Fundamental Transaction (without regard to any limitations on the
exercise of this Warrant), as adjusted in accordance with the provisions of this
Warrant. Notwithstanding the foregoing, and without limiting Section 1(f)
hereof, the Holder may elect, at its sole option, by delivery of written notice
to the Company to waive this Section 4(b) to permit the Fundamental Transaction
without the

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assumption of this Warrant. In addition to and not in substitution for any other
rights hereunder, prior to the consummation of each Fundamental Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a “Corporate Event”), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon an
exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu of the shares
of the Common Stock (or other securities, cash, assets or other property (except
such items still issuable under Sections 3 and 4(a) above, which shall continue
to be receivable thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities, cash, assets or
any other property whatsoever (including warrants or other purchase or
subscription rights) (collectively, the “Corporate Event Consideration”) which
the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant). The provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. The provisions of this Section 4(b) shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events.
5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation or Bylaws, or through
any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issuance or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, and will at all times in good faith carry out all of the
provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, (ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as any of the Warrants are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the exercise of the
Warrants, the number of shares of Common Stock as shall from time to time be
necessary to effect the exercise of the Warrants then outstanding (without
regard to any limitations on exercise).
6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, the Holder, solely in such Person’s capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of capital stock of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in such
Person’s capacity as the Holder of this Warrant, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such Person is then entitled
to receive upon the due exercise of this Warrant. In addition,

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nothing contained in this Warrant shall be construed as imposing any liabilities
on the Holder to purchase any securities (upon exercise of this Warrant or
otherwise) or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company. Notwithstanding this
Section 6, the Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.
7. REISSUANCE OF WARRANTS.
(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in accordance with
Section 7(d)), registered as the Holder may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less than the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being
transferred.
(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
(but without the obligation to post a bond) and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.
(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender.
(d) Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated
on the face of such new Warrant which is the same as the Issuance Date, and (iv)
shall have the same rights and conditions as this Warrant.
8. NOTICES. Whenever notice is required to be given under this Warrant,
including, without limitation, an Exercise Notice, unless otherwise provided
herein, such notice shall be given in writing, (i) if delivered (a) from within
the domestic United States, by first-class

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registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, electronic mail or by facsimile or (b) from outside
the United States, by International Federal Express, electronic mail or
facsimile, and (ii) will be deemed given (A) if delivered by first-class
registered or certified mail domestic, three (3) Business Days after so mailed,
(B) if delivered by nationally recognized overnight carrier, one (1) Business
Day after so mailed, (C) if delivered by International Federal Express, two (2)
Business Days after so mailed and (D) at the time of transmission, if delivered
by electronic mail to each of the email addresses specified in this Section 8
prior to 5:00 p.m. (New York time) on a Trading Day, (E) the next Trading Day
after the date of transmission, if delivered by electronic mail to each of the
email addresses specified in this Section 8 on a day that is not a Trading Day
or later than 5:00 p.m. (New York time) on any Trading Day and (F) if delivered
by facsimile, upon electronic confirmation of delivery of such facsimile, and
will be delivered and addressed as follows:
(i) if to the Company, to:

Workhorse Group Inc.
100 Commerce Drive
Loveland, Ohio 45140
Attention: Stephen M. Fleming
Facsimile: (516)-977-1209
Email: smf@flemingpllc.com

(ii) if to the Holder, at such address or other contact information delivered by
the Holder to Company or as is on the books and records of the Company (provided
that, with respect to the Holder, such notice may only be delivered via
electronic mail or facsimile),
With a copy (for informational purposes only) to:

Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Telephone:  (212) 906-1200
Facsimile:  (212) 751-4864
Attention:  Peter N. Handrinos, Esq.
E-mail:  peter.handrinos@lw.com

The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant, including in reasonable detail a description of
such action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Exercise Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) at least fifteen
(15) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the shares of
Common Stock, (B) with respect to any grants,

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issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation; provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder. It is expressly understood and agreed
that the time of exercise specified by the Holder in each Exercise Notice shall
be definitive and may not be disputed or challenged by the Company.
9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of
this Warrant may be amended or waived and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Holder.
10. GOVERNING LAW; JURISDICTION; JURY TRIAL. This Warrant shall be governed by
and construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Warrant 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 with any
transaction contemplated hereby or discussed herein, 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. The Company 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 the
Company at the address set forth in Section 8(i) above or such other address as
the Company subsequently delivers to the Holder 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 the Holder from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company’s
obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor of
the Holder. If either party shall commence an action, suit or proceeding to
enforce any provisions of this Warrant, the prevailing party in such action,
suit or proceeding shall be reimbursed by the other party for their reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

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11. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall submit the disputed determinations or arithmetic calculations via
facsimile or electronic mail within two (2) Business Days of receipt of the
Exercise Notice or other event giving rise to such dispute, as the case may be,
to the Holder. If the Holder and the Company are unable to agree upon such
determination or calculation of the Exercise Price or the Warrant Shares within
three (3) Business Days of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall, within two (2) Business
Days submit via facsimile or electronic mail (a) the disputed determination of
the Exercise Price to an independent, reputable investment bank selected by the
Company and approved by the Holder or (b) the disputed arithmetic calculation of
the Warrant Shares to the Company’s independent, outside accountant. The Company
shall cause at its expense the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the Holder of the results no later than ten (10) Business Days from the time it
receives the disputed determinations or calculations. Such investment bank’s or
accountant’s determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.
12. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant and any other Transaction Documents, at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder to
pursue actual damages for any failure by the Company to comply with the terms of
this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
13. TRANSFER. This Warrant and the Warrant Shares may be offered for sale, sold,
transferred, pledged or assigned without the consent of the Company.
14. SEVERABILITY; CONSTRUCTION; HEADINGS. If any provision of this Warrant 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 Warrant so long as this Warrant 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

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possible to that of the prohibited, invalid or unenforceable provision(s). This
Warrant shall be deemed to be jointly drafted by the Company and the Holder and
shall not be construed against any Person as the drafter hereof. The headings of
this Warrant are for convenience of reference and shall not form part of, or
affect the interpretation of, this Warrant.
15. DISCLOSURE. Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Warrant, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its subsidiaries, the Company
shall contemporaneously with any such receipt or delivery publicly disclose such
material, nonpublic information on a Current Report on Form 8-K or otherwise. In
the event that the Company believes that a notice contains material, nonpublic
information relating to the Company or its subsidiaries, the Company so shall
indicate to such Holder contemporaneously with delivery of such notice, and in
the absence of any such indication, the Holder shall be allowed to presume that
all matters relating to such notice do not constitute material, nonpublic
information relating to the Company or its subsidiaries.
16. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall
have the following meanings:
(a) “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
(b) “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Subscription Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.
(c) “Bid Price” means, for any security as of the particular time of
determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
as of such time of determination, or if the foregoing does not apply, the bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg as of such time of
determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any

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market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the
Bid Price cannot be calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such security as
of such time of determination shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved in accordance with the procedures in Section 11. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.
(d) “Bloomberg” means Bloomberg Financial Markets.
(e) “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.
(f) “Change of Control” means any Fundamental Transaction other than (i) any
reorganization, recapitalization or reclassification of the Common Stock in
which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respect, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification, (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or (iii) a merger in connection with a bona fide
acquisition by the Company of any Person in which (x) the gross consideration
paid, directly or indirectly, by the Company in such acquisition is not greater
than 20% of the Company’s market capitalization as calculated on the date of the
consummation of such merger and (y) such merger does not contemplate a change to
the identity of a majority of the board of directors of the Company.
Notwithstanding anything herein to the contrary, any transaction or series of
transaction that, directly or indirectly, results in the Company or the
Successor Entity not having Common Stock or common stock, as applicable,
registered under the 1934 Act and listed on an Eligible Market shall be deemed a
Change of Control.
(g) “Closing Bid Price” and “Closing Sale Price” means, for any security as of
any date, the last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by Bloomberg, or, if the
Principal Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the case may be,
then the last bid price or the last trade price, respectively, of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or trading market for
such security, the last closing bid price or last trade price, respectively, of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such

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security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or last
trade price, respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the OTC Link or “pink sheets” by OTC Markets
Group Inc. (formerly Pink OTC Markets Inc.). If the Closing Bid Price or the
Closing Sale Price cannot be calculated for a security on a particular date on
any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as
the case may be, of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such
dispute shall be resolved pursuant to Section 11. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or other similar transaction during the applicable calculation
period.
(h) “Common Stock” means (i) the Company’s Common Stock, par value $0. 001 per
share, and (ii) any capital stock into which such Common Stock shall have been
changed or any capital stock resulting from a reclassification of such Common
Stock.
(i) “Convertible Securities” means any capital stock or other security of the
Company or any of its subsidiaries (other than Options) 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.
(j) “Eligible Market” means The Nasdaq Capital Market, the NYSE American LLC,
The Nasdaq Global Select Market, The Nasdaq Global Market or The New York Stock
Exchange, Inc.
(k) “Exercise Period” means, with respect to shares for which this Warrant is
exercisable following any redemption (in whole or in part) of the Note, the date
that is ninety (90) days after the Company Note Redemption Time applicable to
such redemption; provided, that such date shall be extended by an amount of time
equal to the number of days during which any Exercise Failure was in existence
under this Warrant.
(l)  “Expiration Date” means the date that is ninety (90) days after the
termination or cancelation of the Note in accordance with its terms; provided,
that such date shall be extended by an amount of time equal to the number of
days during which any Exercise Failure was in existence under this Warrant.
(m) “Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its shares of Common Stock be subject to or party to
one or more Subject

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Entities making, a purchase, tender or exchange offer that is accepted by the
holders of at least either (x) 50% of the outstanding shares of Common Stock,
(y) 50% of the outstanding shares of Common Stock calculated as if any shares of
Common Stock held by all Subject Entities making or party to, or Affiliated with
any Subject Entities making or party to, such purchase, tender or exchange offer
were not outstanding; or (z) such number of shares of Common Stock such that all
Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become collectively
the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with one
or more Subject Entities whereby all such Subject Entities, individually or in
the aggregate, acquire, either (x) at least 50% of the outstanding shares of
Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to,
such stock purchase agreement or other business combination were not
outstanding; or (z) such number of shares of Common Stock such that the Subject
Entities become collectively the beneficial owners (as defined in Rule 13d-3
under the 1934 Act) of at least 50% of the outstanding shares of Common Stock,
or (v) reorganize, recapitalize or reclassify its shares of Common Stock, (B)
that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock,
merger, consolidation, business combination, reorganization, recapitalization,
spin-off, scheme of arrangement, reorganization, recapitalization or
reclassification or otherwise in any manner whatsoever, of either (x) at least
50% of the aggregate ordinary voting power represented by issued and outstanding
shares of Common Stock, (y) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock not held by all
such Subject Entities as of the Subscription Date calculated as if any shares of
Common Stock held by all such Subject Entities were not outstanding, or (z) a
percentage of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock or other equity securities of the Company
sufficient to allow such Subject Entities to effect a statutory short form
merger or other transaction requiring other stockholders of the Company to
surrender their Common Stock without approval of the stockholders of the Company
or (C) directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, the issuance of or the entering
into any other instrument or transaction structured in a manner to circumvent,
or that circumvents, the intent of this definition in which case this definition
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this definition to the extent necessary to correct
this definition or any portion of this definition which may be defective or
inconsistent with the intended treatment of such instrument or transaction.
(n) “Group” means a “group” as that term is used in Section 13(d) of the 1934
Act and as defined in Rule 13d-5 thereunder.

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(o) “Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
(p) “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person, including such entity whose common stock or
equivalent equity security is quoted or listed on an Eligible Market (or, if so
elected by the Holder, any other market, exchange or quotation system), or, if
there is more than one such Person or such entity, the Person or such entity
designated by the Holder or in the absence of such designation, such Person or
entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction or Change of Control.
(q) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.
(r) “Principal Market” means The Nasdaq Capital Market.
(s) “Required Holders” means the holders of the Warrants representing at least a
majority of the shares of Common Stock underlying the Warrants then outstanding.
(t) “Standard Settlement Period” means the standard settlement period, expressed
in a number of Trading Days, for the Company’s primary trading market or
quotation system with respect to the Common Stock that is in effect on the date
of receipt of an applicable Exercise Notice.
(u) “Subject Entity” means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.
(v) “Successor Entity” means one or more Person or Persons (or, if so elected by
the Holder, the Company or Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or Change of Control or one or more Person or
Persons (or, if so elected by the Holder, the Company or the Parent Entity) with
which such Fundamental Transaction or Change of Control shall have been entered
into.
(w) “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded.
(x) “Transaction Documents” means any agreement entered into by and between the
Company and the Holder, as applicable.
(y) “Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during
the period beginning at 9:30:01 a.m., New York time (or such other time as the
Principal Market

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publicly announces is the official open of trading), and ending at 4:00:00 p.m.,
New York time (or such other time as the Principal Market publicly announces is
the official close of trading), as reported by Bloomberg through its “Volume at
Price” function or, if the foregoing does not apply, the dollar volume-weighted
average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30:01 a.m.,
New York time (or such other time as such market publicly announces is the
official open of trading), and ending at 4:00:00 p.m., New York time (or such
other time as such market publicly announces is the official close of trading),
as reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest Closing Bid Price and the lowest closing ask price of any of the market
makers for such security as reported in the OTC Link or “pink sheets” by OTC
Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Weighted Average
Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Weighted Average Price of such security on such date shall
be the fair market value as mutually determined by the Company and the Holder.
If the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to Section 11 with
the term “Weighted Average Price” being substituted for the term “Exercise
Price.” All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar
transaction during the applicable calculation period.
[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

WORKHORSE GROUP INC.

By:___________________________
Name:
Title:

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EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK

WORKHORSE GROUP INC.
The undersigned holder hereby exercises the right to purchase _________________
shares of Common Stock (“Warrant Shares”) of Workhorse Group Inc., a company
organized under the laws of Nevada (the “Company”), evidenced by the attached
Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Warrant.

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:

____________ a “Cash Exercise” with respect to _________________ Warrant Shares;
 and/or

____________ a “Cashless Exercise” with respect to ______________ Warrant
Shares.

2. Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.

3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

Date: _______________ __, ______

Name of Registered Holder

By:
Name:
Title:

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ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs Empire
Stock Transfer, Inc. to issue the above indicated number of shares of Common
Stock on or prior to the applicable Share Delivery Date.

WORKHORSE GROUP INC.

By:________________________________
Name:
Title:

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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”) dated as of [ • ], 2019 among
Workhorse Group Inc., a Nevada corporation (the “Grantor”), and HT Investments
MA, LLC, a Delaware limited liability company, in its capacity as collateral
agent for the benefit of the Holders (as defined below) (together with its
successors and assigns in such capacity, the “Secured Party”).
W I T N E S S E T H:
WHEREAS, the Grantor will enter into that certain Securities Purchase Agreement,
dated as of the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the “Securities Purchase Agreement”), with HT
Investments MA, LLC (the “Initial Holder”) and each other party thereto,
pursuant to which, among other things, the Grantor will issue, and the Initial
Holder will purchase, subject to the terms set forth therein, the Convertible
Notes (as defined in the Securities Purchase Agreement);
AND WHEREAS, it is a condition precedent to the closing under the Securities
Purchase Agreement that the Grantor shall have executed and delivered this
Agreement to the Secured Party for its benefit and the benefit of the Holders.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1.Definitions. Capitalized terms used herein without definition and
defined in the Convertible Notes are used herein as defined therein. In
addition, as used herein:
“Account” means any “account”, as such term is defined in the UCC.
2 “Agreement” has the meaning set forth in the preamble hereof.
3 “Applicable Law” means, in relation to any subject, all provisions applicable
to that subject of all (i) constitutions, treaties, statutes, laws, rules,
regulations and ordinances of any Governmental Entity, (ii) authorizations,
consents, approvals, permits or licenses issued by, or a registration or filing
with, any Governmental Entity and (iii) orders, decisions, judgments, awards and
decrees of any Governmental Entity (including common law and principles of
public policy).
4 “Certus” means Certus Unmanned Aerial Systems LLC, a Delaware limited
liability company owned 50% by the Grantor and 50% by Moog Inc.
5  “Chattel Paper” means all “chattel paper”, as such term is defined in the
UCC, including, without limitation, “electronic chattel paper” and “tangible
chattel paper”, as each term is defined in the UCC.
6 “Collateral” has the meaning ascribed thereto in Section 3 hereof.
7 “Collateral Records” means all books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts,

--------------------------------------------------------------------------------

tapes, disks and related data processing software and similar items that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon.
“Collateral Support” means all property (real or personal) assigned,
hypothecated or otherwise securing any Collateral and shall include any security
agreement or other agreement granting a lien or security interest in such real
or personal property.
8 “Commercial Tort Claims” means “commercial tort claims”, as such term is
defined in the UCC, including, without limitation, all commercial tort claims
listed on Schedule VIII hereto.
9 “Contracts” means all contracts, undertakings, or other agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or under which
the Grantor may now or hereafter have any right, title or interest, including,
without limitation, with respect to an Account, any agreement relating to the
terms of payment or the terms of performance thereof.
10 “Control Agreement” has the meaning set forth in Section 4.5 hereof.
11 “Convertible Notes” has the meaning set forth in the Securities Purchase
Agreement.
12 “Copyrights” means all copyrights and rights, title and interests (and all
related IP Ancillary Rights) in copyrights, works protectable by copyrights,
mask works, database and design rights, copyright registrations and copyright
applications, including, without limitation, the copyright registrations and
copyright applications listed on Schedule III attached hereto (if any), all
Copyrights (as defined in the Convertible Notes), and all renewals of any of the
foregoing.
13 “Deposit Accounts” means all “deposit accounts”, as such term is defined in
the UCC, now or hereafter held in the name of the Grantor.
14 “Documents” means all “documents”, as such term is defined in the UCC, and
shall include, without limitation, all documents of title (as defined in the
UCC), bills of lading or other receipts evidencing or representing Inventory or
Equipment.
15 “Equipment” means (i) all “equipment”, as such term is defined in the UCC
and, in any event, shall include, Motor Vehicles, (ii) all machinery,
manufacturing equipment, data processing equipment, computers, office equipment,
furnishings, furniture, appliances, fixtures and tools (in each case, regardless
of whether characterized as equipment under the UCC); and (iii) all accessions
or additions thereto, all parts thereof, whether or not at any time of
determination incorporated or installed therein or attached thereto, and all
replacements therefor, wherever located, now or hereafter existing, including
any fixtures.
16 “Excluded Accounts” means any accounts maintained by the Grantor exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of the Grantor’s employees; provided amounts therein are
transferred into such accounts no earlier than two Business Days prior to the
use of all amounts contained therein for making such payments.
17 “Excluded Collateral” has the meaning set forth in Section 2.1(a) hereof.
18 “GAAP” has the meaning set forth in the Securities Purchase Agreement.

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19 “General Intangibles” means all “general intangibles”, as such term is
defined in the UCC, and, in any event, shall include, without limitation,
payment intangibles, contract rights, rights to payment, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill
(including the goodwill associated with any Trademark), Patents, Trademarks,
Copyrights, URLs and domain names, industrial designs and other Intellectual
Property or rights therein or applications therefor, whether under license or
otherwise, programs, programming materials, blueprints, drawings, purchase
orders, customer lists, monies due or recoverable from pension funds, rights to
payment and other rights under any royalty or licensing agreements, including
Intellectual Property Licenses, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, pension plan refunds, pension plan refund claims, insurance premium
rebates, tax refunds, and tax refund claims, interests in a partnership or
limited liability company which do not constitute a security under Article 8 of
the UCC.
20 “Goods” means all “goods”, as such term is defined in the UCC, including,
without limitation, fixtures and embedded Software to the extent included in
“goods” as defined in the UCC.
21 “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.
22 “Grantor” has the meaning set forth in the preamble hereof.
23 “Holders” means the Initial Holder and each Holder under and as defined in
any Convertible Note.
24 “Initial Holder” has the meaning set forth in the preamble hereof.
25 “Instruments” means all “instruments”, as such term is defined in the UCC,
and shall include, without limitation, promissory notes, drafts, bills of
exchange and trade acceptances.
26 “Insurance” means (i) all insurance policies covering any or all of the
Collateral (regardless of whether the Secured Party is the loss payee thereof)
and (ii) all key man life insurance policies (if any).
27 “Intellectual Property” means all rights, title and interests in intellectual
property arising under any Applicable Law and all IP Ancillary Rights relating
thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names,
Trade Secrets, industrial designs, integrated circuit topographies, confidential
proprietary information and rights under Intellectual Property Licenses.
28 “Intellectual Property Licenses” means any written agreement, including all
contractual obligations (and all related IP Ancillary Rights), granting any
right, title and interest in any Intellectual Property, including software
license agreements, whether the Grantor is a licensee or licensor under any such
license agreement, and including, without limitation, the license agreements
listed on Schedule IV

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attached hereto and all Copyright Licenses, Patent Licenses and Trademark
Licenses (each as defined in the Convertible Notes).
29 “Internet Domain Name” means all right, title and interest (and all related
IP Ancillary Rights) arising under any Applicable Law in Internet domain names.
30 “IP Ancillary Rights” means, with respect to an item of Intellectual Property
all foreign counterparts to, and all divisionals, reversions, continuations,
continuations-in-part, reissues, reexaminations, renewals and extensions of,
such Intellectual Property and all income, royalties, proceeds and liabilities
at any time due or payable or asserted under or with respect to any of the
foregoing or otherwise with respect to such Intellectual Property, including all
rights to sue or recover at law or in equity for any past, present or future
infringement, misappropriation, dilution, violation or other impairment thereof,
and, in each case, all rights to obtain any other IP Ancillary Right.
31  “Inventory” means (i) any “inventory”, as such term is defined in the UCC,
and (ii) all goods held for sale or lease or to be furnished under contracts of
service or so leased or furnished, all raw materials, work in process, finished
goods, and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in the Grantor’s business; all goods in which the
Grantor has an interest in mass or a joint or other interest or right of any
kind; and all goods which are returned to or repossessed by the Grantor, all
computer programs embedded in any goods and all accessions thereto and products
thereof (in each case, regardless of whether characterized as inventory under
the UCC).
32 “Investment Property” means all “investment property”, as such term is
defined in the UCC.
33 “Letter-of-Credit Right” means any “letter-of-credit right”, as such term is
defined in the UCC.
34 “Mortgage” means any mortgage, leasehold mortgage, deed of trust, leasehold
deed of trust, deed to secure debt, leasehold deed to secure debt or other
document, in form and substance reasonably satisfactory to the Secured Party,
creating in favor of the Secured Party a Lien on real property owned, leased,
subleased or otherwise occupied by the Grantor.
35 “Motor Vehicles” means motor vehicles, tractors, trailers and other like
property, whether or not the title thereto is governed by a certificate of title
or ownership.
36 “Note Documents” means the Securities Purchase Agreement, the Convertible
Notes, the Warrants (as defined in the Securities Purchase Agreement), the
Security Documents and all other documents, certificates, instruments and
agreements delivered in connection with the foregoing, all as amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
37 “Obligations” means all liabilities, indebtedness and obligations (including
interest accrued at the rate provided in the applicable Note Document after the
commencement of a bankruptcy proceeding, whether or not a claim for such
interest is allowed) of the Grantor under the Convertible Notes, any Security
Document or any other Note Document, in each case howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.

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38 “Patents” means any patents and patent applications, including, without
limitation, the inventions and improvements described and claimed therein, all
patentable inventions and those patents and patent applications listed on
Schedule V attached hereto (if any), all Patents (as defined in the Convertible
Notes), and all IP Ancillary Rights in respect of any of the foregoing.
39 “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.
40 “Pledge Supplement” has the meaning set forth in Section 4.1(j) hereof.
41 “Pledged Collateral” means (a) all of the Pledged Interests, (b) the
certificates, if any, representing the Pledged Interests and any interest of the
Grantor on the books and records of any Pledged Entity pertaining to such
Pledged Interests and (c) all dividends, distributions, cash, warrants, rights,
options, instruments, securities and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of, or in exchange
for, any or all of the Pledged Interests
42 “Pledged Entities” means the corporations, limited liability companies and
other entities set forth on Exhibit A and each other corporation, limited
liability company or other entity, the stock or other equity interests and
securities of which are owned or acquired by the Grantor and described on a
Pledge Supplement.
43 “Pledged Interests” means all of the capital stock, limited liability company
interests and other equity interests and securities of the Pledged Entities or
any other entity now owned or hereafter acquired by the Grantor.
44  “Proceeds” means “proceeds”, as such term is defined in the UCC and, in any
event, includes, without limitation, (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable with respect to any of the Collateral,
(b) any and all payments (in any form whatsoever) made or due and payable from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any Governmental
Entity (or any person acting under color of a Governmental Entity), and (c) any
and all other amounts from time to time paid or payable under, in respect of or
in connection with any of the Collateral.
45 “Receivables” means all rights to payment, whether or not earned by
performance, for goods or other property sold, leased, licensed, assigned or
otherwise disposed of, or services rendered or to be rendered, including,
without limitation all such rights constituting or evidenced by any Account,
Chattel Paper, Instrument, General Intangible or Investment Related Property,
together with all of the Grantor’s rights, if any, in any goods or other
property giving rise to such right to payment and all Collateral Support and
Supporting Obligations related thereto and all Receivables Records.
46 “Receivables Records” means (i) all originals or copies of all documents,
instruments or other writings or electronic records or other Records evidencing
the Receivables; (ii) all books, correspondence, credit or other files, Records,
ledger sheets or cards, invoices, and other papers relating to Receivables,
including, without limitation, all tapes, cards, computer tapes, computer discs,
computer runs, record keeping systems and other papers and documents relating to
the Receivables, whether in the possession or under the control of the Grantor
or any computer bureau or agent from time to time acting for the Grantor or
otherwise; (iii) all evidences of the filing of financing statements and the
registration of other instruments in connection therewith, and amendments,
supplements or other modifications thereto, notices to other creditors or
secured parties, and certificates, acknowledgments, or other writings,

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including, without limitation, lien search reports, from filing or other
registration officers; and (iv) all other written or non-written forms of
information related in any way to the foregoing or any Receivable.
47 “Record” has the meaning specified in the UCC.
48 “Representative” means any Person acting as agent, representative or trustee
on behalf of the Secured Party from time to time.
49 “Security Documents” means this Agreement, the Control Agreements, the
Mortgages, and each other agreement or instrument pursuant to or in connection
with which the Grantor grants a security interest in any Collateral to the
Secured Party, for its benefit and the benefit of the Holders, or pursuant to
which any such security interest in Collateral is perfected, each as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.
50 “Secured Party” has the meaning set forth in the preamble hereof.
51 “Securities Purchase Agreement” has the meaning set forth in the recitals
hereof.
52 “Software” means all “software”, as such term is defined in the UCC, now
owned or hereafter acquired by the Grantor, other than software embedded in any
category of Goods, including, without limitation, all computer programs and all
supporting information provided in connection with a transaction related to any
program.
53 “Supporting Obligation” means any “supporting obligation”, as such term is
defined in the UCC.
54 “Trade Secrets” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Applicable Law in or relating to trade
secrets.
55 “Trademarks” means all rights, title and interests (and all related IP
Ancillary Rights) arising under any Applicable Law in any trademarks, trade
names, internet domain names, URLs, all websites, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, all goodwill associated therewith, all
registrations and recordings thereof and all applications in connection
therewith, including, without limitation, the trademarks, trademark
applications, internet domain names and URLs listed in Schedule VI attached
hereto (if any) and renewals thereof, all Trademarks (as defined in the
Convertible Notes).
56 “UCC” shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York; provided, that to the extent that the Uniform
Commercial Code is used to define any term herein and such term is defined
differently in different Articles of the Uniform Commercial Code, the definition
of such term contained in Article 9 shall govern.
Section 2. Representations, Warranties and Covenants of the Grantor. The Grantor
represents and warrants to, and covenants with, the Secured Party as follows:
(a) The Grantor has rights in and the power to transfer the Collateral in which
it purports to grant a security interest pursuant to Section 3 hereof (subject,
with respect to after acquired Collateral, to the Grantor acquiring the same)
and no Lien other than (x) with respect to the Collateral other than the Pledged
Collateral, Permitted Liens, and (y) with respect to the Pledged Collateral, the

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Permitted Liens described in clause (A) or (N) of the definition thereof, in
either case, exists or will exist upon such Collateral at any time.
(b) This Agreement is the legal, valid and binding obligation of the Grantor,
enforceable against the Grantor in accordance with its terms except to the
extent that such enforceability is subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance and moratorium laws and other laws of
general application affecting enforcement of creditors’ rights generally, or the
availability of equitable remedies, which are subject to the discretion of the
court before which an action may be brought.
(c) This Agreement is effective to create in favor of the Secured Party a valid
security interest in and Lien upon all of the Grantor’s right, title and
interest in and to the Collateral, and upon (i) the filing of appropriate UCC
financing statements in the jurisdictions listed on Schedule I attached hereto,
(ii) each Deposit Account being subject to a Control Agreement (as hereinafter
defined) among the Grantor, depository institution and the Secured Party on
behalf of the Holders, (iii) filings in the United States Patent and Trademark
Office or United States Copyright Office with respect to Collateral that is
Patents, Trademarks or Copyrights, as the case may be, (iv) the filing of the
Mortgages in the jurisdictions listed on Schedule I hereto, (v) the delivery to
the Secured Party of the Pledged Collateral together with assignments in blank,
(vi) the security interest created hereby being noted on each certificate of
title evidencing the ownership of any Motor Vehicle in accordance with
Section 4.1(d) hereof, (vii) delivery to the Secured Party or its Representative
of Instruments duly endorsed by the Grantor or accompanied by appropriate
instruments of transfer duly executed by the Grantor with respect to Instruments
not constituting Chattel Paper and (viii) the consent of the issuer and any
confirmer of any letter of credit to an assignment to the Secured Party of the
proceeds of any drawing thereunder, such security interest will be a duly
perfected first priority security interest (subject only to Permitted Liens) in
all of the Collateral. No consent, approval or authorization of or designation
or filing with any Governmental Entity on the part of the Grantor is required in
connection with the pledge and security interest granted under this Agreement
(other than (x) any consent or approval which has been obtained and is in full
force and effect and (y) the filings described in clauses (c)(i), (iii) and (iv)
above).
(d) The execution, delivery and performance of this Agreement will not violate
(i) any material provision of any Applicable Law, (ii) any order, judgment,
writ, award or decree of any court, arbitrator or governmental authority, which
are applicable the Grantor, (iii) the articles or certificate of incorporation,
certificate of formation, bylaws or any other similar organizational documents
of the Grantor or any Pledged Entity or of any securities issued by the Grantor
or any Pledged Entity, (iv) any mortgage, indenture, lease, contract, or other
agreement, instrument or undertaking to which the Grantor or any Pledged Entity
is a party or which is binding upon the Grantor or any Pledged Entity or upon
any of the assets of the Grantor or any Pledged Entity, and will not result in
the creation or imposition of any lien, charge or encumbrance on or security
interest in any of the assets of the Grantor or any Pledged Entity, except as
otherwise contemplated by this Agreement.
(e) All of the Equipment, Inventory and Goods with a value in excess of $50,000
individually or in the aggregate owned by the Grantor is located at the places
as specified on Schedule I attached hereto other than locations where such
Equipment, Inventory and Goods is temporarily located for maintenance or repair
and locations in transit. Except as disclosed on Schedule I, none of the
Collateral is in the possession of any bailee, warehousemen, processor or
consignee. Schedule I discloses

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the Grantor’s name as of the date hereof as it appears in official filings in
the state or province, as applicable, of its incorporation, formation or
organization, the type of entity of the Grantor (including corporation,
partnership, limited partnership or limited liability company), organizational
identification number issued by the Grantor’s state of incorporation, formation
or organization (or a statement that no such number has been issued), the
Grantor’s state or province, as applicable, of incorporation, formation or
organization and the chief place of business, chief executive office and the
office where the Grantor keeps its books and records and the states in which the
Grantor conducts its business. The Grantor has only one state or province, as
applicable, of incorporation, formation or organization. The Grantor does not do
business and has not done business during the past five years under any trade
name or fictitious business name, and has not changed its jurisdiction of
incorporation, formation or organization or its corporate structure in any way,
except as disclosed on Schedule II attached hereto.
(f) To the Grantor’s knowledge, no Copyrights, Patents, Intellectual Property
Licenses or Trademarks listed on Schedules III, IV, V and VI attached hereto,
respectively, if any, have been adjudged invalid or unenforceable or have been
canceled, in whole or in part, or are not presently subsisting. To the Grantor’s
knowledge, each of such Copyrights, Patents, Intellectual Property Licenses and
Trademarks (if any) is valid and enforceable. To the Grantor’s knowledge and as
of the date hereof, the Grantor is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each of such Copyrights,
Patents, Intellectual Property Licenses and Trademarks, identified on Schedules
III, IV, V and VI, as applicable, as being owned by the Grantor, free and clear
of any liens, charges and encumbrances, including without limitation licenses,
shop rights and covenants by the Grantor not to sue third persons, other than
Permitted Liens and Permitted Intellectual Property Licenses. The Grantor has
adopted, used and is currently using, or has a current bona fide intention to
use, all of the Trademarks and Copyrights listed on Schedules III and VI,
respectively. As of the date hereof, the Grantor has not received written notice
of any suits or actions commenced or threatened with reference to the
Copyrights, Patents or Trademarks owned by it.
(g) Without duplication of any information required to be delivered by the
Grantor to the Secured Party under and in accordance with the terms of the
Convertible Notes, then subject to Section 2(r), the Grantor agrees to deliver
to the Secured Party (x) an updated Schedule I, II, VII and/or VIII within 10
Business Days of any change thereto and (y) an updated Schedule III, IV, V
and/or VI in the case of any change thereto on the each Interest Payment Date.
(h) All depositary and other accounts including, without limitation, Deposit
Accounts, securities accounts, brokerage accounts and other similar accounts,
maintained by the Grantor (other than Excluded Accounts) are described on
Schedule VII hereto, which description includes for each such account, the name
and address of the financial institution at which such account is maintained and
the account number of such account. The Grantor shall not open any new Deposit
Accounts, securities accounts, brokerage accounts or other accounts unless the
Grantor shall have given the Secured Party prior written notice of its intention
to open any such new accounts. Subject to Section 2(r), the Grantor shall
deliver to the Secured Party a revised version of Schedule VII showing any
changes thereto promptly following, but in any event within 10 Business Days of,
any such change. The Grantor hereby authorizes the financial institutions at
which the Grantor maintains an account to provide Secured Party with such
information with respect to such account as the Secured Party from time to time
reasonably may request, and the Grantor hereby consents to such information
being provided to the Secured Party. In addition, all of the Grantor’s
depositary, security, brokerage and other accounts including, without

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limitation, Deposit Accounts (other than Excluded Accounts) shall be subject to
the provisions of Section 4.5 hereof.
(i) The Grantor does not own any Commercial Tort Claims having a value in excess
of $50,000 individually or in the aggregate except for those disclosed on
Schedule VIII hereto (if any).
(j) The Grantor does not have any interest in real property except as disclosed
on Schedule IX (if any). Subject to Section 2(r), the Grantor shall deliver to
the Secured Party a revised version of Schedule IX showing any changes thereto
within 20 days of any such change. Except as otherwise agreed to by the Secured
Party, all such interests in real property with a fair market value in excess of
$500,000 with respect to such real property are, or within 30 days after the
Grantor acquires any additional real property interest with a fair market value
in excess of $500,000 shall be, subject to a Mortgage in favor of the Secured
Party; provided, that if at any time the fair market value of any real property
interest of the Grantor that is not subject to a Mortgage in favor of the
Secured Party (whether individually or in the aggregate with other such real
property interests) exceeds $1,000,000, then Grantor shall promptly cause its
real property interests to be subject to one or more Mortgages in favor of the
Secured Party such that the fair market value of the real property interests of
the Grantor that are not subject to a Mortgage does not exceed $1,000,000.
(i) The Grantor shall duly and properly record each interest in real property
held by the Grantor that is required to be subject to a Mortgage, except with
respect to easements, rights of way, access agreements, surface damage
agreements, surface use agreements or similar agreements that the Grantor, in
good faith, using prudent customs and practices in the industry in which it
operates, does not believe are of material value or material to the operation of
the Grantor’s business or, with respect to state and federal rights of way, are
not capable of being recorded as a matter of state and federal law.
(ii) The Grantor shall cause a title insurance company reasonably satisfactory
to the Collateral Agent to issue, in respect of each mortgaged real property
interest (including any additional real property interest (whether fee,
leasehold or otherwise) that is required to be subject to a Mortgage), a
mortgagee’s title insurance policy (or policies) or marked up unconditional
binder for such insurance or unconditional commitment to issue a title policy
for such insurance. Each such policy shall (1) be in an amount reasonably
satisfactory to the Collateral Agent and in any event such amount shall not
exceed 120% of the then fair market value of the property; (2) insure that the
Mortgage insured thereby creates a valid first Lien on, and security interest
in, such mortgaged real property interest free and clear of all defects and
encumbrances, except for Permitted Liens; (3) name the Collateral Agent, for the
benefit of the Holders, as the insured thereunder; (4) be in the form of ALTA
Loan Policy reasonably acceptable to the Collateral Agent; and (5) contain such
endorsements and affirmative coverage as the Collateral Agent may reasonably
request, each in form and substance reasonably acceptable to the Collateral
Agent.
(k) All Equipment (including, without limitation, Motor Vehicles) owned by the
Grantor and subject to a certificate of title or ownership statute is described
on Schedule X hereto.
(l) None of the Collateral constitutes, or is the Proceeds of, “farm products”
(as defined in the UCC).

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(m) The Grantor does not own any “as extracted collateral” (as defined in the
UCC) or any timber to be cut.
(n) All actions and consents, including all filings, notices, registrations and
recordings necessary for the exercise by the Secured Party of the rights
provided for in this Agreement or the exercise of remedies in respect of the
Collateral have been made or obtained, other than those required under federal
and state securities laws (in each case, with respect only to the exercise of
remedies).
(o) Exhibit A sets forth (i) the authorized capital stock and other equity
interests of each Pledged Entity, (ii) the number of shares of capital stock and
other equity interests of each Pledged Entity that are issued and outstanding as
of the date hereof and (iii) the percentage of the issued and outstanding shares
of capital stock and other equity interests of each Pledged Entity held by the
Grantor. The Grantor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Interests, and such shares are and will remain
free and clear of all pledges, liens, security interests and other encumbrances
and restrictions whatsoever, except the liens and security interests in favor of
the Secured Party created by this Agreement and any Permitted Lien described in
clause (N) of the definition thereof.
(p) Except as set forth on Exhibit A, there are no outstanding options, warrants
or other similar agreements with respect to the Pledged Interests or any of the
other Collateral.
(q) The Pledged Interests have been duly and validly authorized and issued, are
fully paid and non-assessable, and the Pledged Interests listed on Exhibit A
constitute all of the issued and outstanding capital stock or other equity
interests of the Pledged Entities or, with respect to Certus, such other
percentage of ownership as set forth on Exhibit A.
(r) Upon delivery by the Grantor to the Secured Party of any updated schedule
required to be delivered pursuant to this Section 2, unless the Grantor has in
good faith determined that the matters contained in such updated schedule do not
constitute material, nonpublic information relating to the Grantor or any of its
Subsidiaries, the Grantor shall on or prior to 9:00 am, New York city time on
the Business Day immediately following such updated schedule delivery date,
publicly disclose such material, non-public information on a Form 8-K or
otherwise. In the event that the Grantor believes that any updated schedule
required to be delivered pursuant to this Section 2 contains material,
non-public information relating to the Grantor or any of its Subsidiaries, the
Grantor so shall indicate to the Secured Party explicitly in writing
concurrently with the delivery of such updated schedule, and in the absence of
any such written indication, the Secured Party shall be entitled to presume that
information contained in such updated schedule does not constitute material,
non-public information relating to the Grantor or any of its Subsidiaries.
Section 3. Collateral.
(a) As collateral security for the prompt payment and performance in full when
due (whether at stated maturity, by acceleration or otherwise) of the
Obligations, the Grantor hereby pledges and grants to the Secured Party (for the
ratable benefit of the Holders) a Lien on and security interest in all of the
Grantor’s right, title and interest in the following properties and assets of
the Grantor, whether

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now owned by the Grantor or hereafter acquired and whether now existing or
hereafter coming into existence and wherever located (all being collectively
referred to herein as “Collateral”):
i) all Instruments, together with all payments thereon or thereunder, and
Letter-of-Credit Rights;
ii) all Accounts;
iii) all Inventory;
iv) all General Intangibles (including Software);
v) all Equipment;
vi) all Documents;
vii) all Contracts;
viii) all Goods;
ix) all Investment Property;
x) all Deposit Accounts and the balance from time to time in all bank accounts
maintained by the Grantor;
xi) all Commercial Tort Claims specified on Schedule VIII;
xii) all Intellectual Property;
xiii) all Chattel Paper, all amounts payable thereunder, all rights and remedies
of the Grantor thereunder including but limited to the right to amend, grant
waivers and declare defaults, any and all accounts evidenced thereby, any
guarantee thereof, and all collections and monies due or to become due or
received by any Person in payment of any of the foregoing;
xiv) all Receivables and Receivable Records;
xv) all Insurance;
xvi) all Pledged Collateral;
xvii) to the extent not otherwise included above, all Collateral Records,
Collateral Support and Supporting Obligations relating to any of the foregoing;
and
xviii) all other tangible and intangible property of the Grantor, including,
without limitation, all interests in real property, Proceeds, tort claims,
products, accessions, rents, profits, income, benefits, substitutions, additions
and replacements of and to any of the property of the Grantor described in the
preceding clauses of this Section 3 (including, without limitation, any proceeds
of insurance thereon, insurance claims and all rights, claims and benefits
against any Person relating

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thereto), other rights to payments not otherwise included in the foregoing, and
all books, correspondence, files, records, invoices and other papers, including
without limitation all tapes, cards, computer runs, computer programs, computer
files and other papers, documents and records in the possession or under the
control of the Grantor, any computer bureau or service company from time to time
acting for the Grantor.
Notwithstanding anything to the contrary in this Agreement, this Agreement shall
not constitute a grant of a security interest in, and the term “Collateral”
shall be deemed to exclude, all of the following property (the “Excluded
Collateral”): (A) any intent-to-use trademark applications filed pursuant to
Section 1(b) of the Lanham Act, 15 U.S.C. §1051, to the extent that, and solely
during the period in which, the grant of a security interest therein would
otherwise invalidate the Grantor’s right, title or interest therein, (B) any
property owned by the Grantor that is subject to a purchase money Lien or a
“capital lease” in accordance with GAAP permitted hereunder or under the Note
Documents if the contractual obligation pursuant to which such Lien is granted
(or the document providing for such capital lease) prohibits the creation of a
Lien thereon or expressly requires the consent of any person other than the
Grantor, unless such consent has been obtained or such prohibitions otherwise
cease to exist, in which case such Collateral shall automatically become subject
to the security interest granted hereunder, (C) any General Intangibles or other
rights, in each case arising under any contracts, instruments, licenses or other
documents as to which the grant of a security interest would violate or
invalidate any such contract, instrument, license or other document or give any
other party to such contract, instrument, license or other document the right to
terminate its obligations thereunder, (D) any asset, the granting of a security
interest in which would be void or illegal under any applicable governmental
law, rule or regulation, or pursuant thereto would result in, or permit the
termination of, such asset, provided, that the property described in clauses (C)
and (D) above shall only be excluded from the term “Collateral” to the extent
the conditions stated therein are not rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or any other Applicable Law,
(E) assets sold pursuant to the Asset Purchase Agreement dated October 1, 2019
by and among Moog Inc., Surefly, Inc. and the Grantor, as in effect on the date
hereof and as may be amended to extend the closing date of the transactions
contemplated by such Asset Purchase Agreement so long as such amendment does not
impose further obligations on the Grantor and would not cause additional assets
being sold thereunder, and any assets of Certus, and (F) the Excluded Accounts.
Notwithstanding the foregoing, all Proceeds of the property described in clauses
(A) through (F) above shall constitute Collateral and shall be included within
the property and assets over which a security interest is granted pursuant to
this Agreement, unless such Proceeds would independently constitute Excluded
Collateral.
(b) The security interest granted under this Section does not constitute and is
not intended to result in a creation or an assumption by the Secured Party of
any obligation of the Grantor or any other Person in connection with any or all
of the Collateral or under any agreement or instrument relating thereto.
Anything herein to the contrary notwithstanding, (i) the exercise by the Secured
Party of any of its rights in the Collateral shall not release the Grantor from
any of its duties or obligations in respect of the Collateral other than any
duties and obligations arising with respect to Collateral after the Grantor has
been dispossessed of such Collateral by the Secured Party (or its assignee),
which, by their nature, may not be satisfied without possession of such
Collateral and (ii) the Secured Party shall not have any obligations or
liability in respect of the Collateral by reason of this Agreement, nor shall
the Secured Party be obligated to perform any of the obligations or duties of
the Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

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Section 4. Covenants; Remedies. In furtherance of the grant of the pledge and
security interest pursuant to Section 3 hereof, the Grantor hereby agrees with
the Secured Party as follows:
4.1 Delivery and Other Perfection; Maintenance, etc.
(a) Delivery of Instruments, Documents, Etc. The Grantor shall deliver and
pledge to the Secured Party or its Representative any and all Instruments,
negotiable Documents and Chattel Paper evidencing amounts greater than $50,000
individually or in the aggregate and certificated securities accompanied by
stock/membership interest powers executed in blank, which stock/membership
interest powers may be filled in and completed at any time upon the occurrence
and during the continuance of any Event of Default duly endorsed and/or
accompanied by such instruments of assignment and transfer executed by the
Grantor in such form and substance as the Secured Party or its Representative
may request; provided, that so long as no Event of Default shall have occurred
and be continuing, the Grantor may retain for collection in the ordinary course
of business any Instruments, negotiable Documents and Chattel Paper received by
the Grantor in the ordinary course of business, and the Secured Party or its
Representative shall, promptly upon request of the Grantor, make appropriate
arrangements for making any other Instruments, negotiable Documents and Chattel
Paper pledged by the Grantor available to the Grantor for purposes of
presentation, collection or renewal (any such arrangement to be effected, to the
extent deemed appropriate by the Secured Party or its Representative, against a
trust receipt or like document). If the Grantor retains possession of any
Chattel Paper, negotiable Documents or Instruments evidencing amounts greater
than $25,000 individually or in the aggregate pursuant to the terms hereof, such
Chattel Paper, negotiable Documents and Instruments shall be marked with the
following legend: “This writing and the obligations evidenced or secured hereby
are subject to the security interest of HT Investments MA, LLC, in its capacity
as agent for one or more creditors, as Secured Party.”
(b) Other Documents and Actions. The Grantor shall give, execute, deliver, file
and/or record any financing statement, registration, notice, instrument,
document, agreement, Mortgage or other papers that may be necessary (as
determined in the reasonable judgment of the Secured Party or its
Representative) to create, preserve, perfect or validate the security interest
granted pursuant hereto (or any security interest or mortgage contemplated or
required hereunder, including with respect to Section 2(j) of this Agreement) or
to enable the Secured Party or its Representative to exercise and enforce the
rights of the Secured Party hereunder with respect to such pledge and security
interest; provided that notices to account debtors in respect of any Accounts or
Instruments shall be subject to the provisions of clause (e) below.
Notwithstanding the foregoing the Grantor hereby irrevocably authorizes the
Secured Party at any time and from time to time to file in any filing office in
any jurisdiction any initial financing statements (and other similar filings or
registrations under any Applicable Laws and regulations pertaining to the
creation, attachment, or perfection of security interests) and amendments
thereto that (a) indicate the Collateral (i) as all assets of the Grantor or
words of similar effect, regardless of whether any particular asset comprised in
the Collateral falls within the scope of Article 9 of the UCC or (ii) as being
of an equal or lesser scope or with greater detail, and (b) contain any other
information required by part 5 of Article 9 of the UCC for the sufficiency or
filing office acceptance of any financing statement or amendment, including (i)
whether the Grantor is an organization, the type of organization and any
organization identification number issued to the Grantor and (ii) in the case of
a financing statement filed as a fixture filing, a sufficient description of
real property to which the Collateral relates. The Grantor agrees to furnish any
such information to the Secured Party promptly upon request.

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(c) Books and Records; Inspections. The Grantor shall maintain at its own cost
and expense, in accordance with sound business practices, complete and accurate,
in all material respects, books and records of the Collateral, including,
without limitation, a record of all payments received and all credits granted
with respect to the Collateral and all other material dealings with the
Collateral. Upon the occurrence and during the continuation of any Event of
Default, the Grantor shall deliver and turn over any such books and records (or
true and correct copies thereof) to the Secured Party or its Representative at
any time on written demand. The Grantor shall permit, at reasonable times during
business hours and with reasonable prior notice, the Secured Party or its
Representative to: (i) inspect the properties and operations of the Grantor or
any Pledged Entity (to the extent the Grantor is permitted to inspect the
Pledged Entity’s property and operations); (ii) visit any or all of its offices,
to discuss its financial matters with its directors or officers and with its
independent auditors (and the Grantor hereby authorizes such independent
auditors to discuss such financial matters with the Secured Party or its
Representative; provided that the Grantor shall be invited to attend any such
meeting with its independent auditors); (iii) examine (and, at the expense of
the Grantor, photocopy extracts from) any of its books or other records; and
(iv)(A) inspect the Collateral and other tangible assets of the Grantor or any
Pledged Entity (to the extent the Grantor is permitted to inspect the Pledged
Entity’s assets), (B) perform appraisals of the equipment of the Grantor or any
Pledged Entity (to the extent the Grantor is permitted to perform appraisals of
the equipment of the Pledged Entity) and (C) inspect, audit, check and make
copies of and extracts from the books, records, computer data, computer
programs, journals, orders, receipts, correspondence and other data relating to
any Collateral, for purposes of or otherwise in connection with conducting a
review, audit or appraisal of such books and records. The Grantor will pay the
Secured Party the reasonable out-of-pocket costs and expenses of any audit or
inspection of the Collateral promptly after receiving the invoice; provided that
the Grantor shall not be required to reimburse the Secured Party for the
foregoing expenses relating to more than one such inspection or audit in any
calendar year unless an Event of Default has occurred and is continuing, in
which event the Grantor shall be required to reimburse the Secured Party for any
and all of the foregoing expenses. Notwithstanding anything contained in this
Section 4.1(c) to the contrary, if an Event of Default shall have occurred and
be continuing, then the Secured Party or its Representative may take any of the
actions specified in clauses (i) through (iv) of this Section 4.1(c) without
prior notice to the Grantor, but shall endeavor in good faith to provide the
Grantor subsequent notice.
(d) Motor Vehicles. The Grantor shall, promptly upon acquiring same, cause the
Secured Party to be listed as the lienholder on each certificate of title or
ownership covering any items of Equipment, including Motor Vehicles, having a
value in excess of $50,000 individually or in the aggregate for all such items
of Equipment of the Grantor, or otherwise comply with the certificate of title
or ownership laws of the relevant jurisdiction issuing such certificate of title
or ownership in order to properly evidence and perfect the Secured Party’s
security interest in the assets represented by such certificate of title or
ownership The Secured Party will, promptly after receipt of written request
therefor from the Grantor, return any such certificate of title as needed by the
Grantor to maintain the registration and licensing of such Equipment and Motor
Vehicles, and Grantor shall promptly return such certificates of title to
Secured Party upon completion of such registration and licensing requirements.
(a) Notice to Account Debtors; Verification. (i) Upon the occurrence and during
the continuance of any Event of Default, upon request of the Secured Party or
its Representative, the Grantor shall promptly notify (and the Grantor hereby
authorizes the Secured Party and its Representative so to

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notify) each account debtor in respect of any Accounts or Instruments or other
Persons obligated on the Collateral that such Collateral has been assigned to
the Secured Party hereunder, and that any payments due or to become due in
respect of such Collateral are to be made directly to the Secured Party, and
(ii) the Secured Party and its Representative shall have the right at any time
or times to make direct verification with the account debtors or other Persons
obligated on the Collateral of any and all of the Accounts or other such
Collateral.
(b) Intellectual Property. The Grantor represents and warrants that the
Copyrights, Patents, Intellectual Property Licenses and Trademarks listed on
Schedules III, IV, V and VI, respectively (if any), constitute all of the
registered Copyrights and all of the issued or applied-for Patents, written
Intellectual Property Licenses and registered or applied-for Trademarks owned by
the Grantor as of the date hereof. If the Grantor shall (i) obtain rights to any
new patentable inventions, any registered Copyrights or any Patents,
Intellectual Property Licenses or Trademarks, or (ii) become entitled to the
benefit of any registered Copyrights or any Patents, Intellectual Property
Licenses or Trademarks or any improvement on any Patent, the provisions of this
Agreement above shall automatically apply thereto and the Grantor shall promptly
give to the Secured Party notice and any registered Copyrights, issued or
applied-for Patents, written Intellectual Property Licenses, and registered or
applied-for Trademarks. The Grantor hereby authorizes the Secured Party to
modify this Agreement by amending Schedules III, IV, V and VI, as applicable, to
include any such property in any such notice. The Grantor shall (i) prosecute
diligently any patent, trademark or service mark applications pending as of the
date hereof or hereafter to the extent material to the operations of the
business of the Grantor, (ii) preserve and maintain all rights in the
Copyrights, Patents, Intellectual Property Licenses and Trademarks, to the
extent material to the operations of the business of the Grantor and (iii)
ensure that the Copyrights, Patents, Intellectual Property Licenses and
Trademarks are and remain enforceable, to the extent material to the operations
of the business of the Grantor. Any expenses incurred in connection with the
Grantor’s obligations under this Section 4.1(f) shall be borne by the Grantor.
Except for any such items that the Grantor reasonably believes in good faith are
no longer necessary for the on-going operations of its business, Grantor shall
not abandon any material right to file a patent, trademark or service mark
application, or abandon any pending patent, trademark or service mark
application or any other Copyright, Patent, Intellectual Property License or
Trademark without the prior written consent of the Secured Party, which consent
shall not be unreasonably withheld, conditioned or delayed. The Grantor
represents that all Intellectual Property license agreements pursuant to which
the Grantor is a licensee or licensor are written.
(c) Further Identification of Collateral. The Grantor will, when and as often as
requested by the Secured Party or its Representative (but, absent the occurrence
and continuance of an Event of Default, in no event more frequently than
quarterly), furnish to the Secured Party or such Representative, statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Secured Party or its
Representative may reasonably request, all in reasonable detail.
(d) Investment Property. The Grantor will take any and all actions required or
requested by the Secured Party, from time to time, to cause the Secured Party to
obtain exclusive control of any Investment Property owned by the Grantor. For
purposes of this Section 4.1(h), the Secured Party shall have exclusive control
of Investment Property if (i) such Investment Property consists of certificated
securities and the Grantor delivers such certificated securities to the Secured
Party (with assignments in blank or appropriate endorsements if such
certificated securities are in registered form); (ii) such

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Investment Property consists of uncertificated securities and the issuer thereof
agrees, pursuant to documentation in form and substance reasonably satisfactory
to the Secured Party, that it will comply with instructions originated by the
Secured Party without further consent by the Grantor, and (iii) such Investment
Property consists of security entitlements and either (x) the Secured Party
becomes the entitlement holder thereof or (y) the appropriate securities
intermediary agrees, pursuant to the documentation in form and substance
reasonably satisfactory to the Secured Party, that it will comply with
entitlement orders originated by the Secured Party without further consent by
the Grantor.
(i) Commercial Tort Claims. The Grantor shall promptly notify the Secured Party
of any Commercial Tort Claims acquired by it that concerns claims in excess of
$50,000 individually or in the aggregate and unless otherwise consented to by
the Secured Party, the Grantor shall enter into a supplement to this Agreement
granting to the Secured Party a Lien on and security interest in such Commercial
Tort Claim.
(j) Pledge Supplement. Within five (5) Business Days of the creation or
acquisition of any new Pledged Interests, the Grantor shall execute a supplement
to Exhibit A (a “Pledge Supplement”) and deliver such Pledge Supplement to the
Secured Party. Any Pledged Collateral described in a Pledge Supplement delivered
by the Grantor shall thereafter be deemed to be listed on Exhibit A hereto.
4.2 Preservation of Rights. Whether or not an Event of Default has occurred or
is continuing, the Secured Party and its Representative shall have the right to
take any steps the Secured Party or its Representative reasonably deems
necessary or appropriate to preserve any Collateral or any rights against third
parties to any of the Collateral upon the Grantor’s failure to do so, including
obtaining insurance for the Collateral at any time when the Grantor has failed
to do so, and the Grantor shall promptly pay, or reimburse the Secured Party
for, all reasonable and customary out-of-pocket expenses incurred in connection
therewith.
4.3 Name Change; Location; Bailees.
(a) The Grantor shall not form or acquire any subsidiary other than in
accordance with the express terms of the Note Documents.
(b) The Grantor shall provide the Secured Party at least 10 Business Days prior
written notice of (i) any reincorporation or reorganization of itself under the
laws of any jurisdiction other than the jurisdiction in which it is incorporated
or organized as of the date hereof, and/or (ii) any change of its name, identity
or corporate structure. The Grantor will notify the Secured Party promptly, in
writing (but in any event at least 10 Business Days) prior to any such change in
the proposed use by the Grantor of any tradename or fictitious business name
other than any such name set forth on Schedule II attached hereto.
(c) Except for the sale of Inventory in the ordinary course of business, other
sales of assets expressly permitted by the terms of the Note Documents and
except for Collateral temporarily located for maintenance or repair (so long as
the Grantor shall promptly provide the Secured Party with written notice of such
temporary location), the Grantor will keep Collateral with a value in excess of
$100,000 individually or $500,000 in the aggregate at the locations specified in
Schedule I attached hereto. The Grantor will give the Secured Party 10 Business
Days prior written notice before any change

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in the Grantor’s chief place of business or of any new location for any of the
Collateral with a value in excess of $100,000 individually or $500,000 in the
aggregate at all such locations.
4.4 Other Liens. The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is necessary to
remove, any Lien on the Collateral except Permitted Liens, and will defend the
right, title and interest of the Secured Party in and to the Collateral and in
and to all Proceeds thereof against the claims and demands of all Persons
whatsoever.
(a) If any Collateral with a value in excess of $500,000 in the aggregate is at
any time in the possession or control of any warehousemen, bailee, consignee or
processor, the Grantor shall promptly notify the Secured Party of such fact and,
upon the request of the Secured Party or its Representative, notify such
warehousemen, bailee, consignee or processor of the Lien and security interest
created hereby and shall instruct such Person to hold all such Collateral for
the Secured Party’s account subject to the Secured Party’s instructions.
(b) The Grantor acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing
statement naming the Grantor, as debtor, and the Secured Party, as secured
party, without the prior written consent of the Secured Party and agrees that it
will not do so without the prior written consent of the Secured Party, subject
to the Grantor’s rights under Section 9-509(d)(2) to the UCC.
4.5 Bank Accounts and Securities Accounts. On or prior to the date hereof, the
Secured Party and the Grantor, as applicable, shall enter into an account
control agreement or securities account control agreement, as applicable (each a
“Control Agreement”), in a form reasonably acceptable to the Secured Party, with
each financial institution with which the Grantor maintains from time to time
any Deposit Accounts (general or special), securities accounts, brokerage
accounts or other similar accounts (other than Excluded Accounts), which
financial institutions are set forth on Schedule VII attached hereto. Pursuant
to this Agreement, the Grantor grants and shall grant to the Secured Party a
continuing lien upon, and security interest in, all such accounts and all funds
at any time paid, deposited, credited or held in such accounts (whether for
collection, provisionally or otherwise) or otherwise in the possession of such
financial institutions. Following the date hereof, the Grantor shall not
establish any Deposit Account, securities account, brokerage account or other
similar account (other than Excluded Accounts) with any financial institution
unless prior or concurrently thereto the Secured Party and the Grantor shall
have entered into a Control Agreement with such financial institution which
purports to cover such account. The Grantor shall deposit and keep on deposit
all of its funds in a Deposit Account (other than funds in Excluded Accounts)
which is subject to a Control Agreement.
4.6 Events of Default, Etc. During the period during which an Event of Default
shall have occurred and be continuing:
(a) the Grantor shall, at the request of the Secured Party or its
Representative, assemble the Collateral and make it available to the Secured
Party or its Representative at a place or places designated by the Secured Party
or its Representative which are reasonably convenient to the Secured Party or
its Representative, as applicable, and the Grantor;

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(b) the Secured Party or its Representative may make any reasonable compromise
or settlement deemed desirable with respect to any of the Collateral and may
extend the time of payment, arrange for payment in installments, or otherwise
modify the terms of, any of the Collateral;
(c) the Secured Party shall have all of the rights and remedies with respect to
the Collateral of a secured party under the UCC (whether or not said UCC is in
effect in the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted, including, without limitation, the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral in accordance with this Agreement and the
other Note Documents as if the Secured Party were the sole and absolute owner
thereof (and the Grantor agrees to take all such action as may be appropriate to
give effect to such right);
(d) the Secured Party or its Representative shall have the right, in the name of
the Secured Party or in the name of the Grantor or otherwise, to demand, sue
for, collect or receive any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral, but shall be under no
obligation to do so;
(e) the Secured Party or its Representative shall have the right to take
immediate possession and occupancy of any premises owned, used or leased by the
Grantor and exercise all other rights and remedies which may be available to the
Secured Party;
(f) the Secured Party shall have the right, upon reasonable written notice (such
reasonable notice to be determined by the Secured Party in its sole and absolute
discretion, which shall not be less than 10 days), with respect to the
Collateral or any part thereof (whether or not the same shall then be or shall
thereafter come into the possession, custody or control of the Secured Party or
its Representative), to sell, lease, license, assign or otherwise dispose of all
or any part of such Collateral, at such place or places as the Secured Party
deems best, and for cash or for credit or for future delivery (without thereby
assuming any credit risk), at public or private sale, without demand of
performance or notice of intention to effect any such disposition or of the time
or place thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Secured Party or anyone else may be the
purchaser, lessee, licensee, assignee or recipient of any or all of the
Collateral so disposed of at any public sale (or, to the extent permitted by
law, at any private sale) and thereafter hold the same absolutely, free from any
claim or right of whatsoever kind, including any right or equity of redemption
(statutory or otherwise), of the Grantor, any such demand, notice and right or
equity being hereby expressly waived and released. The Secured Party may, to the
fullest extent permitted by Applicable Law, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned.
(g) the Secured Party may, prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent the Secured Party deems
appropriate;

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(h) the Secured Party may proceed to perform any and all of the obligations of
the Grantor contained in any Contract and exercise any and all rights of the
Grantor therein contained as the Grantor itself could;
(i) the Secured Party shall have the right to use the Grantor’s rights under any
Collateral consisting of Intellectual Property Licenses in connection with the
enforcement of the Secured Party’s rights hereunder; and
(j) the rights, remedies and powers conferred by this Section 4.6 are in
addition to, and not in substitution for, any other rights, remedies or powers
that the Secured Party may have under any Note Document, at law, in equity or by
or under the UCC or any other statute or agreement. The Secured Party may
proceed by way of any action, suit or other proceeding at law or in equity and
no right, remedy or power of the Secured Party will be exclusive of or dependent
on any other. The Secured Party may exercise any of its rights, remedies or
powers separately or in combination and at any time.
Without limiting the foregoing, the Secured Party may, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
the Grantor or any other person or entity (all and each of which demands,
advertisements and/or notices are hereby expressly waived), upon the occurrence
and during the continuance of an Event of Default forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith date and otherwise fill in the blanks on any assignments separate from
certificates or stock power or otherwise sell, assign, give an option or options
to purchase, contract to sell or otherwise dispose of and deliver said
Collateral, or any part thereof, in one or more portions at one or more public
or private sales or dispositions, at any exchange or broker’s board or at any of
the Secured Party’s offices or elsewhere upon such terms and conditions as the
Secured Party may deem advisable and at such prices as it may deem best, for any
combination of cash and/or securities or other property or on credit or for
future delivery without assumption of any credit risk, with the right of the
Secured Party (or the designee of the Secured Party) upon any such sale, public
or private, to purchase the whole or any part of said Collateral so sold, free
of any right or equity of redemption of the Grantor, which right or equity is
hereby expressly waived or released. The Grantor agrees that, to the extent
notice of sale shall be required by Applicable Law or this Agreement, at least
ten (10) days’ prior written notice to the Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Notwithstanding any provision in any
operating agreement or shareholder agreement of any issuer of the Collateral or
any other Applicable Law to the contrary, the undersigned, constituting a member
and/or shareholder of each issuer hereby acknowledges that such member and/or
shareholder, as applicable, may pledge to the Secured Party all of such member’s
and/or shareholder’s right, title and interest in such issuer, and upon
foreclosure the successful bidder (which may include the Secured Party or any
Holder) will be deemed admitted as a member and/or shareholder, as applicable,
of such issuer, and will automatically succeed to all of such pledged right,
title and interest, including without limitation such members’ and/or
shareholder’s limited liability company and equity interests, right to vote and
participate in the management and business affairs of the issuer, right to a
share of the profits and losses of the issuer and right to receive distributions
from the issuer.
The proceeds of each collection, sale or other disposition under this
Section 4.6 shall be applied in accordance with Section 4.9 hereof.

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4.7 Deficiency. If the proceeds of sale, collection or other realization of or
upon the Collateral are insufficient to cover the costs and expenses of such
realization and the payment in full of the Obligations, the Grantor shall remain
liable for any deficiency.
4.8 Private Sale. The Grantor recognizes that the Secured Party may be unable to
effect a public sale of any or all of the Collateral consisting of securities by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the “Act”), and applicable state securities laws, but may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. The Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and the Grantor agrees that it is
not commercially unreasonable for the Secured Party to engage in any such
private sales or dispositions under such circumstances. The Grantor agrees that
it would not be commercially unreasonable for the Secured Party to dispose of
the Collateral or any portion thereof by using Internet sites that provide for
the auction of assets of the types included in the Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of assets.
The Secured Party may sell the Collateral without giving any warranties as to
the Collateral. The Secured Party may specifically disclaim or modify any
warranties of title or the like. This procedure will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
The Secured Party shall be under no obligation to delay a sale of any of the
Collateral to permit the Grantor to register such Collateral for public sale
under the Act, or under applicable state securities laws, even if the Grantor
would agree to do so. The Secured Party shall not incur any liability as a
result of the sale of any such Collateral, or any part thereof, at any private
sale provided for in this Agreement and the Grantor hereby waives any claims
against the Secured Party arising by reason of the fact that the price at which
the Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Obligations, even if the Secured Party accepts the first offer
received and does not offer the Collateral to more than one offeree. The Secured
Party may sell the Collateral without giving any warranties as to the
Collateral. The Secured Party may specifically disclaim or modify any warranties
of title or the like. This procedure will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.
The Grantor further agrees to do or cause to be done all such other acts and
things as may be necessary to make such sale or sales of any portion or all of
any such Collateral valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Grantor’s
expense. The Grantor further agrees that a breach of any of the covenants
contained in this Section 4.8 will cause irreparable injury to the Secured
Party, that the Secured Party has no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in
this Section 4.8 shall be specifically enforceable against the Grantor, and the
Grantor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event of
Default has occurred and is continuing.
The Grantor further agrees not to exercise any and all rights of subrogation it
may have against a Pledged Entity upon the sale or disposition of all or any
portion of the Pledged Collateral by the Secured

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Party pursuant to the terms of this Agreement until the termination of this
Agreement in accordance with Section 4.12.
4.9 Application of Proceeds. The proceeds of any collection, sale or other
realization of all or any part of the Collateral following the occurrence and
during the continuance of an Event of Default, and any other cash at the time
held by the Secured Party under this Agreement, shall be applied to the
Obligations in such order as the Secured Party shall elect.
4.10 Attorney-in-Fact. The Grantor hereby irrevocably constitutes and appoints
the Secured Party, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Grantor and in the name of the Grantor or in its own name, from
time to time upon the occurrence and during the continuance of an Event of
Default in the discretion of the Secured Party, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be necessary
to perfect or protect any security interest granted hereunder, to maintain the
perfection or priority of any security interest granted hereunder, and, without
limiting the generality of the foregoing, hereby gives the Secured Party the
power and right, on behalf of the Grantor, without notice to or assent by the
Grantor (to the extent permitted by Applicable Law), to do the following upon
the occurrence and during the continuation of an Event of Default:
(a) to take any and all appropriate action and to execute and deliver any and
all documents and instruments which may be necessary to accomplish the purposes
of this Agreement;
(b) to ask, demand, collect, receive and give acquittance and receipts for any
and all moneys due and to become due under any Collateral and, in the name of
the Grantor or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other Instruments for the
payment of moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Secured Party for the purpose of collecting any and all such
moneys due under any Collateral whenever payable and to file any claim or to
take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Secured Party for the purpose of collecting any and
all such moneys due under any Collateral whenever payable;
(c) to pay or discharge charges or liens levied or placed on or threatened
against the Collateral, to effect any insurance called for by the terms of this
Agreement or the Note Documents and to pay all or any part of the premiums
therefor;
(d) to direct any party liable for any payment under any of the Collateral to
make payment of any and all moneys due, and to become due thereunder, directly
to the Secured Party or as the Secured Party shall direct, and to receive
payment of and receipt for any and all moneys, claims and other amounts due, and
to become due at any time, in respect of or arising out of any Collateral;
(e) to sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against the Grantor, assignments,
verifications and notices in connection with accounts and other Documents
constituting or relating to the Collateral;

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(f) to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or any
part thereof and to enforce any other right in respect of any Collateral;
(g) to defend any suit, action or proceeding brought against the Grantor with
respect to any Collateral;
(h) to settle, compromise or adjust any suit, action or proceeding described
above and, in connection therewith, to give such discharges or releases as the
Secured Party may deem appropriate;
(i) to the extent that the Grantor’s authorization given in Section 4.1(b) of
this Agreement is not sufficient to file such financing statements with respect
to this Agreement, with or without the Grantor’s signature;
(j) generally to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Secured Party were the absolute owner thereof for all purposes;
(k) to prepare, sign, and file any document which may be required by the United
States Patent and Trademark Office, the United States Copyright Office or
similar registrar in order to effect an absolute assignment of all right, title
and interest in all registered Intellectual Property and any application for all
such registrations, and record the same;
(l) to prepare, sign, and file for recordation in any intellectual property
registry, appropriate evidence of the lien and security interest granted herein
in the Intellectual Property in the name of the Grantor as debtor; and
(m) to do, at the Secured Party’s option and at the Grantor’s expense, at any
time, or from time to time, all acts and things which the Secured Party
reasonably deems necessary to protect or preserve or realize upon the Collateral
and the Secured Party’s lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do.
The Grantor hereby ratifies, to the extent permitted by law, all that such
attorneys lawfully do or cause to be done by virtue hereof provided the same is
performed in a commercially reasonable manner. The power of attorney granted
hereunder is a power coupled with an interest and shall be irrevocable until the
Obligations are paid in full and this Agreement is terminated in accordance with
Section 4.12 hereof.
The Grantor also authorizes the Secured Party, at any time from and after the
occurrence and during the continuation of any Event of Default, (x) to
communicate in its own name with any party to any Contract constituting
Collateral with regard to the assignment of the right, title and interest of the
Grantor in and under the Contract hereunder and other matters relating thereto
and (y) to execute, in connection with any sale of Collateral provided for in
Section 4.6 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
4.11 Perfection. Prior to or concurrently with the execution and delivery of
this Agreement, the Grantor shall:

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(a) file such financing statements, assignments for security and other documents
in such offices as may be necessary or as the Secured Party or its
Representative may request to perfect the security interests granted by
Section 3 of this Agreement;
(b) at the Secured Party’s request, deliver to the Secured Party or its
Representative the originals of all Instruments required to be so delivered
hereunder together with, in the case of Instruments constituting promissory
notes, allonges attached thereto showing such promissory notes to be payable to
the order of a blank payee;
(c) deliver to the Secured Party or its Representative all certificates
representing the Pledged Interests now owned by the Grantor, together with
undated assignments separate from certificates or stock/membership interest
powers duly executed in blank by the Grantor and irrevocable proxies;
(d) deliver to the Secured Party or its Representative a Mortgage with respect
to all real property held by the Grantor that is required to be subject to a
Mortgage;
(e) deliver to the Secured Party or its Representative a Control Agreement for
each Deposit Account owned by the Grantor, acceptable in all respects to the
Secured Party, duly executed by the Grantor and the financial institution at
which the Grantor maintains such Deposit Account; and
(f) deliver to the Secured Party or its Representative the originals of all
Motor Vehicle titles with respect to Motor Vehicles having a value in excess of
$50,000 in the aggregate, duly endorsed indicating the Secured Party’s interest
therein as a lienholder, together with such other documents as may be required
consistent with Section 4.1(d) hereof to perfect the security interest granted
by Section 3 in all such Motor Vehicles (if any).
4.12 Termination; Partial Release of Collateral. This Agreement and the Liens
and security interests granted hereunder shall continue in effect until the
Obligations are paid in full (except for contingent indemnity claims for which
no claim has been made). When the Obligations are paid in full, the security
interest granted hereby shall automatically terminate and all rights to the
Collateral shall revert to the Grantor, and the Secured Party will promptly
following such termination deliver possession of all Collateral (including,
without limitation, the Pledged Interests, the other Pledged Collateral and any
other property then held as part of the Pledged Collateral) to the Grantor and
execute and deliver to the Grantor such documents as are necessary to evidence
such termination, including UCC termination statements and such other
documentation as shall be reasonably requested by the Grantor to effect the
termination and release of the Liens and security interests in favor of the
Secured Party affecting the Collateral. Upon any sale of property, permitted by
the Note Documents, to a party who is not the Grantor or a Subsidiary of the
Grantor, the Liens granted herein with respect to such property shall be deemed
to be automatically released and such property shall automatically revert to the
Grantor with no further action on the part of any Person. The Secured Party
shall, at Grantor’s expense, execute and deliver or otherwise authorize the
filing of such documents as the Grantor shall reasonably request, in form and
substance reasonably satisfactory to the Secured Party, including financing
statement amendments to evidence such release.
4.13 Further Assurances. At any time and from time to time, upon the written
request of the Secured Party or its Representative, and at the sole expense of
the Grantor, the Grantor shall promptly and

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duly execute and deliver any and all such further instruments, documents and
agreements and take such further actions as the Secured Party or its
Representative may reasonably require in order for the Secured Party to obtain
the full benefits of this Agreement and of the rights and powers herein granted
in favor of the Secured Party, including, without limitation, using the
Grantor’s commercially reasonable efforts to secure all consents and approvals
necessary or appropriate for the assignment to the Secured Party of any
Collateral held by the Grantor or in which the Grantor has any rights not
heretofore assigned, the filing of any financing or continuation statements
under the UCC with respect to the liens and security interests granted hereby,
transferring Collateral to the Secured Party’s possession (if a security
interest in such Collateral can be perfected by possession), placing the
interest of the Secured Party as lienholder on the certificate of title of any
Motor Vehicle, using commercially reasonable efforts to obtain waivers of liens
from landlords and mortgagees, and delivering to the Secured Party all such
Control Agreements as the Secured Party or its Representative shall require duly
executed by the Grantor and the financial institution at which the Grantor
maintains a Deposit Account covered by such Control Agreement. The Grantor also
hereby authorizes the Secured Party and its Representative to file any such
financing or continuation statement without the signature of the Grantor to the
extent permitted by Applicable Law.
4.14 Limitation on Duty of Secured Party. The powers conferred on the Secured
Party under this Agreement are solely to protect the Secured Party’s interest on
behalf of itself and the Holders in the Collateral and shall not impose any duty
upon it to exercise any such powers. Without in any way limiting the exculpation
and indemnification provisions of the Note Documents, the Secured Party shall be
accountable only for amounts that it actually receives and retains for its own
account as a result of the exercise of such powers and neither the Secured Party
nor its Representative nor any of their respective officers, directors,
employees or agents shall be responsible to the Grantor for any act or failure
to act, except for gross negligence or willful misconduct. Without limiting the
foregoing, the Secured Party and any Representative shall each be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its respective possession if such Collateral is accorded treatment substantially
similar to that which the relevant Secured Party or any Representative, in its
individual capacity, accords its own property consisting of the type of
Collateral involved, it being understood and agreed that neither the Secured
Party nor any Representative shall have any responsibility for taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above) to preserve rights against any Person with respect to any
Collateral.
Without limiting the generality of the foregoing, neither the Secured Party nor
any Representative shall have any obligation or liability under any Contract or
license by reason of or arising out of this Agreement or the granting to the
Secured Party of a security interest therein or assignment thereof or the
receipt by the Secured Party or any Representative of any payment relating to
any Contract or license pursuant hereto, nor shall the Secured Party or any
Representative be required or obligated in any manner to perform or fulfill any
of the obligations of the Grantor under or pursuant to any Contract or license,
or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract or license, or to present or file any claim, or
to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
4.15 Dividends, Distributions, Etc. If, prior to the payment in full of the
Obligations, the Grantor shall receive any certificate (including, without
limitation, any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital, or
issued in

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connection with any reorganization, merger or consolidation), or any options or
rights, whether as an addition to, in substitution for, or in exchange for any
of the Pledged Interests or otherwise, the Grantor agrees, in each case, to
accept the same as the Secured Party’s agent and to hold the same in trust for
the Secured Party, and to deliver the same promptly (but in any event within
five (5) Business Days of receipt) to Secured Party in the exact form received,
with the endorsement of the Grantor when necessary and/or with appropriate
undated assignments separate from certificates or stock powers duly executed in
blank, to be held by the Secured Party subject to the terms hereof, as
additional Pledged Collateral. The Grantor shall promptly deliver to the Secured
Party (i) a Pledge Supplement with respect to such additional certificates, and
(ii) any financing statements or amendments to financing statements as requested
by the Secured Party. The Grantor hereby authorizes the Secured Party to attach
each such Pledge Supplement to this Agreement. Except as provided in Section
4.16(b) below, all sums of money and property so paid or distributed in respect
of the Pledged Interests which are received by the Grantor shall, until paid or
delivered to the Secured Party, be held by the Grantor in trust as additional
Pledged Collateral.
4.16 Voting Rights; Dividends; Certificates.
(a) So long as no Event of Default has occurred and is continuing, the Grantor
shall be entitled (subject to the other provisions hereof, including, without
limitation, Section 4.17 below) to exercise its voting and other consensual
rights with respect to the Pledged Interests and otherwise exercise the
incidents of ownership thereof in any manner not inconsistent with this
Agreement and/or any of the other Note Documents. The Grantor hereby grants to
the Secured Party or its nominee, an irrevocable proxy to exercise all voting,
corporate and limited liability company rights relating to the Pledged Interests
in any instance, which proxy shall be effective, at the discretion of the
Secured Party, upon the occurrence and during the continuance of an Event of
Default so long as the Secured Party has notified the Grantor in writing of its
intent to exercise its voting power under this clause prior to the exercise
thereof. Upon the request of the Secured Party at any time, the Grantor agrees
to deliver to the Secured Party such further evidence of such irrevocable proxy
or such further irrevocable proxies to vote the Pledged Interests as the Secured
Party may reasonably request.
(b) So long as no Event of Default shall have occurred and be continuing, the
Grantor shall be entitled to receive cash dividends or other distributions made
in respect of the Pledged Interests, to the extent permitted to be made pursuant
to the terms of the Note Documents. Upon the occurrence and during the
continuance of an Event of Default, in the event that the Grantor, as record and
beneficial owner of the Pledged Interests, shall have received or shall have
become entitled to receive, any cash dividends or other distributions in the
ordinary course, the Grantor shall deliver to the Secured Party, and the Secured
Party shall be entitled to receive and retain, for the benefit of the Secured
Party and the Holders, all such cash or other distributions as additional
security for the Obligations.
(c) The Grantor shall cause all Pledged Interests (other than the Pledged
Interests of Certus) to be certificated at all times while this Agreement is in
effect.
(d) Any or all of the Pledged Interests held by the Secured Party hereunder may,
if an Event of Default has occurred and is continuing and so long as the Secured
Party has notified the Grantor in writing of its intent to exercise its power of
registration under this sentence prior to the exercise thereof, be registered in
the name of Secured Party or its nominee, and the Secured Party or its

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nominee may thereafter without notice exercise all voting and corporate rights
at any meeting with respect to any Pledged Entity and exercise any and all
rights of conversion, exchange, subscription or any other rights, privileges or
options pertaining to any of the Pledged Interests as if it were the absolute
owner thereof, including, without limitation, the right to vote in favor of, and
to exchange at its discretion any and all of the Pledged Interests upon the
merger, consolidation, reorganization, recapitalization or other readjustment
with respect to any Pledged Entity or upon the exercise by any Pledged Entity,
the Grantor or the Secured Party of any right, privilege or option pertaining to
any of the Pledged Interests, and in connection therewith, to deposit and
deliver any and all of the Pledged Interests with any committee, depository,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Secured Party may reasonably determine, all without liability
except to account for property actually received by the Secured Party, but the
Secured Party shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any failure to do so or
delay in so doing.
4.17 No Disposition, Etc. Until the irrevocable payment in full of the
Obligations (except for contingent indemnity claims for which no claim has been
made), the Grantor agrees that it will not sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Pledged Interests
or any other Pledged Collateral, nor will the Grantor create, incur or permit to
exist any pledge, lien, mortgage, hypothecation, security interest, charge,
option or any other encumbrance with respect to any of the Pledged Interests or
any other Pledged Collateral, or any interest therein, or any proceeds thereof,
except for the lien and security interest of the Secured Party provided for by
this Agreement, the other Security Documents and the Permitted Liens described
in clause (k) of the definition thereof.
Section 5. Miscellaneous.
5.1 No Waiver. No failure on the part of the Secured Party or any of its
Representatives to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Secured Party or
any of its Representatives of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law.
5.2 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
5.3 Notices. All notices, approvals, requests, demands and other communications
hereunder shall be delivered or made in the manner set forth in, and shall be
effective in accordance with the terms of, the Convertible Notes; provided,
that, to the extent any such communication is being made or sent to the Secured
Party, such communication shall be made to the Secured Party at the address set
forth below the Secured Party’s signature hereto. The Grantor and the Secured
Party may change their respective notice addresses by written notice given to
the other parties hereto 10 days following the effectiveness of such change.

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5.4 Amendments, Etc. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by the Grantor and the
Secured Party. Any such amendment or waiver shall be binding upon the Secured
Party and the Grantor and their respective successors and assigns.
5.5 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of each of the parties
hereto; provided, that the Grantor shall not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the Secured
Party. The Secured Party, in its capacity as the Collateral Agent, may assign
its rights and obligations hereunder (a) without the consent of the Grantor, to
any Person (provided that unless an Event of Default shall have occurred and be
continuing at the time of any assignment, such Person does not engage in a
business or activity contemplated by NAICS code 3361 (Motor Vehicle
Manufacturing)) or (b) with the Grantor’s consent (not to be unreasonably
withheld, conditioned or delayed), any other Person acceptable to the Secured
Party; provided that the Grantor’s consent under this clause (b) shall not be
required if an Event of Default has occurred and is then continuing, and in each
event such assignee shall be deemed to be the Secured Party hereunder with
respect to such assigned rights.
5.6 Counterparts; Headings. This Agreement may be authenticated in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may authenticate this Agreement by
signing any such counterpart. This Agreement may be authenticated by manual
signature or facsimile, .pdf or similar electronic signature, all of which shall
be equally valid. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof.
5.7 Severability. If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Secured Party and its
Representative in order to carry out the intentions of the parties hereto as
nearly as may be possible and (b) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
5.8 SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS.  THE
GRANTOR (A) AGREES THAT ANY SUIT, ACTION OR PROCEEDING AGAINST IT ARISING OUT OF
OR RELATING TO THIS AGREEMENT MAY BE INSTITUTED IN ANY U.S. FEDERAL COURT WITH
APPLICABLE SUBJECT MATTER JURISDICTION SITTING IN THE CITY OF NEW YORK; (B)
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (I) ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING; AND (II) ANY CLAIM THAT IT MAY NOW OR HEREAFTER HAVE THAT
ANY SUCH SUIT, ACTION OR PROCEEDING IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM; AND (C) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING; PROVIDED THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
SECURED PARTY’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL
OR OTHER PROPERTY MAY BE FOUND. THE GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE FOREGOING COURTS FOR THE PURPOSE OF ANY

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SUCH LITIGATION AS SET FORTH ABOVE. THE GRANTOR FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE GRANTOR HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

5.9 WAIVER OF RIGHT TO TRIAL BY JURY. THE GRANTOR AND THE SECURED PARTY HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GRANTOR AND THE
SECURED PARTY HEREBY AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION 5.9 AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
5.10 Survival. All representations, warranties, covenants and agreements of the
Grantor and the Secured Party shall survive the execution and delivery of this
Agreement.
5.1 Collateral Agent.
(a) The Holders have, pursuant to Section 21 of each Convertible Note,
designated and appointed the Secured Party as the collateral agent of the
Holders under this Agreement and the other Note Documents.
(b) Nothing in this Section 5.11 shall be deemed to limit or otherwise affect
the rights of the Secured Party to exercise any remedy provided in this
Agreement or any other Security Document.
(c) The Secured Party shall have the discretion to allocate proceeds received by
the Secured Party pursuant to the exercise of remedies under the Note Documents
or at law or in equity (including without limitation with respect to any secured
creditor remedies exercised against the Collateral and any other collateral
security provided for under any Security Documents) to the then outstanding
Obligations in such order as the Secured Party shall elect.

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5.2 No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.3 ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER NOTE
DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN THE
SECURED PARTY, THE GRANTOR, THEIR AFFILIATES AND PERSONS ACTING ON THEIR BEHALF
WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT, TOGETHER WITH
THE OTHER NOTE DOCUMENTS AND THE OTHER INSTRUMENTS REFERENCED HEREIN AND
THEREIN, CONTAINS THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE
MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT AS SPECIFICALLY SET FORTH HEREIN
OR THEREIN, NEITHER THE SECURED PARTY NOR THE GRANTOR MAKES ANY REPRESENTATION,
WARRANTY, COVENANT OR UNDERTAKING WITH RESPECT TO SUCH MATTERS. AS OF THE DATE
OF THIS AGREEMENT, THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES WITH
RESPECT TO THE MATTERS DISCUSSED HEREIN. NO PROVISION OF THIS AGREEMENT MAY BE
AMENDED, MODIFIED OR SUPPLEMENTED OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED
BY THE GRANTOR AND THE SECURED PARTY.
5.4 Grantor Acknowledgement. The Grantor acknowledges receipt of an executed
copy of this Agreement. The Grantor waives the right to receive any amount that
it may now or hereafter be entitled to receive (whether by way of damages, fine,
penalty, or otherwise) by reason of the failure of the Secured Party to deliver
to the Grantor a copy of any financing statement or any statement issued by any
registry that confirms registration of a financing statement relating to this
Agreement.
5.5 Intercreditor Agreement. Notwithstanding anything to the contrary herein, in
the event that Grantor consummates a Qualified Debt Financing, (i) the Liens
granted pursuant to Section 3 shall be subject to the terms and conditions of
any intercreditor agreement entered into by the Grantor and the Secured Party
with respect to such Qualified Debt Financing and on terms reasonably acceptable
to each of the Grantor and the Secured Party (an “Intercreditor Agreement”), and
(ii) the exercise of any right or remedy by the Secured Party hereunder is
subject in all instances to the provisions of the Intercreditor Agreement, if
any. In the event of any conflict between the terms of the Intercreditor
Agreement, if any, and this Agreement, the terms of the Intercreditor Agreement
shall govern and control.

[Signature Pages Follow]

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

WORKHORSE GROUP INC.

By: ______________________________
Name:
Title:

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SECURED PARTY:

HT INVESTMENTS MA, LLC,
as Collateral Agent

By: ______________________________
Name: 
Title: 

Notice Address:
[ • ]
[ • ]

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Schedule I.

A. Organizational Information

Exact Legal Name
Jurisdiction of Formation and Registration
Country / State / Provincial Entity Registration / ID No.
Federal employer identification number
Date of Formation
Chief executive offices
Principal mailing addresses
Workhorse Group Inc.NevadaE0780542007-826-1394771November 13, 2007100 Commerce
Drive, Loveland, Ohio 45140100 Commerce Drive, Loveland, Ohio 45140

B. Location of Equipment, Inventory and Goods
Grantor Name
Location of Equipment, Inventory and Goods
Workhorse Group Inc.
100 Commerce Drive, Loveland, Ohio 45140
Workhorse Group Inc.
119 Northeast Drive, Loveland, Ohio 45140
Workhorse Group Inc.
940 S. State Road 32, Union City, Indiana 47390
Workhorse Group Inc.
Hangar 7, Lunken Airport, Cincinnati, OH 45226

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

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

--------------------------------------------------------------------------------

Schedule II 

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

Former names listed below:
Workhorse Group Inc., a Nevada company (f/k/a AMP Holding Inc.)

--------------------------------------------------------------------------------

Schedule III 

List of Copyrights
None.

--------------------------------------------------------------------------------

Schedule IV 

List of License Agreements

1) Intellectual Property License Agreement between the Grantor and Lordstown
Motors Corp. dated November 7, 2019
2) The following software licenses:

ManufacturerProductTotal # of SeatsMicrosoftWindows Server User Cals85Server
20169Project Online Pro5Office 365 Business7Office 365 Business Premium26Visio
Plan 22Windows 10 Pro100SQL Server 20142Business Central(NAV)MerakiMX84-3Yr
Firewall1MX64-3Yr Firewall2LuxionKeyShot1AdobeCreativeCloud1AltaroVM
Backup9TechsmithSnagit1WebrootSecureAnywhere100DessaultSolidworks
Premium9Solidworks Standard11Solidworks Electrical Schematic 2D8Solidworks
Electrical 3D6Solidworks Flow Simulation1Solidworks Simulation2Solidworks PDM
Pro CAD Editor14Solidworks PDM Pro Viewer 5 Pack1Solidworks Composer 20192

--------------------------------------------------------------------------------

Schedule V 

List of Patents and Patent Applications

Code/Matter No.CountrySerial NumberApplication DatePatent NumberIssue/ Grant
DateExpiration
DateTitleAssigneeAMPICanada252365310/17/2005252365312/22/200910/17/2025VEHICLE
CHASSIS ASSEMBLYWorkhorse Motor Works IncAMPIUnited
States11/252,22010/17/20057,717,46405/18/201009/06/2026Vehicle Chassis
AssemblyWorkhorse Motor Works IncAMPIUnited
States11/252,21910/17/20057,559,57807/14/200909/06/2026Vehicle Chassis
AssemblyWorkhorse Motor Works IncAMPIUnited
States29/243,07411/18/2005D561,07802/05/200802/05/2022Vehicle HeaderWorkhorse
Custom Chassis, LLCAMPIUnited
States29/243,12911/18/2005D561,07902/05/200802/05/2022Vehicle HeaderWorkhorse
Custom Chassis, LLCAMPI 10USUnited
States13/283,66310/28/20118,541,91509/24/201312/16/2031DRIVE MODULE AND MANIFOLD
FOR ELECTRIC MOTOR DRIVE ASSEMBLYWorkhorse Technologies Inc.AMPI 23UUnited
States14/606,49701/27/20159,481,25611/01/201605/03/2035ONBOARD GENERATOR DRIVE
SYSTEM FOR ELECTRIC VEHICLESWorkhorse Technologies Inc.AMPI 24AUnited
States15/915,14403/08/2018Abandoned for Failure to Respond to Office Action on
June 17, 2019Taft can attempt to revive. Proposed Revival Approach to R.
WillisonPACKAGE DELIVERY BY MEANS OF AN AUTOMATED MULTI-COPTER UAS/UAV
DISPATCHED FROM A CONVENTIONAL DELIVERY VEHICLEWorkhorse Group Inc.AMPI
24UUnited States14/989,87001/07/20169,915,95603/13/201806/24/2036PACKAGE
DELIVERY BY MEANS OF AN AUTOMATED MULTI-COPTER UAS/UAV DISPATCHED FROM A
CONVENTIONAL DELIVERY VEHICLEWorkhorse Group Inc.

--------------------------------------------------------------------------------

Schedule VI 

List of Trademarks
Code/Matter No.
Mark Name
Country
Current Owner
Application Number
Application Date
Registration Number
Registration Date
Classes
Goods
AMPI01
NOTHING OUTWORKS A WORKHORSE
Canada
AMP Trucks Inc.
1,053,053
03/30/2000
601,870
02/11/2004
12, .28
Chassis, bodies and parts thereof for delivery trucks, recreational land
vehicles, buses and other specialty motorized vehicles, namely, auto transport
trucks, concrete mixer trucks, dump trucks, garbage hauler trucks, oil-field
trucks, stake and platform trucks, tank trucks, wrecker and tow trucks and
scissors trucks, but specifically excluding utility cars for turf maintenance
for use at golf courses, country clubs, municipalities, building complexes and
large scale industrial complexes
AMPI01
WORKHORSE CUSTOM CHASSIS
Canada
AMP Trucks Inc.
1,053,052
03/30/2000
601,775
02/10/2004
12, 28
Chassis, bodies and parts thereof for delivery trucks, recreational land
vehicles, buses and other specialty motorized vehicles, namely, auto transport
trucks, concrete mixer trucks, dump trucks, garbage hauler trucks, oil-field
trucks, stake and platform trucks, tank trucks, wrecker and tow trucks and
scissors trucks, but specifically excluding utility cars for turf maintenance
for use at golf courses, country clubs, municipalities, building complexes and
large scale industrial complexes
AMPI01
Workhorse UFO and Logo
Canada
AMP Trucks Inc.
1,328,215
12/14/2006
757,840
01/26/2010
12
Chassis and bodies for recreational vehicles
AMPI01
WORKHORSE
Canada
AMP Trucks Inc.
1,468,395
02/04/2010
783,257
11/23/2010
12
Chassis, bodies, and parts thereof, for recreational land vehicles, buses and
trucks
AMPI01
WORKHORSE
Mexico
Workhorse Custom Chassis, LLC
1068329
02/18/2010
1200569
02/10/2011
12
AMPI01
WORKHORSE CUSTOM CHASSIS
Mexico
Workhorse Custom Chassis, LLC
419462
04/05/2000
685022
01/31/2001
12
AMPI01
NOTHING OUTWORKS A WORKHORSE
Mexico
Workhorse Custom Chassis, LLC
419463
04/05/2000
685023
01/31/2001
12
AMPI01
WORKHORSE CUSTOM CHASSIS
United States
AMP Trucks Inc.
75/816,152
10/05/1999
2,413,878
12/19/2000
12
Chassis, bodies, and parts thereof, for recreational land vehicles, buses [ and
specialized trucks, namely, auto transport trucks, concrete mixer trucks, dump
trucks, garbage hauler trucks, oil-field trucks, stake and platform trucks, tank
trucks, wrecker and tow trucks and scissors trucks ]
AMPI15IS

AMP
Iceland
AMP Electric Vehicles Inc.
1295/2011
05/052011
557/2011
5/1/2011
12
Electric drives for vehicles; Electric vehicles, namely, land vehicles

AMPI25
WORKHORSE
United States
AMP Trucks Inc.
78/571,788
2/21/2005
3,214,777
03/06/2007
12
Chassis, bodies, and parts thereof, for recreational land vehicles, buses and
trucks

--------------------------------------------------------------------------------

AMPI28
HORSEFLY
United States
Workhorse Group Inc.
87/770,725
01/25/2018
12
Package delivery systems consisting primarily of civilian
drones

AMPI28CA
HORSEFLY
Canada
Workhorse Group Inc.
1909131
07/12/2018
12
Package delivery systems consisting primarily of civilian drones

AMPI 28CN
HORSEFLY
China P.R.
Workhorse Group Inc.
32402121
7/23/2018
12
Package delivery systems consisting primarily of civilian drones

AMPI 28EM
HORSEFLY
European Union
Workhorse Group Inc.
17930054
07/13/2018
11/27/2018
12, 39
Package delivery systems consisting primarily of civilian drones; drones;
Vehicle leasing services; leasing of land vehicles (delivery trucks); leasing of
drones

AMPI 28MX
HORSEFLY
Mexico
Workhorse Group Inc.
2075312
7/16/2018
1983272
3/26/2019
12
Package delivery systems consisting primarily of civilian drones

--------------------------------------------------------------------------------

Schedule VII 
Depositary Accounts

Account Name
Account Number
Account Description
Financial Institution
Financial Institution Address
Corporate Business Account

Checking Account
PNC Bank
9180 Union Cemetery Rd. Cincinnati, OH 45249
Corporate Business Account

Debit Card Account
PNC Bank
9180 Union Cemetery Rd. Cincinnati, OH 45249
Premium Business Money Market

Sweep Account
PNC Bank
9180 Union Cemetery Rd. Cincinnati, OH 45249
Corporate Business Account

Blocked Account
PNC Bank
9180 Union Cemetery Rd. Cincinnati, OH 45249
Premium Business Money Market

Money Market
PNC Bank
9180 Union Cemetery Rd. Cincinnati, OH 45249

--------------------------------------------------------------------------------

Schedule VIII 
List of Commercial Tort Claims
None.

--------------------------------------------------------------------------------

Schedule IX 
List of Interests in Real Property

Complete Street and Mailing Address, including County and Zip Code
Interest

Company/Subsidiary

119 Northeast Drive, Loveland, Ohio 45140
940 IN-32, Union City, Indiana 47390
100 Commerce Drive, Loveland, Ohio 45140
         Hangar 7, Lunken Airport, Cincinnati, OH 45226
Leasehold
Leasehold
Leasehold
Leasehold
Workhorse Group Inc.
Workhorse Group Inc.
Workhorse Group Inc.
Workhorse Group Inc.

An Affiliate, Workhorse Motor Works Inc. owns the 940 IN-32 property
An Affiliate, Workhorse Properties LLC owns the 100 Commerce Dr. property

--------------------------------------------------------------------------------

Schedule X 

List of Titled Equipment

Year
Make
Model
Vehicle ID#
2011
Chevrolet Silverado
C3500
1GC5CZCG2BZ132623
2010
Gator Trailer
4Z1HD2029AS014857
2007
Saturn Sky
1G8MB35B87Y106581
2012
Mule Egen
5B4MDG199D3447867
1999
Workhorse P30
5B4HP32R8X3308074
2017
Chevrolet Silverado
1500
1GCVKNEH0HZ139161
2018
Chevrolet Silverado
3500
1GC4KYCY1JF110811
2015
Workhorse W-88
Alpha
4525212015
Workhorse W-88
Alpha
4525222015
Workhorse W-88
Alpha
4525232015
Workhorse W-88
Alpha
4525242015
Workhorse W-88
Alpha
4525252005
Workhorse P-42
5B4HP42P753403324

--------------------------------------------------------------------------------

Exhibit A
SUBJECT SECURITIES

Pledged EntityPledgorPercentage of OwnershipSharesCertificate Number(s)Workhorse
Technologies Inc.Workhorse Group Inc.100%  1,000WT-001Workhorse Motor Works
IncWorkhorse Group Inc.100%  200WMW-001Workhorse Properties Inc.Workhorse Group
Inc.100%  1,000WP-001
Surefly, Inc.
Certus Unmanned Aerial Systems LLC
Workhorse Technologies Inc.
Workhorse Group Inc.
100%
50%
1,000
50,000
C-001
Uncertificated

--------------------------------------------------------------------------------

VOTING AGREEMENT
This VOTING AGREEMENT (this “Agreement”), dated as of November [ • ], 2019, is
entered into by and between the undersigned stockholder (the “Stockholder”) of
Workhorse Group Inc., a Nevada corporation (the “Company”), and the Company. The
Company and the Stockholder are each sometimes referred to herein individually
as a “Party” and collectively as the “Parties.” Capitalized terms that are used
but not defined herein shall have the meaning ascribed to them in the Purchase
Agreement (as defined below).
RECITALS
A.Concurrently with or following the execution of this Agreement, the Company
has entered, or will enter, into a Securities Purchase Agreement (as the same
may be amended from time to time, the “Purchase Agreement”), providing for,
among other things, the sale to the Buyers of the Purchased Securities (as such
terms are defined in the Purchase Agreement) pursuant to the terms and
conditions of the Purchase Agreement and the Transaction Documents (as defined
in the Purchase Agreement).
B. For good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Stockholder hereby makes certain representations, warranties,
covenants, and agreements as set forth in this Agreement with respect to the
shares of Common Stock Beneficially Owned by the Stockholder and set forth below
the Stockholder’s signature on the signature page hereto (the “Original Shares”
and, together with any additional shares of Common Stock pursuant to Section 6
hereof, the “Shares”).
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 Parties hereby agree as
follows:
1.Definitions. For purposes of this Agreement, capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Purchase Agreement. When used in this Agreement, the following
terms in all of their tenses, cases, and correlative forms shall have the
meanings assigned to them in this Section 1.
(a) “Beneficially Own” or “Beneficial Ownership” has the meaning assigned to
such term in Rule 13d-3 under the 1934 Act, and a Person’s beneficial ownership
of securities shall be calculated in accordance with the provisions of such rule
(in each case, irrespective of whether or not such rule is actually applicable
in such circumstance). For the avoidance of doubt, “Beneficially Own” and
“Beneficial Ownership” shall also include record ownership of securities.
(b) “Beneficial Owner” shall mean the Person who Beneficially Owns the
referenced securities.
2. Representations of Stockholder. The Stockholder represents and warrants to
the Company that:

--------------------------------------------------------------------------------

(a) Ownership of Shares. The Stockholder: (i) is the Beneficial Owner of all of
the Original Shares set forth below the Stockholder’s signature on the signature
pages hereto free and clear of any proxy, voting restriction, adverse claim, or
other Liens, other than those created by this Agreement or under applicable
federal or state securities laws; and (ii) has the sole voting power over all
such Original Shares. Except pursuant to this Agreement, there are no options,
warrants, or other rights, agreements, arrangements, or commitments of any
character to which the Stockholder is a party relating to the pledge,
disposition, or voting of any such Original Shares and there are no voting
trusts or voting agreements with respect to such Original Shares.
(b) Disclosure of All Shares Owned. The Stockholder does not Beneficially Own
any shares of Company Common Stock other than: (i) the Original Shares set forth
below the Stockholder’s signature on the signature pages hereto; and (ii) any
options, warrants, or other rights to acquire any additional shares of Company
Common Stock or any security exercisable for or convertible into shares of
Company Common Stock, set forth below the Stockholder’s signature on the
signature pages hereto (collectively, “Options”).
(c) Power and Authority; Binding Agreement. If the Stockholder is an individual,
the Stockholder has full power and authority and legal capacity to enter into,
execute, and deliver this Agreement and to perform fully the Stockholder’s
obligations hereunder (including the proxy described in Section 3(b) below). If
the Stockholder is not an individual, the Stockholder has full corporate power
and authority to enter into, execute, and deliver this Agreement and to perform
fully the Stockholder’s obligations hereunder (including the proxy described in
Section 3(b) below) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes the legal, valid, and binding
obligation of the Stockholder, enforceable against the Stockholder in accordance
with its terms.
(d) No Conflict. The execution and delivery of this Agreement by the Stockholder
does not, and the consummation of the transactions contemplated hereby and the
compliance with the provisions hereof will not, conflict with or violate any law
applicable to the Stockholder or result in any breach of or violation of, or
constitute a default (or an event that 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, or result in the creation of any
Lien on any of the Shares attributable to the Stockholder pursuant to, any
agreement or other instrument or obligation binding upon the Stockholder or any
of the Shares attributable to the Stockholder.
(e) No Consents. No consent, approval, order, or authorization of, or
registration, declaration, or filing with, any Governmental Entity or any other
Person on the part of the Stockholder is required in connection with the valid
execution and delivery of this Agreement. If the Stockholder is an individual,
no consent of the Stockholder’s spouse is necessary under any “community
property” or other laws in order for the Stockholder to enter into and perform
its obligations under this Agreement.
(f) No Litigation. There is no action, suit, investigation, or proceeding
(whether judicial, arbitral, administrative, or other) pending against, or, to
the knowledge of the Stockholder, threatened against or affecting, the
Stockholder that could reasonably be expected to materially impair or materially
adversely affect the ability of the Stockholder to perform the Stockholder’s
obligations hereunder or to consummate the transactions contemplated by this
Agreement on a timely basis.

--------------------------------------------------------------------------------

3. Agreement to Vote Shares; Irrevocable Proxy.
(a) Agreement to Vote and Approve. The Stockholder irrevocably and
unconditionally agrees during the term of this Agreement, at any annual or
special meeting of the Company called with respect to the approval contemplated
by Nasdaq Listing Standard Rule 5635(d) with respect to the issuance of shares
of Common Stock upon conversion of, or in exchange for, the Convertible Note and
exercise of the warrants issuable pursuant to the Purchase Agreement in excess
of the limitations imposed by such rule, and at every adjournment or
postponement thereof, and on every action or approval by written consent or
consents of the Company stockholders with respect to such matter, to vote or
cause the holder of record to vote the Shares in favor of providing the
Requisite Stockholder Approval (as defined in the Convertible Note).
“Convertible Note” means the Senior Secured Convertible Note issued pursuant to
the Purchase Agreement, as amended from time to time.
(b) Irrevocable Proxy. The Stockholder hereby appoints the Company and any
designee of the Company, and each of them individually, until the Expiration
Time (at which time this proxy shall automatically be revoked), its proxies and
attorneys-in-fact, with full power of substitution and resubstitution, to vote
or act by written consent during the term of this Agreement with respect to the
Shares in accordance with Section 3(a). This proxy and power of attorney is
given to secure the performance of the duties of the Stockholder under this
Agreement. The Stockholder shall take such further action or execute such other
instruments as may be necessary to effectuate the intent of this proxy. This
proxy and power of attorney granted by the Stockholder shall be irrevocable
during the term of this Agreement, shall be deemed to be coupled with an
interest sufficient in law to support an irrevocable proxy, and shall revoke any
and all prior proxies granted by the Stockholder with respect to the Shares. The
power of attorney granted by the Stockholder herein is a durable power of
attorney and shall survive the bankruptcy, death, or incapacity of the
Stockholder. The proxy and power of attorney granted hereunder shall terminate
upon the termination of this Agreement.
4. No Voting Trusts or Other Arrangement. The Stockholder agrees that during the
term of this Agreement the Stockholder will not, and will not permit any entity
under the Stockholder’s control to, deposit any of the Shares in a voting trust,
grant any proxies with respect to the Shares, or subject any of the Shares to
any arrangement with respect to the voting of the Shares other than agreements
entered into with the Company.
5. Transfer and Encumbrance. The Stockholder agrees that during the term of this
Agreement, the Stockholder will not, directly or indirectly, transfer, sell,
offer, exchange, assign, pledge, convey any legal or Beneficial Ownership
interest in or otherwise dispose of (by merger (including by conversion into
securities or other consideration), by tendering into any tender or exchange
offer, by testamentary disposition, by operation of law, or otherwise), or
encumber (“Transfer”) any of the Shares or enter into any contract, option, or
other agreement with respect to, or consent to, a Transfer of, any of the Shares
or the Stockholder’s voting or economic interest therein; provided, however that
such restriction shall not apply to Transfers to the Company in satisfaction of
any tax withholding obligations through cashless surrender or otherwise or to
sales of the Shares by the Stockholder in amounts necessary to satisfy his
estimated tax obligations as a result of the vesting of outstanding restricted
stock. Any attempted Transfer of Shares or any interest therein in violation of
this Section 5 shall be null and void. This Section 5 shall not prohibit a
Transfer of the Shares by the Stockholder to any member of the Stockholder’s
immediate family, to a trust for the benefit of the Stockholder or any member of
the Stockholder’s immediate family,

--------------------------------------------------------------------------------

upon the death of the Stockholder or to an “affiliate” (as defined in Rule 144)
of the Stockholder; provided, that a Transfer referred to in this sentence shall
be permitted only if, as a precondition to such Transfer, the transferee agrees
in a writing, reasonably satisfactory in form and substance to the Company, to
be bound by all of the terms of this Agreement.
6. Additional Shares. The Stockholder agrees that all shares of Common Stock
that the Stockholder purchases, acquires the right to vote, or otherwise
acquires Beneficial Ownership of, after the execution of this Agreement and
prior to the Expiration Time shall be subject to the terms and conditions of
this Agreement and shall constitute Shares for all purposes of this Agreement.
In the event of any stock split, stock dividend, merger, reorganization,
recapitalization, reclassification, combination, exchange of shares, or the like
of the capital stock of the Company affecting the Shares, the terms of this
Agreement shall apply to the resulting securities and such resulting securities
shall be deemed to be “Shares” for all purposes of this Agreement.
7. Termination. This Agreement shall terminate upon the earliest to occur of
(the “Expiration Time”): (a) the date on which the Purchase Agreement is
terminated in accordance with its terms; and (b) the termination of this
Agreement by mutual written consent of the Parties; and (c) the later of (i) the
six (6) month anniversary of the date hereof and (ii) the date on which the
Requisite Stockholder Approval is obtained. Nothing in this Section 7 shall
relieve or otherwise limit the liability of any Party for any intentional breach
of this Agreement prior to such termination.
8. No Agreement as Director or Officer. The Stockholder makes no agreement or
understanding in this Agreement in its capacity as a director or officer of the
Company or any of its subsidiaries (if the Stockholder holds such office), and
nothing in this Agreement: (a) will limit or affect any actions or omissions
taken by the Stockholder in its capacity as such a director or officer, and no
such actions or omissions shall be deemed a breach of this Agreement; or (b)
will be construed to prohibit, limit, or restrict the Stockholder from
exercising its fiduciary duties as an officer or director to the Company or its
stockholders.
9. Further Assurances. The Stockholder agrees, from time to time, and without
additional consideration, to execute and deliver such additional proxies,
documents, and other instruments and to take all such further action as the
Company may reasonably request to consummate and make effective the transactions
contemplated by this Agreement.
10. Stop Transfer Instructions. At all times commencing with the execution and
delivery of this Agreement and continuing until the Expiration Time, in
furtherance of this Agreement, the Stockholder hereby authorizes the Company or
its counsel to notify the Company’s transfer agent that there is a stop transfer
order with respect to all of the Shares (and that this Agreement places limits
on the voting and transfer of the Shares), subject to the provisions hereof and
provided that any such stop transfer order and notice will immediately be
withdrawn and terminated by the Company following the Expiration Time.
11. Specific Performance. Each Party hereto acknowledges that it will be
impossible to measure in money the damage to the other Party if a Party hereto
fails to comply with any of the obligations imposed by this Agreement, that
every such obligation is material and that, in the event of any such failure,
the other Party will not have an adequate remedy at law or damages. Accordingly,
each Party hereto agrees that injunctive relief or other equitable remedy, in
addition to remedies at law or damages, is the

--------------------------------------------------------------------------------

appropriate remedy for any such failure and will not oppose the seeking of such
relief on the basis that the other Party has an adequate remedy at law. Each
Party hereto agrees that it will not seek, and agrees to waive any requirement
for, the securing or posting of a bond in connection with the other Party’s
seeking or obtaining such equitable relief.
12. Assignment. No Party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
Party hereto, except that the Company may assign, in its sole discretion, all or
any of its rights, interests and obligations hereunder to any of its
“affiliates” (as defined in Rule 144) or to any party that acquires all of
substantially all of the assets of the Company (whether by merger, sale of
stock, sale of assets or otherwise). Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective permitted successors and assigns. Any
assignment contrary to the provisions of this Section 12 shall be null and void.
13. 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:
Workhorse Group Inc.
100 Commerce Drive
Loveland, Ohio 45140
Telephone: (513) 360-4704
Facsimile: ([ • ]) [ • ]-[ • ]
Attention: [ • ]
E-mail: [ • ]

With a copy (for informational purposes only) to:
Fleming PLLC
           100 Commerce Drive
           30 Wall Street, 8th Floor
New York, New York 10005
           Telephone: (516) 833-5034
Attention: Stephen M. Fleming
Email: smf@flemingpllc.com

If to the Stockholder, to the address, email address, or facsimile number set
forth for the Stockholder on the signature pages hereof.

--------------------------------------------------------------------------------

14. Miscellaneous. The provisions of Sections 9(a), (b), (c), (d), (e), (g),
(h), (l), (n), (o) and (p) of the Purchase Agreement shall apply to this
Agreement, mutatis mutandis.
[Remainder of Page Intentionally Left Blank]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Agreement as of the date first written above.

WORKHORSE GROUP INC.

By:  
Name:
Title:

[STOCKHOLDER]

By:  
Name:
Number of Shares of Company Common Stock Beneficially Owned as of the date of
this Agreement:
Number of Options Beneficially Owned as of the date of this Agreement:
Street Address:
City/State/Zip Code:
Fax:
Email:

--------------------------------------------------------------------------------

PERFECTION CERTIFICATE
Reference is hereby made to that certain Security Agreement dated as of [ • ],
2019 (the “Security Agreement”), by and among Workhouse Group Inc., a Nevada
corporation (the “Issuer”) and HT INVESTMENTS MA, LLC, a Delaware limited
liability company, as the collateral agent (the “Collateral Agent”). Capitalized
terms used but not defined herein have the meanings assigned in the Security
Agreement.
As used herein, the term “Companies” means the Issuer and each of its
subsidiaries.
The undersigned hereby certify to the Collateral Agent as follows:
1.Names.
(a) The exact legal name of each Company, as such name appears in its respective
certificate of incorporation or any other organizational document, is set forth
in Schedule 1(a). Each Company is (i) the type of entity disclosed next to its
name in Schedule 1(a) and (ii) a registered organization except to the extent
disclosed in Schedule 1(a). Also set forth in Schedule 1(a) is the
organizational identification number, if any, of each Company that is a
registered organization, the Federal Taxpayer Identification Number or other
taxpayer identification number of each Company and the jurisdiction of formation
of each Company.
(b) Set forth in Schedule 1(b) hereto is a list of any other corporate or
organizational names of each Company (or any other business or organization to
which each Company became the successor by merger, consolidation, acquisition,
change in form, nature or jurisdiction of organization or otherwise) has had in
the past five years, together with the date of the relevant change.
(c) Set forth in Schedule 1(c) is a list of all other names used by each Company
on any filings with the Internal Revenue Service (or any other revenue service
of any other applicable jurisdiction) at any time within the five years
preceding the date hereof. Except as set forth in Schedule 1(c), no Company has
changed its jurisdiction of organization at any time during the past four
months.
2. Current Locations. The chief executive office of each Company is located at
the address set forth in Schedule 2 hereto.
3. Extraordinary Transactions. Except for those purchases, acquisitions and
other transactions described in Schedule 3 attached hereto, all of the property
of the Issuer within the past five (5) years has been originated by the Issuer
in the ordinary course of business or consists of goods which have been acquired
by the Issuer in the ordinary course of business from a person in the business
of selling goods of that kind.
4. Schedule of Filings. Attached hereto as Schedule 4 is a schedule of (i) the
appropriate filing offices for the filing of financing statements or other
filings necessary to perfect the Collateral Agent’s security interest in all
property of the Issuer (other than any property described in clauses (ii) and
(iii)), (ii) the appropriate filing offices for the filings necessary to perfect
the Collateral Agent’s security interest in intellectual property described in
Section 8, (iii) the appropriate filing offices for the mortgages and fixture
filings relating to the real property described in Section 5, and (iv) any other
actions required to create, preserve, protect and perfect the security interests
in the Collateral granted to the Collateral Agent pursuant to the Security
Agreement or the other Security Documents. No other filings or actions

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are required to create, preserve, protect and perfect the security interests in
the Collateral granted to the Collateral Agent pursuant to the Security
Agreement or the other Security Documents.
5. Real Property. (a) Attached hereto as Schedule 5(a) is a list of all (i) real
property owned, leased or otherwise held by the Issuer as of the Closing Date,
(ii) common names, addresses and uses of each such real property (stating
improvements located thereon) and (iii) other information relating thereto
required by such Schedule. Except as described in Schedule 5(b) attached hereto:
(i) the Issuer has not entered into any leases, subleases, tenancies, franchise
agreements, licenses or other occupancy arrangements as owner, lessor,
sublessor, licensor, franchisor or grantor with respect to any of the real
property described in Schedule 5(a) and (ii) the Issuer has no leases of real
property which require the consent of the landlord, tenant or other party
thereto to the transactions described in the Security Agreement.
6. Stock Ownership and Other Equity Interests. Attached hereto as Schedule 6(a)
is a true and correct list of each of all of the authorized, and the issued and
outstanding, stock, partnership interests, limited liability company membership
interests or other equity interest of the Issuer and its Subsidiaries, the
record and beneficial owners of such stock, partnership interests, membership
interests or other equity interests, and the percentage of the total amount of
equity interests owned. Also set forth in Schedule 6(b) is each equity
investment of the Issuer that represents 50% or less of the equity of the entity
in which such investment was made setting forth the percentage of such equity
interests owned.
7. Instruments and Tangible Chattel Paper. Attached hereto as Schedule 7 is a
true and correct list of all promissory notes, instruments (other than checks to
be deposited in the ordinary course of business), tangible chattel paper,
electronic chattel paper and other evidence of indebtedness held by the Issuer
as of the date hereof, including all intercompany notes between or among the
Issuer and any of its subsidiaries.
8. Intellectual Property. (a) Attached hereto as Schedule 8(a) is a schedule
setting forth all of the Issuer’s Patents and Trademarks (each as defined in the
Security Agreement) applied for or registered with the United States Patent and
Trademark Office, and all other Patents and Trademarks (each as defined in the
Security Agreement), including the name of the registered owner or applicant,
the registration, application, or publication number, and jurisdiction of
registration, as applicable, of each Patent or Trademark owned by the Issuer.
(b) Attached hereto as Schedule 8(b) is a schedule setting forth all of the
Issuer’s Copyrights (as defined in the Security Agreement) in the United States
of America, and all other Copyrights, including the name of the registered
owner, the registration number and jurisdiction of registration, as applicable,
of each Copyright owned by the Issuer.
(c) Attached hereto as Schedule 8(c) is a schedule setting forth all Patent
Licenses, Trademark Licenses and Copyright Licenses, including, but not limited
to, the relevant signatory parties to each license along with the date of
execution thereof and, if applicable, a recordation number or other such
evidence of recordation.
9. Deposit Accounts, Securities Accounts and Commodity Accounts. Attached hereto
as Schedule 9 is a true and complete list of all deposit accounts, securities
accounts and commodity accounts maintained by the Issuer, including the name of
each institution where each such account is held, the name of each such account
and the name of each entity that holds each account.

--------------------------------------------------------------------------------

10. Insurance. Attached hereto as Schedule 10 is a true and correct list of all
insurance policies of the Issuer.
11. Other Collateral. Attached hereto as Schedule 11 is a true and correct list
of all of the following types of collateral, if any, owned or held by the
Issuer: (a) all agreements and contracts with any governmental authority, (b)
all aircraft and airplanes, and (c) all ships and boats vessels, stating in each
case, if such types of collateral are required to be pledged pursuant to the
Security Agreement.
[The Remainder of this Page has been intentionally left blank]

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IN WITNESS WHEREOF, we have hereunto signed this Perfection Certificate as of
this [ • ] day of [ • ], 2019.
WORKHORSE GROUP INC.
By:   
Name: 
Title: 

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Schedule 1(a)
Legal Names, Etc.
Legal Name
Type of Entity
Registered Organization
(Yes/No)
Organizational Number
Federal Taxpayer
Identification Number
State and/or Country of Formation
Workhorse Group Inc.
Corporation
Yes
E0780542007-8
26-1394771
Nevada
Workhorse Technologies Inc.
CorporationYes
1679236
20-8529895
Ohio
Workhorse Motor Works Inc
CorporationYes
2013011400560
38-3900022
Indiana
Workhorse Properties Inc.
CorporationYes
3943690
32-0553760
Ohio
Surefly, Inc.
CorporationYes
6675215
35-2615741
Delaware

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Schedule 1(b)
Prior Organizational Names
Company/Subsidiary
Prior Name
Date of Change
Workhorse Group Inc.AMP Holding Inc.4/10/15Workhorse Technologies Inc.AMP
Electric Vehicles Inc.2/12/16Workhouse Motor Works Inc.AMP Trucks,
Inc.2/2/16Workhorse Properties Inc.n/an/aSurefly, Inc.n/an/a

--------------------------------------------------------------------------------

Schedule 1(c)
Other Names on Revenue Service Filings; Changes in Jurisdiction
Company/Subsidiary
List of All Other Names Used on Any Filings with any Revenue Service During Past
Five Years
Prior Jurisdiction of Organization
Workhorse Group Inc.AMP Holding Inc.
n/a
Workhouse Motor Works Inc.AMP Trucks, Inc.
n/a

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Schedule 2
Chief Executive Offices
Company/Subsidiary
Address
County
State/Country
Workhorse Group Inc.100 Commerce Drive, LovelandHamiltonOhio/USAWorkhorse
Technologies Inc.100 Commerce Drive, LovelandHamiltonOhio/USAWorkhouse Motor
Works Inc.940 S. State Road 32, Union City
RandolphIndiana/USAWorkhorse Properties Inc.100 Commerce Drive,
LovelandHamiltonOhio/USASurefly, Inc.100 Commerce Drive,
LovelandHamiltonOhio/USA

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Schedule 3
Extraordinary Transactions
Company/Subsidiary
Description of Transaction Including Parties Thereto
Seller’s/Predecessor’s State of Formation
Date of Transaction
Workhorse Group Inc.
Merger of a wholly owned subsidiary, Workhorse Group Inc., into AMP Holding Inc.
resulting in AMP Holding Inc. changing its name to Workhorse Group Inc.
Nevada
4/10/15

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Schedule 4
Filings/Filing Offices
Type of Filing
Entity
Applicable Collateral Document
[Mortgage, Security Agreement or Other]
Jurisdictions
UCC-1
Workhorse Group Inc.
Security Agreement
Nevada
UCC-1 Fixture Filing
Workhorse Group Inc.
Security Agreement
Hamilton County, Ohio
Randolph County, Indiana
Mortgage & Fixture Filing
Workhorse Properties Inc.
Mortgage
Hamilton County, Ohio

Mortgage & Fixture Filing
Workhorse Motor Works Inc
Mortgage
Randolph County, Indiana

Trademark and Patent Assignment
Workhorse Group Inc.
Other
United States Patent and Trademark Office

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Schedule 5(a)

Real Property
I. Owned Real Property

Entity of Record
Common Name, Address and Tax Parcel ID No(s)
Purpose/Use
Improvements Located on Real Property (including number of “Buildings” and/or
“Mobile Homes”
Approximate Square Footage
Legal Description (if Encumbered by Mortgage and/or Fixture Filing)
To be Encumbered by Mortgage and Fixture Filing
Option to Purchase/Right of First Refusal
None

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II. Leased or Other Interests in Real Property

Entity of Record
Common Name, Address and Tax Parcel ID No(s)
Landlord / Owner
Description of Lease or Other Documents Evidencing Interest
Purpose/Use
Improvements Located on Real Property (including number of “Buildings” and/or
“Mobile Homes”
Approximate Square Footage
Legal Description (if Encumbered by Mortgage and/or Fixture Filing)
To be Encumbered by Mortgage and Fixture Filing
Option to Purchase/ Right of First Refusal
Workhorse Group Inc.
119 Northeast Drive, Loveland, OH 45140 (Hamilton County)
621-0016-0019-00

Gold Metal Products
6-month lease for office space
Office space
Building
5,810
N/A
NO
NO
Workhorse Group Inc.Hangar 7,
Lunken Airport, Cincinnati, OH 45226 (Hamilton County)
Signature Engines, Inc.
Month to month for $500 per month
Parts and supplies storage
Building
Amount of space to store 1 personal aircraft
N/A
NO
NO
Workhorse Group Inc.
100 Commerce Drive, Loveland, OH 45140 (Hamilton County)

Tax Parcel ID No: 621-0017-003-00
Workhorse Properties Inc.
Administration, research and development, light manufacturing
One building
45,000
See Schedule A to Mortgage
YES
NO
Workhorse Group Inc.
940 S. State Road 32, Union City, IN 47390 (Randolph County)
Tax Parcel ID No: 010-00764-03
Workhorse Motor Works Inc.
Manufacturing
Three main building structures
250,000
See Schedule A to Mortgage
YES
NO

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Schedule 5(b)

Required Consents; Company Held Landlord’s/ Grantor’s Interests

I. Landlord’s / Grantor’s Consent Required
1. None.
II. Leases, Subleases, Tenancies, Franchise Agreements, Licenses or Other
Occupancy Agreements Pursuant to which any Company holds Landlord’s / Grantor’s
Interest
1. Workhorse Group Inc. will have a sublease in place with Moog Inc. after the
closing of the Asset
Purchase Agreement among Surefly Inc., the Issuer, and Moog Inc. and Joint
Venture between the Issuer and Moog Inc.

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Schedule 6
(a) Equity Interests of Issuer and Subsidiaries
Current Legal Entities Owned
Record Owner
Certificate No.
No. Shares/Interest
Percent Owned
Workhorse Technologies Inc.Workhorse Group Inc.WT-0011,000100%  Workhorse Motor
Works Inc.Workhorse Group Inc.WMW-001200100%  Workhorse Properties Inc.Workhorse
Group Inc.WP-0011,000100%  Surefly, Inc.Workhorse Technologies
Inc.C0011,000100%  

(b) Other Equity Interests

Current Legal Entities Owned
Record Owner
Certificate No.
No. Shares/Interest
Percent Owned
Certus Unmanned Aerial Systems LLC
Workhorse Group Inc.
n/a
50,000 units
50%

Note: Workhorse Group Inc. formed Certus Unmanned Aerial Systems LLC. Subject to
the closing of the Asset Purchase Agreement entered into among Moog Inc.,
Surefly, Inc. and Workhorse Group Inc., Workhorse Group Inc. will have a 50%
uncertificated interest (50,000 units) in Certus Unmanned Aerial Systems LLC.

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Schedule 7
Instruments and Tangible Chattel Paper
1. Promissory Notes:
Payee
Payor
Principal Amount
Date of Issuance
Interest Rate
Maturity Date
Pledged
[Yes/No]
None

2. Chattel Paper:
Description
Pledged
[Yes/No]
None

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Schedule 8(a)
Patents and Trademarks
PATENTS:

Code/Matter No.CountrySerial NumberApplication DatePatent NumberIssue/ Grant
DateExpiration
DateTitleAssigneeAMPICanada252365310/17/2005252365312/22/200910/17/2025VEHICLE
CHASSIS ASSEMBLYWorkhorse Motor Works IncAMPIUnited
States11/252,22010/17/20057,717,46405/18/201009/06/2026Vehicle Chassis
AssemblyWorkhorse Motor Works IncAMPIUnited
States11/252,21910/17/20057,559,57807/14/200909/06/2026Vehicle Chassis
AssemblyWorkhorse Motor Works IncAMPIUnited
States29/243,07411/18/2005D561,07802/05/200802/05/2022Vehicle HeaderWorkhorse
Custom Chassis, LLCAMPIUnited
States29/243,12911/18/2005D561,07902/05/200802/05/2022Vehicle HeaderWorkhorse
Custom Chassis, LLCAMPI 10USUnited
States13/283,66310/28/20118,541,91509/24/201312/16/2031DRIVE MODULE AND MANIFOLD
FOR ELECTRIC MOTOR DRIVE ASSEMBLYWorkhorse Technologies Inc.AMPI 23UUnited
States14/606,49701/27/20159,481,25611/01/201605/03/2035ONBOARD GENERATOR DRIVE
SYSTEM FOR ELECTRIC VEHICLESWorkhorse Technologies Inc.AMPI 24AUnited
States15/915,14403/08/2018Abandoned for Failure to Respond to Office Action on
June 17, 2019Taft can attempt to revive. Proposed Revival Approach to R.
WillisonPACKAGE DELIVERY BY MEANS OF AN AUTOMATED MULTI-COPTER UAS/UAV
DISPATCHED FROM A CONVENTIONAL DELIVERY VEHICLEWorkhorse Group Inc.AMPI
24UUnited States14/989,87001/07/20169,915,95603/13/201806/24/2036PACKAGE
DELIVERY BY MEANS OF AN AUTOMATED MULTI-COPTER UAS/UAV DISPATCHED FROM A
CONVENTIONAL DELIVERY VEHICLEWorkhorse Group Inc.

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TRADEMARKS:
Code/Matter No.
Mark Name
Country
Current Owner
Application Number
Application Date
Registration Number
Registration Date
Classes
Goods
AMPI01
NOTHING OUTWORKS A WORKHORSE
Canada
AMP Trucks Inc.
1,053,053
03/30/2000
601,870
02/11/2004
12, .28
Chassis, bodies and parts thereof for delivery trucks, recreational land
vehicles, buses and other specialty motorized vehicles, namely, auto transport
trucks, concrete mixer trucks, dump trucks, garbage hauler trucks, oil-field
trucks, stake and platform trucks, tank trucks, wrecker and tow trucks and
scissors trucks, but specifically excluding utility cars for turf maintenance
for use at golf courses, country clubs, municipalities, building complexes and
large scale industrial complexes
AMPI01
WORKHORSE CUSTOM CHASSIS
Canada
AMP Trucks Inc.
1,053,052
03/30/2000
601,775
02/10/2004
12, 28
Chassis, bodies and parts thereof for delivery trucks, recreational land
vehicles, buses and other specialty motorized vehicles, namely, auto transport
trucks, concrete mixer trucks, dump trucks, garbage hauler trucks, oil-field
trucks, stake and platform trucks, tank trucks, wrecker and tow trucks and
scissors trucks, but specifically excluding utility cars for turf maintenance
for use at golf courses, country clubs, municipalities, building complexes and
large scale industrial complexes
AMPI01
Workhorse UFO and Logo
Canada
AMP Trucks Inc.
1,328,215
12/14/2006
757,840
01/26/2010
12
Chassis and bodies for recreational vehicles
AMPI01
WORKHORSE
Canada
AMP Trucks Inc.
1,468,395
02/04/2010
783,257
11/23/2010
12
Chassis, bodies, and parts thereof, for recreational land vehicles, buses and
trucks
AMPI01
WORKHORSE
Mexico
Workhorse Custom Chassis, LLC
1068329
02/18/2010
1200569
02/10/2011
12
AMPI01
WORKHORSE CUSTOM CHASSIS
Mexico
Workhorse Custom Chassis, LLC
419462
04/05/2000
685022
01/31/2001
12
AMPI01
NOTHING OUTWORKS A WORKHORSE
Mexico
Workhorse Custom Chassis, LLC
419463
04/05/2000
685023
01/31/2001
12
AMPI01
WORKHORSE CUSTOM CHASSIS
United States
AMP Trucks Inc.
75/816,152
10/05/1999
2,413,878
12/19/2000
12
Chassis, bodies, and parts thereof, for recreational land vehicles, buses [ and
specialized trucks, namely, auto transport trucks, concrete mixer trucks, dump
trucks, garbage hauler trucks, oil-field trucks, stake and platform trucks, tank
trucks, wrecker and tow trucks and scissors trucks ]
AMPI15IS

AMP
Iceland
AMP Electric Vehicles Inc.
1295/2011
05/052011
557/2011
5/1/2011
12
Electric drives for vehicles; Electric vehicles, namely, land vehicles

AMPI25
WORKHORSE
United States
AMP Trucks Inc.
78/571,788
2/21/2005
3,214,777
03/06/2007
12
Chassis, bodies, and parts thereof, for recreational land vehicles, buses and
trucks

AMPI28
HORSEFLY
United States
Workhorse Group Inc.
87/770,725
01/25/2018
12
Package delivery systems consisting primarily of civilian
drones

AMPI28CA
HORSEFLY
Canada
Workhorse Group Inc.
1909131
07/12/2018
12
Package delivery systems consisting primarily of civilian drones

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AMPI 28CN
HORSEFLY
China P.R.
Workhorse Group Inc.
32402121
7/23/2018
12
Package delivery systems consisting primarily of civilian drones

AMPI 28EM
HORSEFLY
European Union
Workhorse Group Inc.
17930054
07/13/2018
11/27/2018
12, 39
Package delivery systems consisting primarily of civilian drones; drones;
Vehicle leasing services; leasing of land vehicles (delivery trucks); leasing of
drones

AMPI 28MX
HORSEFLY
Mexico
Workhorse Group Inc.
2075312
7/16/2018
1983272
3/26/2019
12
Package delivery systems consisting primarily of civilian drones

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Schedule 8(b)
Copyrights
None.

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Schedule 8(c)
Intellectual Property Licenses
Intellectual Property License Agreement between the Issuer and Lordstown Motors
Corp. dated November 7, 2019
2) The following software licenses:

ManufacturerProductTotal # of SeatsMicrosoftWindows Server User Cals85Server
20169Project Online Pro5Office 365 Business7Office 365 Business Premium26Visio
Plan 22Windows 10 Pro100SQL Server 20142Business Central(NAV)MerakiMX84-3Yr
Firewall1MX64-3Yr Firewall2LuxionKeyShot1AdobeCreativeCloud1AltaroVM
Backup9TechsmithSnagit1WebrootSecureAnywhere100DessaultSolidworks
Premium9Solidworks Standard11Solidworks Electrical Schematic 2D8Solidworks
Electrical 3D6Solidworks Flow Simulation1Solidworks Simulation2Solidworks PDM
Pro CAD Editor14Solidworks PDM Pro Viewer 5 Pack1Solidworks Composer 20192

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Schedule 9

Account Name

Account Number

Account
Description

Financial
Institution
Financial
Institution
Address

Corporate Business Account40-0712-9788Checking AccountPNC Bank9180 Union
Cemetery Rd. Cincinnati, OH 45249Corporate Business Account42-4047-6014Debit
Card AccountPNC Bank9180 Union Cemetery Rd. Cincinnati, OH 45249Premium Business
Money Market41-0284-5707Sweep AccountPNC Bank9180 Union Cemetery Rd. Cincinnati,
OH 45249Corporate Business Account41-3018-9639Blocked AccountPNC Bank9180 Union
Cemetery Rd. Cincinnati, OH 45249Premium Business Money Market41-3019-0699Money
MarketPNC Bank9180 Union Cemetery Rd. Cincinnati, OH 45249

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Schedule 10
Insurance

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Schedule 11
Other Collateral
(a) Agreements and Contracts with Governmental Authorities
Description
None

(b) Aircraft and Airplanes
Description
Pledged
[Yes/No]
None

(c) Ships, Boats and Vessels
Description
Pledged
[Yes/No]
None