Exhibit 4.2


 





THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER SUCH ACT AND QUALIFICATION
UNDER APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE MAKER THAT SUCH REGISTRATION AND QUALIFICATION
IS NOT REQUIRED.


 


THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF THAT CERTAIN SECURITIES PURCHASE AGREEMENT BETWEEN THE MAKER AND THE SECURITY HOLDER DATED OCTOBER
12, 2015, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE MAKER.


 





WORKHORSE GROUP INC.


 


CONVERTIBLE PROMISSORY NOTE


 


	$______________ 	November 6, 2015


 


FOR VALUE RECEIVED, Workhorse Group Inc.
(the “Maker”) hereby promises to pay to the order of __________________ or his, her or its successors or assigns (the
“Holder”) the principal amount of __________________ Dollars ($________) (the “Principal Amount”).  This
Convertible Promissory Note shall be referred to herein as the “Note” and referred to collectively with other notes
of the same series as the “Notes”.


 


1.           Purpose.  This
Note is made and delivered by the Maker to the Holder as of the date first written above (the “Original Issue Date”)
pursuant to the terms of that certain Securities Purchase Agreement, dated as of October 12, 2015, by and among the Maker and the
Holder (the “Purchase Agreement”).  This Note is one of a series of substantially identical Notes issued
by the Maker under the Purchase Agreement.  All capitalized terms used and not defined herein shall have the meanings
ascribed to them in the Purchase Agreement.


 


2.           Interest.  Simple
interest on the Principal Amount from time-to-time remaining unpaid shall accrue from the date of this Note at the rate of six
percent (6%) per annum.  Interest shall be computed on the basis of a 360 day year and a 30 day month. Interest shall
be paid, at the Maker’s option, in cash, or in shares of Maker’s Common Stock or in a mix of both, as further specified
herein.


 


3.           Maturity
Date.  All amounts, including principal and interest, payable hereunder shall be due and payable on the earliest
to occur of (i) November 6, 2017 (the “Calendar Due Date”), (ii)) the listing (the “Listing”) of the Maker’s
Common Stock on The Nasdaq Stock Market or NYSE MKT (each, a “National Exchange”), or (iii) a Change of Control (as
defined below). Such date shall be referred to herein as the “Maturity Date”.


 


4.           Methods
of Repayment.


 


4.1           Mandatory
Conversion at Maturity.  On the Maturity Date, all amounts payable hereunder (except for interest, which is subject
to payment in accordance with Section 4.3 of this Note) shall be repaid with shares of the Maker’s Common Stock in accordance
with the terms of Section 5.1 of this Note.


 


4.2           Optional
Conversion prior to Maturity.  Prior to the Maturity Date, all or a portion of the principal payable hereunder, along
with a proportional amount of all other amounts then payable under the Note (except for interest, which is subject to payment in
accordance with Section 4.3 of this Note), may from time to time be repaid with shares of the Maker’s Common Stock in accordance
with the terms of Section 5.2 of this Note. Each date of such an optional conversion shall be referred to herein as an “Optional
Conversion Date”.


 



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4.3 Method of Interest Payment.
Interest payable hereunder shall be paid on the earlier of the Maturity Date or the Optional Conversion Date of the outstanding
principal amount of the Note as to which such interest has accrued. Such payment may be made in cash, in shares of the Maker's
Common Stock, or in a mixture of both, at the election of the Maker. If the Maker elects to pay any portion of the interest in
shares, such shares will be converted in accordance with Section 5.3 of this Note.


 


4.4           
No Prepayment Right.  All amounts payable hereunder shall be repaid on the Maturity Date or on one or more Optional
Conversion Dates.


 


5.           Conversion
of Note.  The following provisions shall govern the conversion into shares of Common Stock of any and all amounts
due under this Note.


 


5.1Mandatory Conversion at Maturity.  On
the Maturity Date, all amounts payable hereunder (except for interest, which shall be paid in accordance with Section 5.3 of this
Note) shall be paid in shares of the Maker’s Common Stock at a conversion price (the “Mandatory Principal Conversion
Price”) equal to the lowest of: (i) $0.35 (the “Closing Price”), (ii) the Listing Price (as defined below), (iii)
the Public Offering Price (as defined below), (iv) the Private Offering Price (as defined below), or (v) the Change of Control
Price (as defined below).  The “Listing Price” means the lower of the opening and closing National Exchange
prices (as appropriately adjusted to reflect stock dividends, stock splits, combinations, recapitalizations and the like with respect
to the Maker’s capital stock after the date hereof) on such day that the Maker’s Common Stock is first traded on a
National Exchange. The “Public Offering Price” means the price per share (as appropriately adjusted to reflect stock
dividends, stock splits, combinations, recapitalizations and the like with respect to the Maker’s capital stock after the
date hereof) paid by public investors in an underwritten public offering conducted in connection with the Listing, without regard
to any underwriting discount or other offering expense. The “Private Offering Price” means the means the lowest price
per share (as appropriately adjusted to reflect stock dividends, stock splits, combinations, recapitalizations and the like with
respect to the Maker’s capital stock after the date hereof) paid by investors in any private equity, equity-linked or debt
financing (other than the Offering) conducted after the date hereof prior to the Listing, without regard to any broker’s
fee or other offering expense. The “Change of Control Price” means the per-share consideration (as appropriately adjusted
to reflect stock dividends, stock splits, combinations, recapitalizations and the like with respect to the Maker’s capital
stock after the date hereof) paid in the Change of Control.


 


5.2Optional Conversion prior to
Maturity.  On each Optional Conversion Date, if any, all principal to be repaid on such date, along with a proportional
amount of all other amounts then payable under the Note (except for interest, which shall be paid in accordance with Section 5.3
of this Note) shall be paid in shares of the Maker’s Common Stock at a conversion price (the “Optional Principal Conversion
Price”) equal to the Closing Price.


 


5.3Conversion of Interest. On
the Maturity Date and on each Optional Conversion Date, if any, the portion of the interest then payable hereunder that the Maker
elects to pay in shares, if any, shall be paid in shares of the Maker’s Common Stock at a conversion price (the “Interest
Conversion Price”) equal to the closing public market price (as appropriately adjusted to reflect stock dividends, stock
splits, combinations, recapitalizations and the like with respect to the Maker’s capital stock after the date hereof) of
the Maker’s Common Stock on the Trading Day immediately prior to the date of Maturity or such Optional Conversion Date, as
applicable.


 


5.4           Conversion
Rate.  The number of shares of Common Stock issuable upon conversion pursuant to Sections 5.1, 5.2 or 5.3 shall be
determined by dividing (x) the Principal Amount (plus other amounts payable) and the amount accrued interest, as the case may be,
to be paid (the “Conversion Amount”) by (y) the Mandatory Principal Conversion Price, the Optional Principal Conversion
Price or the Interest Conversion Price, as applicable.


 


5.5           No
Fractional Shares.  The Maker shall not issue any fraction of a share of Common Stock upon any conversion.  If
the issuance would result in the issuance of a fraction of a share of Common Stock, the Maker shall round up such fraction of a
share of Common Stock to the nearest whole share.  The Maker shall pay any and all transfer, stamp and similar taxes
that may be payable with respect to the issuance and delivery of Common Stock upon conversion.


 



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5.6           Mechanics
of Conversion. Within 20 days of the Maturity Date and each Optional
Conversion Date, if any, the Maker shall transmit to the Holder the number of shares of Common Stock representing full repayment
of the Conversion Amount being made on such date, and cash to the extent interest due on such date is being paid in cash, together
with an explanation of the calculation of the share and cash amounts being transmitted.  Upon receipt of such items,
the Holder shall surrender this Note to a common carrier for delivery to the Maker as soon as practicable on or following such
date (and shall execute an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction).  The
person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on the Maturity Date or Optional Conversion Date, as applicable.


 


5.7           Reservation
of Common Stock. Until the Notes are paid in full, the Maker shall at all times keep reserved for issuance under this Note
such number of shares of Common Stock as shall be necessary to satisfy the Maker’s obligation to issue shares of Common Stock
hereunder assuming all amounts payable under this Note shall be paid in shares of Common Stock (without regard to any limitation
otherwise contained herein with respect to the number of shares of Common Stock that may be acquirable upon exercise of this Note).  If,
notwithstanding the foregoing, and not in limitation thereof, at any time any of the Notes remain outstanding, the Maker does not
have a sufficient number of authorized and unreserved shares of Common Stock (the “Required Reserve Amount”) to satisfy
its obligation set forth in this Section 5.7 (such failure, an “Authorized Share Failure”), then the Maker shall immediately
take all action necessary to increase the Maker’s authorized shares of Common Stock to an amount sufficient to allow the
Maker to maintain the Required Reserve Amount for all the Notes 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 60 days after the occurrence of such Authorized Share Failure, the Maker shall, to the extent necessary or advisable
in order to cure sure Authorized Share Failure, hold a meeting of its shareholders for the approval of an increase in the number
of authorized shares of Common Stock, in connection with such meeting, provide each shareholder with a proxy statement, and use
its best efforts to solicit its shareholders’ approval of such increase in authorized shares of Common Stock and to cause
its board of directors to recommend to the shareholders that they approve such increase.


 


5.8Adjustments.  The
applicable Conversion Price and number and kind of shares or other securities to be issued upon conversion determined pursuant
to Section 5 hereof, shall be subject to adjustment from time to time upon the happening of certain events while the Maker’s
conversion obligations remain outstanding, as follows:


 


5.8.1           Merger,
Sale of Assets, etc.  If the Maker at any time shall consolidate with or merge into or sell or convey all or substantially
all of its assets to any other entity, this Note, as to the unpaid Principal Amount thereof and other payments and interest accrued
thereon, shall thereafter be deemed to evidence the right to purchase such number and kind of shares or other securities and property
as would have been issuable or distributable on account of such consolidation, merger, sale or conveyance, upon or with respect
to the securities subject to the conversion or purchase right immediately prior to such consolidation, merger, sale or conveyance.  The
foregoing provision shall similarly apply to successive transactions of a similar nature by any such successor or purchaser.  Without
limiting the generality of the foregoing, the anti-dilution provisions of this Section 5.8 shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.


 


5.8.2           Reclassification,
etc.  If the Maker at any time shall, by reclassification or otherwise, change the Common Stock into the same or
a different number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid Principal
Amount thereof and other payments and interest accrued thereon, shall thereafter be deemed to evidence the right to purchase an
adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect
to the Common Stock immediately prior to such reclassification or other change.


 



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5.8.3           Notice
of Adjustment.  Whenever the applicable Conversion Price is adjusted pursuant to this Section 5.8, the Maker shall
promptly mail to the Holder a notice setting forth the applicable Conversion Price after such adjustment and setting forth a statement
of the facts requiring such adjustment.


 


6.           Registration;
Book-Entry. The Maker shall maintain a register (the “Register”) for the recordation of the names and addresses
of the holders of each Note and the Principal Amount of the Notes held by such holders (the “Registered Notes”).  The
entries in the Register shall be conclusive and binding for all purposes absent manifest error, and to that extent the Maker and
the holders of the Notes shall treat each person whose name is recorded in the Register as the owner of a Note for all purposes,
including, without limitation, the right to receive payments of the Principal Amount and interest, if any, hereunder, notwithstanding
notice to the contrary.  A Registered Note may be assigned or sold in whole or in part only in accordance with the terms
of Section 11.3 of this Note and by registration of such assignment or sale on the Register.


 


7.           Defaults;
Remedies.


 


7.1           Events
of Default.  The occurrence of any one or more of the following events shall constitute an event of default hereunder
(each, an “Event of Default”):


 


7.1.1           The
Maker fails to make any payment when due under this Note;


 


7.1.2           The
Maker fails to observe and perform any of its covenants or agreements on its part to be observed or performed under the Purchase
Agreement or any other Transaction Document, and such failure shall continue for more than 30 days after notice of such failure
has been delivered to the Maker;


 


7.1.3           Any
representation or warranty made by the Maker in the Purchase Agreement or any other Transaction Document is untrue as of the date
of such representation or warranty except, in the case of a breach of a representation or warranty which is curable, only if such
breach continues for a period of at least 20 consecutive Business Days;


 


7.1.4           The
Maker admits in writing its inability to pay its debts generally as they become due, files a petition in bankruptcy or a petition
to take advantage of any insolvency act, makes an assignment for the benefit of its creditors, or consents to the appointment of
a receiver of itself or of the whole or any substantial part of its property, or has a petition filed against it be adjudicated
a bankrupt, or files a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any State thereof;


 


7.1.5           A
court of competent jurisdiction enters an order, judgment, or decree appointing, without the consent of the Maker, a receiver of
the Maker or of the whole or any substantial part of its property, or approving a petition filed against the Maker seeking reorganization
or arrangement of the Maker under the federal bankruptcy laws or any other applicable law or statute of the United States of America
or any State thereof, and such order, judgment, or decree shall not be vacated or set aside or stayed within 60 days from the date
of entry thereof;


 


7.1.6           Any
court of competent jurisdiction assumes custody or control of the Maker or of the whole or any substantial part of its property
under the provisions of any other law for the relief or aid of debtors, and such custody or control is not be terminated or stayed
within 60 days from the date of assumption of such custody or control;


 


7.1.7.          This
Note ceases to be, or is asserted by the Maker not to be, a legal, valid and binding obligation of the Maker enforceable in accordance
with its terms;


 


7.1.8           A
judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Maker which judgments
are not, within 60 days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days
after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a creditworthy
party shall not be included in calculating the $250,000 amount set forth above so long as the Maker certifies that it has not received
a written statement from such insurer or indemnity provider denying such coverage (which written statement shall be reasonably
satisfactory to the Holder) and if the Maker will receive the proceeds of such insurance or indemnity within 30 days of the issuance
of such judgment;


 



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7.1.10         A
default by the Maker occurs under one or more obligations in an aggregate monetary amount in excess of $250,000 for more than 30
days after the applicable due dates, unless the Maker is contesting the validity of each such obligation in good faith and has
segregated cash funds equal to not less than one-half of the disputed amount;


 


7.1.11The Maker fails to deliver
the shares of Common Stock to the Holder pursuant to and in the form required by this Note or, if required, a replacement Note,
more than five Business Days after the required delivery date of such Common Stock or replacement Note;


 


7.1.12The Maker fails to have reserved
for issuance upon conversion of this Note the amount of Common Stock set forth in this Note; or


 


7.1.9           Any
such Event of Default occurs with respect to any of the other Notes.


 


7.2           Notice
by the Maker.  The Maker shall notify the Holder in writing as soon as reasonably practicable but in no event more
5 Business Days after the occurrence of any Event of Default of which the Maker acquires knowledge.


 


7.3           Remedies.  Upon
the occurrence of any Event of Default, all sums due and payable to the Holder under this Note shall, at the option of the Holder,
become due and payable immediately without presentment, demand, notice of nonpayment, protest, notice of protest, or other notice
of dishonor, all of which are hereby expressly waived by the Maker.  Any payment under this Note (i) not paid within
10 days following the Calendar Due Date or (ii) due immediately following acceleration by the Holder shall bear interest at the
rate of 15% from such Calendar Due Date or acceleration, as applicable, until paid, subject to Section 7.5.  To the extent
permitted by law, the Maker waives any right to and stay of execution and the benefit of all exemption laws now or hereafter in
effect.  In addition to the foregoing, upon the occurrence of any Event of Default, the Holder may forthwith exercise
singly, concurrently, successively, or otherwise any and all rights and remedies available to the Holder at law, in equity, or
otherwise.


 


7.4           Remedies
Cumulative, etc.  No right or remedy conferred upon or reserved to the Holder under this Note, or now or hereafter
existing at law or in equity or otherwise, is intended to be exclusive of any other right or remedy, and each and every such right
or remedy shall be cumulative and concurrent, and shall be in addition to every other such right or remedy, and may be pursued
singly, concurrently, successively, or otherwise, at the sole discretion of the Holder, and shall not be exhausted by any one exercise
thereof but may be exercised as often as occasion therefor may occur.  No act of the Holder shall be deemed or construed
as an election to proceed under any one such right or remedy to the exclusion of any other such right or remedy; furthermore, each
such right or remedy of the Holder shall be separate, distinct, and cumulative and none shall be given effect to the exclusion
of any other.


 


7.5           Usury
Compliance.  All agreements between the Maker and the Holder are expressly limited, so that in no event or contingency
whatsoever, whether by reason of the consideration given with respect to this Note, the acceleration of maturity of the unpaid
Principal Amount and interest thereon, or otherwise, shall the amount paid or agreed to be paid to the Holder for the use, forbearance,
or detention of the indebtedness which is the subject of this Note exceed the highest lawful rate permissible under the applicable
usury laws.  If, under any circumstances whatsoever, fulfillment of any provision of this Note shall involve transcending
the highest interest rate permitted by law which a court of competent jurisdiction deems applicable, then the obligations to be
fulfilled shall be reduced to such maximum rate, and if, under any circumstances whatsoever, the Holder shall ever receive as interest
an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to the reduction of
the unpaid Principal Amount under this Note and other amounts (excluding interest) owed in respect of this Note, and not to the
payment of interest, or, if such excessive interest exceeds the unpaid balance of the Principal Amount under this Note and such
other amounts (excluding interest), such excess shall be refunded to the Maker.  This provision shall control every other
provision of all agreements between the Maker and the Holder.


 



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8.           Replacement
of Note.  Upon receipt by the Maker of evidence satisfactory to it of the loss, theft, destruction, or mutilation
of this Note and (in case of loss, theft, or destruction) of indemnity satisfactory to it, and upon surrender and cancellation
of this Note, if mutilated, the Maker will make and deliver a new Note of like tenor in lieu of this Note.


 


9.           Maker’s
Covenants.


 


9.1           Restricted
Payments.  The Maker shall not, and the Maker shall not permit any of its subsidiaries (if any) to, directly or indirectly,
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or
in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any
capital stock or all or any portion of any indebtedness, whether by way of payment in respect of principal of, interest on or premium
or any other amount due in connection with, such indebtedness if at the time such payment is due or is otherwise made or, after
giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute,
an Event of Default has occurred and is continuing.


 


9.2           Valid
Issuance of Securities.  The Maker covenants that the securities issuable upon the conversion of this Note will,
upon conversion of this Note, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect
of the issue thereof.


 


9.3           Timely
Notice.  The Maker shall give the Holder at least 10 days’ advance written notice prior to the closing of a
Change of Control, provided that the Holder agrees to be bound by any applicable confidentiality agreement or agreements the Maker
shall deem necessary or appropriate.


 


10.           Certain
Definitions.


 


10.1           ”Business
Day” means any day that is not a Saturday, Sunday, federal holiday or bank holiday in any jurisdiction in which the Maker
holds a substantial portion of its assets.


 


10.2           ”Change
of Control” means any liquidation, dissolution, or winding up of the Maker, either voluntary or involuntary, and shall
be deemed to be occasioned by, or to include, (i) the acquisition of the Maker by another entity by means of any transaction or
series of related transactions (including, without limitation, any stock acquisition, reorganization, merger or consolidation)
unless the Maker’s shareholders of record as constituted immediately prior to such acquisition or sale will, immediately
after such acquisition or sale (by virtue of securities issued as consideration for the Maker’s acquisition or sale or otherwise)
hold at least a majority of the voting power of the surviving or acquiring entity or its direct or indirect parent entity (except
that any bona fide equity or debt financing transaction for capital raising purposes shall not be deemed a Change of Control for
this purpose) and (ii) a sale, exclusive license or other disposition of all or substantially all of the assets of the Maker, including
a sale, exclusive license or other disposition of all or substantially all of the assets of one or more of the Maker’s subsidiaries,
if such assets constitute substantially all of the assets of the Maker and such subsidiaries taken as a whole.


10.3“Conversion Price”
means either the Principal Conversion Price or Interest Conversion Price, as applicable.


 


10.4
“Trading Day” means a day on which any of the
following markets or exchanges on which the Common Stock is listed or quoted is open for trading: the New York Stock Exchange,
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the OTCQB marketplace or the
OTCQX marketplace (or any successors to any of the foregoing).


 



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11.           Amendments,
Waivers, and Consents.


 


11.1           Amendment
and Waiver by the Holders.  The Notes, including this Note, may be amended, modified, or supplemented, and waivers
or consents to departures from the provisions thereof may be given, if the Maker and the holders of an aggregate majority of the
Principal Amount of the Notes then outstanding consent to the amendment; provided, however, that no term of this Note may be amended
or waived in such a way as to adversely affect the Holder disproportionately to the holder or holders of any other Notes without
the written consent of the Holder and neither the principal balance nor interest rate of this Note may be amended or modified without
the consent of the Holder.  Such consent may not be effected orally, but only by a signed statement in writing.  Any
such amendment or waiver shall apply to and be binding upon the Holder of this Note, upon each future holder of this Note, and
upon the Maker, whether or not this Note shall have been marked to indicate such amendment or waiver.  No such amendment
or waiver shall extend to or affect any obligation not expressly amended or waived or impair any right consequent thereon.


 


11.2            Severability.  In
the event that for any reason one or more of the provisions of this Note or their application to any person or circumstance shall
be held to be invalid, illegal, or unenforceable in any respect or to any extent, such provision shall nevertheless remain valid,
legal, and enforceable in all other respects and to such extent as may be permissible.  In addition, any such invalidity,
illegality, or unenforceability shall not affect any other provisions of this Note, but this Note shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.


 


11.3              Assignment;
Binding Effect.  The Maker may not assign its obligations under this Note without the prior written consent of the
Holder.  Any attempted assignment in violation of this Section 11.3 shall be null and void.  Subject to the
foregoing, this Note inures to the benefit of the Holder and its successors and assigns, and binds the Maker and its successors
and permitted assigns, and the words “Holder” and “Maker” whenever occurring herein shall be deemed and
construed to include such respective successors and assigns.


 


11.4              Notices
Generally.  All notices required to be given to any of the parties hereunder shall be given as set forth in the Purchase
Agreement.


 


11.5              Governing
Law; Jurisdiction; Jury Trial. This Note shall be construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Note 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
Maker 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 Maker 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 it set forth on the signature page hereto 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.  In the event that any provision of this Note is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform to such statute or rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note.  Nothing
contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the
Maker in any other jurisdiction to collect on the Maker’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.  THE MAKER
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 NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.  This Note shall be deemed
an unconditional obligation of Maker for the payment of money and, without limitation to any other remedies of Holder, may be enforced
against Maker by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar rule or statute
in the jurisdiction where enforcement is sought.  For purposes of such rule or statute, any other document or agreement
to which Holder and Maker are parties or which Maker delivered to Holder, which may be convenient or necessary to determine Holder’s
rights hereunder or Maker’s obligations to Holder are deemed a part of this Note, whether or not such other document or agreement
was delivered together herewith or was executed apart from this Note.


 



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11.6                  Section
Headings, Construction.  The headings of paragraphs in this Note are provided for convenience only and will not affect
its construction or interpretation.  All words used in this Note will be construed to be of such gender or number as
the circumstances require.  Unless otherwise expressly provided, the words “hereof” and “hereunder”
and similar references refer to this Note in its entirety and not to any specific section or subsection hereof.


 


11.7Payment of Collection, Enforcement
and Other Costs.  If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce
the provisions of this Note, or (b) there occurs any bankruptcy, reorganization, or receivership of the Maker or other proceedings
affecting the Maker’s creditors’ rights and involving a claim under this Note, then the Maker shall pay the costs incurred
by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or
other proceeding, including, but not limited to, attorneys’ fees and disbursements.


 


11.8                   Delays
or Omissions.  No delay or omission to exercise any right, power, or remedy accruing to the Holder, upon any breach
or default of the Maker under this Note shall impair any such right, power, or remedy of the Holder nor shall it be construed to
be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default therefore or thereafter
occurring.  Any waiver, permit, consent, or approval of any kind or character on the part of the Holder of any breach
or default under this Note or any waiver on the part of the Holder of any provisions or conditions of this Note must be made in
writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under
this Note or by law or otherwise afforded to the Holders, shall be cumulative and not alternative.


 


[SIGNATURE PAGE FOLLOWS]


 



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IN WITNESS WHEREOF, Workhorse Group Inc.
has caused this Convertible Promissory Note to be executed and delivered on the date set forth above on the cover page of this
Note.


 


WORKHORSE GROUP INC.


 


 


 


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Name:

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