Exhibit 10.1


 


SECURITIES PURCHASE AGREEMENT


 


SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of December 26, 2017, by and among (i) Workhorse Group Inc., a Nevada
corporation, with headquarters located at 100 Commerce Drive, Loveland, Ohio 45140 (the “Company”), (ii) Surefly,
Inc., a newly formed indirect Subsidiary (as hereinafter defined) of the Company incorporated in the State of Delaware (“SFI”),
solely with respect to Sections 4(o) and 4(p) hereof and (iii) the investors listed on the Schedule of Buyers attached hereto (individually,
a “Buyer” and collectively, the “Buyers”).


 


WHEREAS:


 


A. The
Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D
(“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the 1933 Act.


 


B. The
Company has authorized a new series of senior secured notes of the Company, in substantially the form attached hereto as Exhibit
A (the “Notes”).


 


C. Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, that aggregate
principal amount of Notes set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers attached hereto (which aggregate
principal amount of Notes for all Buyers shall be $5,750,000).


 


D. The
Notes will rank senior to all future indebtedness of the Company and its Subsidiaries (as defined below), will be guaranteed by
Workhorse Technologies Inc., a Subsidiary (as defined in Section 3(a)) of the Company (“WTI”), and SFI, as evidenced
by a guarantee agreement, in the form attached hereto as Exhibit B (as amended or modified from time to time in accordance
with its terms, the “Guarantee Agreement”), and will be secured by (i) a first priority perfected security interest
(subject to Permitted Liens under and as defined in the Notes) in all assets of SFI, as evidenced by a pledge and security agreement,
substantially in the form attached hereto as Exhibit C, (as amended or modified from time to time in accordance with its
terms, the “Security Agreement”) and (ii) a first priority, perfected security interest in all shares of SFI’s
common stock pledged by WTI, as evidenced by the pledge agreement attached hereto as Exhibit D (as amended or modified from
time to time in accordance with its terms, the “Pledge Agreement”).


 


NOW, THEREFORE,
the Company and each Buyer hereby agree as follows:


 


1.PURCHASE AND SALE OF NOTES.


 


(a)Purchase
of Notes. 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
(as defined below), a principal amount of Notes as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers
(the “Closing”).


 






     

     


    

 


(b)Closing.
The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York City time, on the date hereof
(or such other date and time as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or waiver)
of the conditions to the Closing set forth in Sections 6 and 7 below, at the offices of Schulte Roth & Zabel LLP, 919 Third
Avenue, New York, New York 10022.


 


(c)Purchase
Price. The aggregate purchase price for the Notes to be purchased by each Buyer at the Closing (the “Purchase Price”)
shall be the amount set forth opposite each Buyer’s name in column (4) of the Schedule of Buyers. Each Buyer shall pay $1,000 for
each $1,150 of principal amount of Notes to be purchased by such Buyer at the Closing.


 


(d)Form
of Payment. On the Closing Date, (i) each Buyer shall pay for the Notes to be issued and sold to such Buyer at the Closing
by paying: (1) 96.5% of its Purchase Price to the Company (less, in the case of the applicable Buyers, the amounts withheld pursuant
to Section 4(f)), by wire transfer of immediately available funds in accordance with the Company’s written wire instructions and
(2) 3.5% of its Purchase Price to the Placement Agent (as defined in Section 3(g)) by wire transfer of immediately available funds
in accordance with the Placement Agent’s written wire instructions and (ii) the Company shall deliver to each Buyer the Notes
(allocated in the principal amounts as such Buyer shall request) which such Buyer is then purchasing hereunder, duly executed on
behalf of the Company and registered in the name of such Buyer or its designee.


 


2.BUYER’S REPRESENTATIONS
AND WARRANTIES. Each Buyer, severally and not jointly, represents and warrants with respect to only itself that, as of the
date hereof and as of the Closing Date:


 


(a)No
Public Sale or Distribution. Such Buyer is acquiring the Notes for its own account and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer does not agree to hold any of the Notes
for any minimum or other specific term and reserves the right to dispose of the Notes at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring the Notes hereunder in the ordinary course
of its business. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person (as
defined below) to distribute any of the Notes. For purposes of this Agreement, “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity
and any government or any department or agency thereof.


 


(b)Accredited
Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.


 


(c)Reliance
on Exemptions. Such Buyer understands that the Notes are being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings
of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire
the Notes.


 






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(d)Information.
Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Notes that have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect
such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer understands that its investment
in the Notes involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to its acquisition of the Notes.


 


(e)No
Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Notes or the fairness or suitability of the investment in
the Notes nor have such authorities passed upon or endorsed the merits of the offering of the Notes.


 


(f)Transfer
or Resale. Such Buyer understands that: (i) the Notes have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder,
(B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such
Notes to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such Buyer provides the Company with reasonable assurance that such Notes can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “Rule
144”); (ii) any sale of the Notes made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Notes under circumstances in which the seller (or the Person) through
whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any
other Person is under any obligation to register the Notes under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Notes may be pledged in connection with a
bona fide margin account or other loan or financing arrangement secured by the Notes and such pledge of Notes shall not be deemed
to be a transfer, sale or assignment of the Notes hereunder, and no Buyer effecting a pledge of Notes shall be required to provide
the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction
Document (as defined in Section 3(b)), including, without limitation, this Section 2(f).


 






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(g)Legends.
Such Buyer understands that the certificates or other instruments representing the Notes, except as set forth below, shall bear
a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock
certificates):


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.


 


The legend set forth above shall be removed
and the Company shall issue a certificate without such legend to the holder of the Notes upon which it is stamped, if (i) such
Notes are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides
the Company with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment or transfer of
the Notes may be made without registration under the applicable requirements of the 1933 Act, or (iii) the Notes can be sold, assigned
or transferred pursuant to Rule 144 or Rule 144A.


 


(h)Validity;
Enforcement. This Agreement has 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.


 


(i)No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby 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 would not, individually or in the aggregate, reasonably be expected to have a material adverse effect
on the ability of such Buyer to perform its obligations hereunder.


 






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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)Organization
and Qualification. Each of the Company and each of its “Subsidiaries” (which for purposes of this Agreement
means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest)
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 authorization to own their properties and to carry on their business as now being conducted and
as presently proposed to be 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 used in this Agreement, “Material Adverse Effect”
means any material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, individually or taken as a whole, or on the transactions
contemplated hereby or on the other Transaction Documents or by the agreements and instruments to be entered into in connection
herewith or therewith, or on the authority or ability of the Company to perform any of its obligations under any of the Transaction
Documents. The Company has no Subsidiaries except as set forth on Schedule 3(a).


 


(b)Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement, the Notes, the Security Documents (as defined below) and each of the other agreements entered into by the parties hereto
in connection with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”)
and to issue the Notes in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other
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 Notes, have been duly authorized by the Company’s Board of Directors and (other than the
filing of a Form D with the SEC and other filings as may be required by state securities agencies) no further filing, consent,
or authorization is required by the Company, its Board of Directors or its shareholders. This Agreement and the other Transaction
Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. Each of the Subsidiaries party to any
of the Transaction Documents has the requisite power and authority to enter into and perform its obligations under such Transaction
Documents. The execution and delivery by the Subsidiaries party to any of the Transaction Documents of such Transaction Documents
and the consummation by such Subsidiaries of the transactions contemplated thereby have been duly authorized by such Subsidiaries’
respective boards of directors (or other applicable governing body) and (other than filings as may be required by state securities
agencies) no further filing, consent, or authorization is required by such Subsidiaries, their respective boards of directors (or
other applicable governing body) or shareholders (or other applicable owners of equity of such Subsidiaries). The Transaction Documents
to which any of the Subsidiaries are parties have been duly executed and delivered by such Subsidiaries, and constitute the legal,
valid and binding obligations of such Subsidiaries, enforceable against them in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
For purposes of this Agreement, the term “Security Documents” means Guarantee Agreement, the Security Agreement,
the Pledge Agreement, any account control agreement, any and all financing statements, fixture filings, security agreements, pledges,
assignments, mortgages, deeds of trust, opinions of counsel, and all other documents requested by the Collateral Agent to create,
perfect, and continue perfected or to better perfect the Collateral Agent’s security interest in and liens on all of the assets
of the Company and each of its Subsidiaries (whether now owned or hereafter arising or acquired, tangible or intangible, real or
personal), and in order to fully consummate all of the transactions contemplated hereby and under the other Transaction Documents.


 






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(c)Issuance
of Securities. The issuance of the Notes is duly authorized and, upon issuance, the Notes shall be validly issued and free
from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof. Assuming
the accuracy of each of the representations and warranties set forth in Section 2 of this Agreement, the offer and issuance by
the Company of the Notes is exempt from registration under the 1933 Act.


 


(d)No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and any of its Subsidiaries
parties to any of the Transaction Documents and the consummation by the Company and any of its Subsidiaries of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of the Notes) will not (i) result in a violation of
the Company’s Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”),
or the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), any memorandum of association,
certificate of incorporation, certificate of formation, bylaws, any certificate of designations or other constituent documents
of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the articles of association
or bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including other 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 laws of the State of Nevada, the State of Ohio, the State of Delaware and any 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. Nothing in the Notes or any other Transaction Document violate any applicable
usury laws and the original issue discount, together with any other interest or amounts payable under the Notes and each other
Transaction Documents, collectively, do not exceed the maximum rate permitted by applicable law.


 






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(e)Consents.
Neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing
or registration with (other than the filing of a Form D with the SEC and other filings as may be required by state securities agencies),
any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any of its Subsidiaries
is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date (or in
the case of the filings detailed above, will be made timely after the Closing Date), and the Company and its Subsidiaries is unaware
of any facts or circumstances that might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the
registration, application or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements
of the Principal Market and has no knowledge of any facts or circumstances that would reasonably lead to delisting or suspension
of the Common Stock in the foreseeable future. The issuance by the Company of the Notes shall not have the effect of delisting
or suspending the Common Stock from the Principal Market.


 


(f)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” of the Company
or any of its Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of the Company, a “beneficial owner” of
more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(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
Notes. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its representatives.


 


(g)No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person
acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation
D) in connection with the offer or sale of the Notes. 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, including, without limitation, any placement agent fees payable
to Oppenheimer & Co. Inc., as placement agent (the “Placement Agent”) in connection with the sale of the Notes.
The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s
fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges that it has engaged the Placement
Agent in connection with the sale of the Notes. Other than the Placement Agent, neither the Company nor any of its Subsidiaries
has engaged any placement agent or other agent in connection with the sale of the Notes.


 






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(h)No
Integrated Offering. None of the Company, its Subsidiaries, 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 registration of the issuance of any of the Notes under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause this offering of the Notes to require approval of shareholders of the Company for purposes of
the 1933 Act or any applicable shareholder 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.
None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps referred
to in the preceding sentence that would require registration of the issuance of any of the Notes under the 1933 Act or cause the
offering of any of the Notes to be integrated with other offerings for purposes of any such applicable shareholder approval provisions.


 


(i)SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (all of the foregoing filed prior to the date hereof or prior to the Closing Date, and all exhibits included therein
and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred
to as the “SEC Documents”). The Company has delivered to the Buyers or their respective representatives true,
correct and complete copies of the SEC Documents not available on the EDGAR system. As of their respective filing 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
filing dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods
involved (“GAAP”) (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 and its Subsidiaries 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 Section 2(d) of this Agreement or 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, in the light of the circumstance
under which they are or were made, not misleading.


 






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(j)Absence
of Certain Changes. Except as disclosed in Schedule 3(j), since December 31, 2016, there has been no material adverse
change and no material adverse development in the business, assets, liabilities, properties, operations, condition (financial or
otherwise), results of operations or prospects of the Company or any of its Subsidiaries. Except as disclosed in Schedule 3(j),
since December 31, 2016, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any
assets, individually or in the aggregate, in excess of $150,000 outside of the ordinary course of business or (iii) had capital
expenditures, individually or in the aggregate, in excess of $150,000. 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 its respective creditors
intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact that 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(j), “Insolvent” means, with respect to any Person, (i) the present fair saleable value of such
Person’s assets is less than the amount required to pay such Person’s total Indebtedness (as defined in Section 3(p)), (ii) such
Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that would be beyond its ability
to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.


 


(k)No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred
or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that 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 its Common Stock
and which has not been publicly announced.


 


(l)Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under any certificate of designations of any outstanding series of preferred stock of the Company (if any), its Articles of Incorporation
or Bylaws or their organizational charter or memorandum of association or certificate of incorporation or articles of association
or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of
its Subsidiaries will conduct its business in violation of any of the foregoing, except for possible violations which could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has
no knowledge of any facts or circumstances that would reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. During the two (2) years prior to the date hereof, the Common Stock has been designated for quotation
on the Principal Market. During the two (2) years prior to the date hereof, (i) trading in the Common Stock has not been suspended
by the SEC or the Principal Market and (ii) 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 its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would
not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.


 






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(m)Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official
or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.


 


(n)Sarbanes-Oxley
Act. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, that
are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are
effective as of the date hereof.


 


(o) Transactions
With Affiliates. None of the officers, directors or employees of the Company or any of its Subsidiaries is presently a party
to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee
or, to the knowledge of the Company or any of its Subsidiaries, any corporation, partnership, trust or other entity in which any
such officer, director, or employee has a substantial interest or is an officer, director, employee, trustee or partner.


 






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(p)Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries (i) except as disclosed in Schedule 3(p)(i), has
any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which,
or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result
in a Material Adverse Effect, (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, (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, or (v) except as disclosed in
Schedule 3(p)(v), has any outstanding Indebtedness that is secured by any liens. Schedule 3(p) provides a detailed
description of the material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services, including, without limitation, “capital leases” in accordance
with GAAP (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced
by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness
(even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession
or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP,
consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any mortgage, deed of trust, lien, pledge, charge, security interest or other encumbrance of any nature whatsoever
in or upon any property or assets (including accounts and contract rights) with respect to any asset or property 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.


 


(q)Absence
of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, government agency, 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 Subsidiaries 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(q). The matters set forth in Schedule 3(q) would not reasonably be expected to have a
Material Adverse Effect.


 






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(r)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 such Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able 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.


 


(s)Employee
Relations.


 


(i) 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 respective employees are good. No executive officer of the
Company or any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) 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. No executive officer of the Company or any of its Subsidiaries, to the knowledge 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 does not subject the Company or any of its Subsidiaries to
any liability with respect to any of the foregoing matters.


 


(ii) The
Company and its Subsidiaries are in compliance with all 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.


 


(t)Title.
Except as set forth in Schedule 3(p)(i), the Company and its Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as do not materially affect
the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any
of its Subsidiaries. Any real property and facilities held under lease by the Company and 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 with the use made
and proposed to be made of such property and buildings by the Company and its Subsidiaries.


 


(u)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 and as presently proposed to be conducted. Each of patents owned by the Company or any of its Subsidiaries is listed
in the SEC Documents. None of the Company’s or its Subsidiaries’ Intellectual Property Rights have expired or terminated or have
been abandoned or are expected to expire or terminate or are expected to be abandoned, within three years from the date of this
Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property
Rights of others. 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. Neither
the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements
or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights.


 






    	 	- 12 -	 



     


    

 


(v)Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with any and all Environmental Laws (as hereinafter defined),
(ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where,
in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably 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.


 


(w)Subsidiary
Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.


 


(x) Investment
Company Status. Neither the Company nor any Subsidiary is, and upon consummation of the sale of the Notes, and for so long
any Buyer holds any Notes, will be, an “investment company,” a company controlled by an “investment company”
or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”
as such terms are defined in the Investment Company Act of 1940, as amended.


 


(y) Tax
Status. The Company and each of its Subsidiaries (i) has made or filed all U.S. federal, state and foreign income and all other
tax returns, reports and declarations required by any jurisdiction to which it is subject and all such returns, reports, and declarations
are true and correct in all material respects, (ii) has 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 for which adequate reserves have been set aside and (iii) has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.


 






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(z) Internal
Accounting and Disclosure Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance 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 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. During the twelve months prior to the date hereof neither the Company nor any of its Subsidiaries
has received any notice or correspondence from any accountant relating to any material weakness in any part of the system of internal
accounting controls of the Company or any of its Subsidiaries.


 


(aa)Off
Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company 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 would be reasonably likely to have a Material Adverse Effect.


 


(bb)Ranking
of Notes. Except as set forth in Schedule 3(bb), no Indebtedness of the Company or any of its Subsidiaries is senior
to or ranks pari passu with the Notes in right of payment, whether with respect of payment of redemptions, interest, damages
or upon liquidation or dissolution or otherwise.


 


(cc)Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the sale and transfer of the Notes 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.


 






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(dd)Manipulation
of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of any of the Notes, (ii) other than the Placement
Agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Notes, or (iii) other than the
Placement Agent, paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of
the Company.


 


(ee)U.S.
Real Property Holding Corporation. The Company is not, has never been, and so long as any Notes remain outstanding, shall not
become, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended,
and the Company shall so certify upon any Buyer’s request.


 


(ff)Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or affiliates 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 or affiliates 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 or affiliates 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.


 


(gg)No
Additional Agreements. Neither the Company nor any of its Subsidiaries has any agreement or understanding with any Buyer with
respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.


 


(hh)Disclosure.
Except for discussions specifically regarding the offer and sale of the Notes, 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, nonpublic information concerning the Company or any of its Subsidiaries, other
than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands
and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries
is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of
the written information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to you 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 are made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve
(12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact
or omit 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. No event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including
results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure
at or before the date hereof or announcement by the Company but which has not been so publicly announced or disclosed. 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.


 






    	 	- 15 -	 



     


    

 


(ii) Shell
Company Status. The Company is not, and has not been for the last five years, an issuer identified in Rule 144(i)(1) of the
1933 Act.


 


(jj)Stock
Option Plans. 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. 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.


 


(kk)No
Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents.


 


(ll)Compliance
with Anti-Money Laundering Laws. The operations of the Company and its Subsidiaries are and have been conducted at all times
in compliance with applicable financial recordkeeping and reporting requirements and all other applicable U.S. and non-U.S. anti-money
laundering laws and regulations, including, but not limited to, those of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the USA Patriot Act of 2001 and the applicable money laundering statutes of all applicable jurisdictions, the
rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced
by any governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries
with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.


 






    	 	- 16 -	 



     


    

 


(mm)No
Conflicts with Sanctions Laws. Neither the Company nor any of the Subsidiaries has made any contribution or other payment
to any official of, or candidate for, any federal, state or foreign office in violation of any law which violation is required
to be disclosed in the Prospectus. Neither the Company nor any of its Subsidiaries, nor any
director, officer, employee, agent, affiliate or other person associated with or acting on behalf of the Company or any of its
Subsidiaries or affiliates is, or is directly or indirectly owned or controlled by, a Person that is currently the subject or the
target of any sanctions administered or enforced by the U.S. government (including, without limitation, the Office of Foreign Assets
Control of the U.S. Department of the Treasury (“OFAC”) or the U.S. Departments of State or Commerce and including,
without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations
Security Council (“UNSC”), the European Union, Her Majesty’s Treasury (“HMT”) or any other relevant
sanctions authority (collectively, “Sanctions”), or is the Company, any of its Subsidiaries located, organized
or resident in a country or territory that is the subject or target of a comprehensive embargo or Sanctions prohibiting trade with
the country or territory, including, without limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria (each, a “Sanctioned
Country”); no action of the Company or any of its Subsidiaries in connection with (i) the execution, delivery and performance
of this Agreement and the other Transaction Documents, (ii) the issuance and sale of the Notes or
(iii) the direct or indirect use of proceeds from the Notes or the consummation of
any other transaction contemplated hereby or by the other Transaction Documents or the fulfillment of the terms hereof or thereof,
will result in the proceeds of the transactions contemplated hereby and by the other Transaction Documents being used, or loaned,
contributed or otherwise made available, directly or indirectly, to any Subsidiary, joint venture partner or other person or entity,
for the purpose of (i) unlawfully funding or facilitating any activities of or business with any person that, at the time of such
funding or facilitation, is the subject or target of Sanctions, (ii) unlawfully funding or facilitating any activities of or business
in any Sanctioned Country or (iii) in any other manner that will result in a violation by any Person (including any Person participating
in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. For the past five years, the Company
and its Subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any person
that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.


 


(nn)Anti-Bribery.
Neither the Company, nor any of its Subsidiaries or affiliates, nor any director, officer, agent, employee or other person associated
with or acting on behalf of the Company, or any of its Subsidiaries or affiliates, has (i) used any funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee, to any employee or agent of a private entity with which the Company
does or seeks to do business (a “Private Sector Counterparty”) or to foreign or domestic political parties or
campaigns from corporate funds, (iii) violated or is in violation of any provision of any applicable law or regulation implementing
the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or any applicable provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K Bribery Act 2010, or any other
similar law of any other jurisdiction in which the Company operates its business, including, in each case, the rules and regulations
thereunder, (iv) taken, is currently taking or will take any action in furtherance of an offer, payment, gift or anything else
of value, directly or indirectly, to any person while knowing that all or some portion of the money or value will be offered, given
or promised to anyone to improperly influence official action, to obtain or retain business or otherwise to secure any improper
advantage or (v) otherwise made any bribe, rebate, payoff, influence payment, unlawful kickback or other unlawful payment; the
Company and each of its respective Subsidiaries has instituted and has maintained, and will continue to maintain, policies and
procedures reasonably designed to promote and achieve compliance with the laws referred to in (iii) above and with this representation
and warranty; and none of the Company, nor any of its Subsidiaries or affiliates will directly or indirectly use the proceeds of
the convertible securities or lend, contribute or otherwise make available such proceeds to any subsidiary, affiliate, joint venture
partner or other person or entity for the purpose of financing or facilitating any activity that would violate the laws and regulations
referred to in (iii) above.


 






    	 	- 17 -	 



     


    

 


(oo) No
Disqualification Events. With respect to Notes to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act
(“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of
the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer
Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether
any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its
disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.


 


(pp)Other
Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid (directly
or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D
Securities.


 


(qq)Surefly
Assets. The Company hereby represents that the assets contained in SFI constitute all of the Company’s and its direct and indirect
Subsidiaries’ assets related to aerial technology and aviation other than relating to the Horsefly division of the Company and
its direct and indirect Subsidiaries.


 


4. COVENANTS.


 


(a)Reasonable
Best Efforts. Each party shall use its reasonable best efforts timely to satisfy each of the covenants and the conditions to
be satisfied by it as provided in Sections 6 and 7 of this Agreement. In addition, the Company shall use its reasonable best efforts
to: (i) continue to invest and develop the Company’s and its direct and indirect Subsidiaries’ assets relating to aerial technology
and aviation and (ii) pursue the transactions described in the draft of the Company’s press release provided to the Buyers prior
to the date hereof with respect to the Company’s and its direct and indirect Subsidiaries’ assets relating to aerial technology
and aviation, including, without limitation, using reasonable best efforts to ensure that the Company is sufficiently capitalized
to effect the spin-off described in such press release (the “Spin-Off”).


 






    	 	- 18 -	 



     


    

 


(b)Form
D and Blue Sky. The Company agrees to file a Form D with respect to the Notes as required under Regulation D and to provide
a copy thereof to each Buyer promptly after such filing. 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 Notes 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. The Company shall make all filings and reports relating to the offer and sale of the Notes
required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.


 


(c)Reporting
Status. Until the date none of the Notes are outstanding (the “Reporting Period”), the Company shall timely
file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer
require or otherwise permit such termination.


 


(d)Use
of Proceeds. The Company will use the proceeds from the sale of the Notes solely as set forth on Schedule 4(d).


 


(e)Financial
Information. The Company agrees to send the following to each holder of Notes (an “Investor”) during the Reporting
Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, any Quarterly Reports
on Form 10-Q, any Current Reports on Form 8-K (or any analogous reports under the 1934 Act) and any registration statements (other
than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed
copies of all press releases issued by the Company or any of its Subsidiaries, and (iii) copies of any notices and other information
made available or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof
to the shareholders. As used herein, “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)Fees.
The Company shall reimburse the Lead Investor (a Buyer) or its designee(s) (in addition to any other expense amounts paid to any
Buyer or its counsel prior to the date of this Agreement) for all costs and expenses incurred in connection with the transactions
contemplated by the Transaction Documents (including all legal fees and disbursements in connection therewith, documentation and
implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which
amount may be withheld by such Buyer from its purchase price for any Notes purchased at the Closing to the extent not previously
reimbursed by the Company and which shall not exceed $75,000. (the “Lead Investor Counsel Amount”). In addition
to the Lead Investor Counsel Amount, the Company shall reimburse Kelley Drye & Warren LLP for all costs and expenses incurred
in connection with the transactions contemplated by the Transaction Documents (including all legal fees and disbursements in connection
therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in
connection therewith), which amount may be withheld by such Buyer in which Kelley Drye & Warren LLP is acting as legal representative
in connection herewith (as disclosed across from such Buyer’s name in column (5) of the Schedule of Buyers) from its purchase price
for any Notes purchased at the Closing to the extent not previously reimbursed by the Company and which shall not exceed $15,000.
The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s commissions
(other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby, including, without
limitation, any fees or commissions payable to the Placement Agent. The Company shall pay, and hold each Buyer harmless against,
any liability, loss or expense (including, without limitation, reasonable attorney’s fees and 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 Notes to the Buyers.


 






    	 	- 19 -	 



     


    

 


(g)Pledge
of Securities. The Company acknowledges and agrees that the Notes may be pledged by an Investor in connection with a bona fide
margin agreement or other loan or financing arrangement that is secured by the Notes. The pledge of Notes shall not be deemed to
be a transfer, sale or assignment of the Notes hereunder, and no Investor effecting a pledge of Notes shall be required to provide
the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(f) hereof; provided that an Investor and its pledgee shall be required
to comply with the provisions of Section 2(f) hereof in order to effect a sale, transfer or assignment of Notes to such pledgee.
The Company hereby agrees to execute and deliver such documentation as a pledgee of the Notes may reasonably request in connection
with a pledge of the Notes to such pledgee by an Investor.


 


(h)Disclosure
of Transactions and Other Material Information. On or before 8:30 a.m., New York City time, on the first Business Day after
this Agreement has been executed, the Company shall issue a press release reasonably acceptable to the Buyers and file a Current
Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the
1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement (and all schedules and
exhibits to this Agreement), the form of Notes and the Security Documents as exhibits to such filing (including all attachments),
the “8-K Filing”). From and after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession of
any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors,
employees, affiliates or agents, that is not disclosed in the 8-K Filing. In addition, effective upon the filing of the 8-K Filing,
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, employees, affiliates or
agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate and be of no further
force or effect. The Company understands and confirms that each Buyer will rely on the foregoing in effecting transactions in securities
of the Company. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers,
directors, employees, affiliates and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company
or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer. If a Buyer has,
or believes it has, received any such material, nonpublic information regarding the Company or any of its Subsidiaries from the
Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents, it may provide
the Company with written notice thereof. The Company shall, within two (2) Business Days of receipt of such notice, make public
disclosure of such material, nonpublic information. In the event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees, affiliates and agents, in addition to any other
remedy provided herein or in the Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form of
a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company,
its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates or agents. No Buyer shall have any
liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates, shareholders
or agents for any such disclosure. To the extent that the Company delivers any material, nonpublic information to a Buyer without
such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality to the
Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agent with respect to,
or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agent
not to trade on the basis of, such material, nonpublic information. 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, that the Company shall be entitled, without the prior approval of any Buyer, to make 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 any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such
Buyer in any filing, announcement, release or otherwise.


 






    	 	- 20 -	 



     


    

 


(i)Additional
Notes. So long as any Buyer beneficially owns any Notes, the Company will not issue any Notes other than to the Buyers as contemplated
hereby and the Company shall not issue any other securities that would cause a breach or default under the Notes. 


 


(j)Corporate
Existence. So long as any Buyer beneficially owns any Notes, each of the Company, WTI and SFI shall (i) maintain its corporate
existence and (ii) not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with
the applicable provisions governing Fundamental Transactions set forth in the Notes.


 


(k)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 result, either individually or in the aggregate,
in a Material Adverse Effect.


 


(l) Notice
of Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.


 


(m) Collateral
Agent.


 


(i) Each
Buyer hereby (a) appoints Empery Tax Efficient, LP as the collateral agent hereunder and under the Security Documents (in such
capacity, the “Collateral Agent”), and (b) authorizes the Collateral Agent (and its officers, directors, employees
and agents) to take such action on such Buyer’s behalf in accordance with the terms hereof and thereof. The Collateral Agent shall
not have, by reason hereof or pursuant to any Security Documents, a fiduciary relationship in respect of any Buyer. Neither the
Collateral Agent nor any of its officers, directors, employees and agents shall have any liability to any Buyer for any action
taken or omitted to be taken in connection hereof or the Security Documents except to the extent caused by its own gross negligence
or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all of its
officers, directors, employees and agents (collectively, the “Collateral Agent Indemnitees”) from and against
any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without
limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Collateral Agent Indemnitee, whether direct, indirect
or consequential, arising from or in connection with the performance by such Collateral Agent Indemnitee of the duties and obligations
of Collateral Agent pursuant hereto or any of the Security Documents.


 


(ii) The
Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person,
and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder
or thereunder, upon advice of counsel selected by it.


 


(iii) The
Collateral Agent may resign from the performance of all its functions and duties hereunder and under the Notes and the Security
Documents at any time by giving at least ten (10) Business Days prior written notice to the Company and each holder of the Notes.
Such resignation shall take effect upon the acceptance by a successor Collateral Agent of appointment as provided below. Upon any
such notice of resignation, the holders of a majority of the outstanding principal amount of Notes shall appoint a successor Collateral
Agent. Upon the acceptance of the appointment as Collateral Agent, such successor Collateral Agent shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall
be discharged from its duties and obligations under this Agreement, the Notes, the Guarantee Agreement, the Pledge Agreement and
the Security Agreement. After any Collateral Agent’s resignation hereunder, the provisions of this Section 4(m) shall inure to
its benefit. If a successor Collateral Agent shall not have been so appointed within said ten (10) Business Day period, the retiring
Collateral Agent shall then appoint a successor Collateral Agent who shall serve until such time, if any, as the holders of a majority
of the outstanding principal amount of Notes appoints a successor Collateral Agent as provided above.


 






    	 	- 21 -	 



     


    

 


(iv) The
Company hereby covenants and agrees to take all actions as promptly as practicable reasonably requested by either the holders of
a majority of the outstanding principal amount of Notes or the Collateral Agent (or its successor), from time to time pursuant
to the terms of this Section 4(m), to secure a successor Collateral Agent satisfactory to such requesting part(y)(ies), in their
sole discretion, including, without limitation, by paying all fees of such successor Collateral Agent, by having the Company agree
to indemnify any successor Collateral Agent and by each of the Company executing a collateral agency agreement or similar agreement
and/or any amendment to the Security Documents reasonably requested or required by the successor Collateral Agent.


 


(n) No
Transfer of Assets. From the date hereof until the Closing Date, the Company shall not, without the prior written approval
of the Required Holders, assign, sell, transfer or otherwise dispose of any assets held by WTI as of the date hereof.


 


(o) Right
to Purchase Preferred Stock of SFI. Each of the Company and SFI hereby acknowledges and grants to each Buyer, severally, the
right, but not an obligation, exercisable at any time at the option of each such Buyer with respect to the Note held by such Buyer
(without regard to the Notes of any other Buyer or election of any other Buyer to effect an exchange pursuant to this Section 4(o))
to exchange all, or any portion of its Notes (including, without limitation, any accrued and unpaid Interest (as defined in the
Notes) with respect to the principal amount of the Notes and any accrued and unpaid Late Charges (as defined in the Notes) with
respect to such portion of such Principal and such Interest, if any) as set forth in such Buyer’s election notice to the Company
and SFI into its pro rata share (based on the principal amount of Notes held by such holder compared to the aggregate principal
amount of Notes held by all holders of Notes) of stated value of convertible preferred stock of SFI and warrants to purchase common
stock of SFI on the terms described in the draft of the Company’s press release attached hereto as Exhibit E. The forgoing
provisions shall be subject to definitive documentation reasonably acceptable to each Buyer, the Company and SFI to give effect
to the terms set forth above.


 


(p) Participation
in Future Financing.


 


(i) From
the date hereof until the date that is the earlier of (i) the second (2nd) anniversary of the Closing Date and (ii)
the Business Day immediately following the date on which SFI has raised at least $20 million of capital pursuant to one or more
sales of securities (which, for the avoidance of doubt, must include gross proceeds of at least $15 million in cash and the remaining
$5 million shall either (i) also be paid in cash, (ii) the exchange of Notes for securities of SFI or (iii) a combination thereof),
the Company and SFI hereby acknowledge and agree that upon any issuance by (i) SFI, (ii) any direct or indirect subsidiary of the
Company that holds any or all of the Collateral (as defined in the Pledge Agreement), or (iii) any of their respective subsidiaries,
of equity, debt or Common Stock Equivalents (as defined below) for consideration consisting of cash, an exchange of Notes or a
combination thereof (a “Subsequent Financing”), each Buyer shall have the right, but not an obligation, severally,
at each such Buyer’s sole option, to participate in up to an amount of the Subsequent Financing equal to 50% of the Subsequent
Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent
Financing. Further, in connection with any Subsequent Financing, each of the Company and SFI hereby acknowledges and agrees that
each holder of Notes shall have the right, but not an obligation, severally, at each such Buyer’s sole option, to exchange all
or any portion of such Notes (including, without limitation, any accrued and unpaid Interest with respect to the principal amount
of the Notes and any accrued and unpaid Late Charges with respect to such portion of such Principal and such Interest, if any)
to SFI (or such other issuer in the Subsequent Financing) as payment of all or any portion of the purchase price with respect to
the securities to be acquired in such Subsequent Placement by such holder. If a Buyer elects to effect such an exchange, each dollar
of principal amount, any accrued and unpaid Interest and any Late Charges of Notes so exchanged shall reduce by one dollar the
purchase price to be otherwise paid by such holder to SFI (or such other issuer). If a Buyer seeks to participate in a Subsequent
Financing, prior to participating in such Subsequent Financing by paying the applicable purchase price in cash, it shall first
exchange all its Notes as payment of consideration in such Subsequent Financing until it no longer holds any Notes. As used herein,
“Common Stock Equivalents” means any securities of any subject entity which would entitle the holder thereof to
acquire at any time common stock of the subject entity, including, without limitation, any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, common stock of such subject entity.


 






    	 	- 22 -	 



     


    

 


(ii) At
least one (1) Business Day prior to the signing of definitive documents with respect to any Subsequent Financing, the Company shall
deliver to each Buyer a written notice (a “Subsequent Financing Notice”) of its intention to effect a Subsequent
Financing, which Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.


 


(iii) Any
Buyer desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30 p.m.
(New York City time) on the Business Day after all of the Buyers have received the Subsequent Financing Notice (the “Election
Deadline”) that such Buyer is willing to participate in the Subsequent Financing, the amount of such Buyer’s participation,
including the form of payment (e.g., exchange of Notes, cash or percentage of each), and representing and warranting that such
Buyer has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If
the Company receives no such notice from a Buyer prior the expiration of such Election Deadline, such Buyer shall be deemed to
have notified the Company that it does not elect to participate.


 


(iv) If
by the Election Deadline, notifications by the Buyers of their willingness to participate in the Subsequent Financing (or to cause
their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company
may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing
Notice.


 






    	 	- 23 -	 



     


    

 


(v) If
by the Election Deadline, the Company receives responses to a Subsequent Financing Notice from Buyers seeking to purchase more
than the aggregate amount of the Participation Maximum, each such Buyer shall have the right to purchase its Pro Rata Portion (as
defined below) of the Participation Maximum.  As used herein, “Pro Rata Portion” means the ratio of
(x) the aggregate principal amount of Notes purchased on the Closing Date by a Buyer participating under this Section 4(p) and
(y) the sum of the aggregate principal amount of Notes purchased on the Closing Date by all Buyers participating under this Section
4(p).


 


(vi) The
Company must provide the Buyers with a second Subsequent Financing Notice, and the Buyers will again have the right of participation
set forth above in this Section 4(p), if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated
for any reason on the terms set forth in such Subsequent Financing Notice within five (5) Business Days after the date of the initial
Subsequent Financing Notice.


 


(vii) The
Company and each Buyer agree that if any Buyer elects to participate in the Subsequent Financing, the transaction documents related
to the Subsequent Financing shall not include any term or provision whereby such Buyer shall be required to agree to any restrictions
on trading as to any of the securities purchased hereunder or be required to consent to any amendment to or termination of, or
grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Buyer.
In addition, the Company and each Buyer agree that, in connection with a Subsequent Financing, the transaction documents related
to the Subsequent Financing shall include a requirement for the Company to issue a widely disseminated press release by 9:30 am
(New York City time) on the Business Day immediately following execution of the transaction documents in such Subsequent Financing
that discloses the material terms of the transactions contemplated by the transaction documents in such Subsequent Financing.


 


(viii) Notwithstanding
anything to the contrary in this Section 4(p) and unless otherwise agreed to by such Buyer, the Company shall either confirm in
writing to such Buyer that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose
its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Buyer will not
be in possession of any material, non-public information, by the fifth (5th) Business Day following delivery of the
Subsequent Financing Notice. If by such fifth (5th) Business Day, no public disclosure regarding a transaction with
respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received
by such Buyer, such transaction shall be deemed to have been abandoned and such Buyer shall not be deemed to be in possession of
any material, non-public information with respect to the Company or any of its Subsidiaries.


 


(q) Future
Assets. The Company hereby covenants and agrees that any and all assets purchased, developed or otherwise acquired after the
date hereof by the Company and/or any of its direct and indirect Subsidiaries relating to, or determined after the date hereof
to relate to,  aerial technology and aviation shall promptly be transferred to SFI, or, in the case of assets relating to
the Horsefly division of the Company and its direct and indirect Subsidiaries, become subject to the Co-License Agreement (as defined
in the Notes) in which the Collateral Agent will obtain a first priority security interest in SFI’s interest in the Co-License
Agreement in accordance with the provisions of Section 11(b) of the Notes.


 






    	 	- 24 -	 



     


    

 


(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 Schulte Roth & Zabel LLP a complete closing set of the executed Transaction Documents, Notes and
any other documents required to be delivered to any party pursuant to Section 7 hereof or otherwise.


 


5.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 Notes), a register for the Notes in which the Company shall record the name and address of the Person
in whose name the Notes have been issued (including the name and address of each transferee) and the principal amount of Notes
held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of
any Buyer or its legal representatives. The Notes shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer
of the Notes in accordance with Section 2(f), the Company shall permit the transfer and shall promptly instruct its transfer agent
to issue one or more certificates 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 will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5, 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.


 


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


 


The obligation of the
Company hereunder to issue and sell the Notes to each Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are for the 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 Transaction Documents to which it is a party and delivered the same to the Company.


 


(ii) Such
Buyer shall have delivered: (1) 96.5% of its Purchase Price to the Company (less, in the case of the applicable Buyers, the amounts
withheld pursuant to Section 4(f)), for the Notes being purchased by such Buyer at the Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company and (2)_ 3.5% of its Purchase Price to the Placement
Agent by wire transfer of immediately available funds pursuant to the Placement Agent’s wire instructions provided by the Company.


 






    	 	- 25 -	 



     


    

 


(iii) The
representations and warranties of such Buyer shall be true and correct as of the date when made and as of the Closing Date as though
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 specified 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 obligation of each
Buyer hereunder to purchase the Notes at the Closing is subject to the satisfaction, at or before the Closing Date, of each of
the following conditions, provided that these conditions are for each Buyer’s sole benefit and 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 of its Subsidiaries shall have duly executed and delivered to such Buyer each of the following documents to which
it is a party: (A) each of the Transaction Documents and (B) the Notes (allocated in such principal amounts as such Buyer shall
request), being purchased by such Buyer at the Closing pursuant to this Agreement


 


(ii) Such
Buyer shall have received the opinion of Fleming PLLC, the Company’s outside counsel, dated as of the Closing Date, in substantially
the form of Exhibit F attached hereto.


 


(iii) The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of
its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction,
as of a date within ten (10) days of the Closing Date.


 


(iv) The
Company shall have delivered to such Buyer a certificate evidencing the Company’s and each of its Subsidiaries’ qualification as
a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the
Company and its Subsidiaries conduct business, 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 Articles of Incorporation of the Company and each of its Subsidiaries
as certified by the Secretary of State (or comparable office) of the jurisdiction of formation of the Company and each of its Subsidiaries
within ten (10) days of the Closing Date.


 


(vi) The
Company shall have delivered to such Buyer a certificate, 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 and each of its Subsidiaries’ Board of
Directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation of the Company and each of its Subsidiaries
and (iii) the Bylaws of the Company and each of its Subsidiaries, each as in effect at the Closing, in the form attached hereto
as Exhibit G.


 






    	 	- 26 -	 



     


    

 


(vii) The
representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as
though 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 specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to
the Closing Date. Such Buyer shall have received a certificate, 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
attached hereto as Exhibit H.


 


(viii) Each
of WTI, as transferor, and SFI, as transferee, shall have executed the bill of sale (the “Bill of Sale”) attached
hereto as Exhibit I.


 


(ix) WTI
shall have filed with the United States Patent and Trademark Office an assignment form to give effect to the transfer of all intellectual
property assets being transferred from WTI to SFI pursuant to the Bill of Sale.


 


(x) The
Collateral Agent shall have received certified copies of request for copies of information on Form UCC-11, listing all effective
financing statements which name as debtor the Company or any of its Subsidiaries and which are filed in such office or offices
as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created
by the Security Agreement, together with copies of such financing statements, none of which, except as otherwise agreed in writing
by the Collateral Agent, shall cover any of the Collateral, and the results of searches for any tax lien and judgment lien filed
against such person or its property, which results, except as otherwise agreed to in writing by the Collateral Agent, shall not
show any such liens.


 


(xi) The
Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) 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 (A) in writing by the SEC or the Principal Market or
(B) by falling below the minimum listing maintenance requirements of the Principal Market.


 


(xii) The
Collateral Agent shall have received the Security Agreement, duly executed by the Company and SFI, together with any copyright,
patent and trademark agreements required by the terms of the Security Agreement and the Company, in accordance with the terms of
the Security Agreement, shall have delivered to the Collateral Agent with a copy to each Buyer, appropriate financing statements
on Form UCC-1 to be duly filed in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable
to perfect the security interests purported to be created by the Security Agreement.


 






    	 	- 27 -	 



     


    

 


(xiii) The
Collateral Agent shall have received the Pledge Agreement, duly executed by WTI, and WTI, in accordance with the terms of the Pledge
Agreement, shall have delivered to the Collateral Agent, with a copy to each Buyer, certificates representing the Pledged Equity
(as defined in the Pledge Agreement), along with duly executed blank assignment form and/or stock powers for the Pledged Equity
in a form reasonably acceptable to the Collateral Agent, including a Medallion Guarantee on such assignment form and/or stock powers.


 


(xiv) The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Notes.


 


(xv) The
Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.


 


8.TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from the date
hereof due to the Company’s or such Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching
party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement
with respect to such breaching party at the close of business on such date by delivering a written notice to that effect to each
other party to this Agreement and without liability of any party to any other party; provided, however, that if this
Agreement is terminated pursuant to this Section 8, the Company shall remain obligated to reimburse the Empery Asset Master Ltd.
(the “Lead Investor”) or its designee(s), as applicable, and Hudson Bay Master Fund Ltd. or its designee(s), as
applicable, for the expenses described in Section 4(f) above.


 


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. Each party 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. 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. EACH PARTY 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 AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 






    	 	- 28 -	 



     


    

 


(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; provided that a facsimile
or .pdf signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect
as if the signature were an original, not a facsimile or .pdf signature.


 


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


 


(d)Severability.
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).


 


(e)Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein,
and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain 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 Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. Provisions
of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and the holders of at least a majority of the aggregate
principal amount of Notes issued or issuable hereunder, which majority must include Hudson Bay Master Fund Ltd. (solely to the
extent Hudson Bay Master Fund Ltd. or any of its affiliates holds any Notes) and affiliates of Empery Asset Management, LP (solely
to the extent such affiliates of Empery Asset Management, LP holds any Notes) (each, a “Designee”, and such majority
including such required Designees, if any, the “Required Holders”); provided, further, that the
provisions of Section 4(m) cannot be amended without the additional prior written approval of the Collateral Agent or its successor.
Any amendment or waiver effected in accordance with this Section 9(e) shall be binding upon each Buyer and holder of Notes and
the Company. No such amendment shall be effective to the extent that it applies to less than all of the Buyers or holders of Notes.
No consideration 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 (other than the reimbursement of legal fees) also is offered to all
of the parties to the Transaction Documents or holders of Notes, as the case may be. 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
or otherwise.


 






    	 	- 29 -	 



     


    

 


(f)Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement or any
of the other Transaction Document’s must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon delivery, when sent by facsimile (provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party), (iii) upon delivery, when sent by electronic mail (provided that the sending
party does not receive an automated rejection notice); or (iv) one Business Day after deposit with an overnight courier service,
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:	844-937-9547
	 	Facsimile:	513-900-8845
	 	Attention:	Stephen S. Burns, CEO
	 	E-mail: steve.burns@workhorse.com



 


With a copy to (for informational purposes only):


 





	 	Fleming PLLC
	 	30 Wall Street, 8th Floor
	 	New York, New York 10005
	 	Telephone:   	516-833-5034
	 	Facsimile:	516-977-1209
	 	Attention:	Stephen M. Fleming, Esq.
	 	E-mail:smf@flemingpllc.com



 






    	 	- 30 -	 



     


    

 


If to SFI:


 





	 	Surefly, Inc.
	 	100 Commerce Drive
	 	Loveland, Ohio 45140
	 	Telephone:   	844-937-9547
	 	Facsimile:	513-900-8845
	 	Attention:	Duane Hughes, Interim CEO
	 	E-mail: duane.hughes@workhorse.com



 


If to a Buyer, to its address, facsimile
number and 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,


 


with a copy (for informational purposes only) to:


  


	 	Schulte Roth & Zabel LLP
	 	919 Third Avenue
	 	New York, New York 10022
	 	Telephone:   	(212) 756-2000
	 	Facsimile:	(212) 593-5955
	 	Attention:	Eleazer N. Klein, Esq.
	 	E-mail:eleazer.klein@srz.com



 


or to such other address, facsimile number
and/or e-mail address 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 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 the Notes. The Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Required Holders, including by way of a Fundamental Transaction (unless the Company is
in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some
or all of its rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder
with respect to such assigned rights.


 


(h)No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that
each Indemnitee shall have the right to enforce the obligations of the Company with respect to Section 9(k).


 


(i)Survival.
Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall
be responsible only for its own representations, warranties, agreements and covenants hereunder.


 






    	 	- 31 -	 



     


    

 


(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 Notes 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 other holder of the Notes and all of their shareholders, partners, members, officers, directors,
employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit 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) and
arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of the issuance of the Notes, (iii) any disclosure made by such Buyer pursuant
to Section 4(h), or (iv) the status of such Buyer or holder of the Notes as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
that 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 any
governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification 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 not more than one counsel for such Indemnitee to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the
indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other
party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be
selected by the Buyers holding at least a majority of the Notes issued and issuable hereunder. The Indemnitee shall cooperate fully
with the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by the
indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that relates
to such action or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully 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, that the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent
of the Indemnitee, which consent shall not be unreasonably withheld conditioned or delayed, consent to entry of any judgment or
enter into any settlement or other compromise which (i) 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 Liabilities or litigation, (ii)
requires any admission of wrongdoing by such Indemnitee, or (iii) obligates or requires an Indemnitee to take, or refrain from
taking, any action. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has
been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 9(k), except to the
extent that the indemnifying party is prejudiced in its ability to defend such action.


 






    	 	- 32 -	 



     


    

 


(iii) 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.


 


(iv) The
indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against
the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.


 


(l)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.


 


(m)Remedies.
Each Buyer and each holder of the Notes 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
fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove
to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.


 


(n)Rescission
and 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 does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or
in part without prejudice to its future actions and rights.


 


(o)Payment
Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or 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.


 


(p)Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under any Transaction Document 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 entity, or create a presumption
that the Buyers are in any way 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 and the Company acknowledges that the Buyers are
not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.
The Company acknowledges and each Buyer confirms that it has independently participated 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.


 


[Signature Page Follows]


 






    	 	- 33 -	 



     


    

 


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


 


	
         
	COMPANY:
	 	 
	 	WORKHORSE GROUP INC.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


  


 


 


 


 


 


 


[Signature Page to Securities Purchase
Agreement]




 






     

     


    

 


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


 


	 	SFI:
	 	 
	 	Solely with respect to Sections 4(o) & 4(p) hereof:
	 	 
	 	SUREFLY, INC.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


  


 


 


 


 


 


 


 


[Signature Page to Securities Purchase
Agreement]


 






     

     


    

 


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


 


	 	BUYERS:
	 	 	 
	 	By:	 
	 	 	Name:  
	 	 	Title:  


 






     

     


    

 


SCHEDULE OF BUYERS


 


 


	(1)	 	(2)	 	(3)	 	(4)	 	(5)
	Buyer	 	Address and
 Facsimile Number	 	Aggregate
 Principal
 Amount of Notes	 	Purchase Price	 	Legal Representative’s Address and Facsimile Number
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 



 






     

     


    

 


EXHIBITS


 


	Exhibit A	Form of Notes
	Exhibit B	Form of Guarantee Agreement
	Exhibit C	Form of Security Agreement
	Exhibit D	Form of Pledge Agreement
	Exhibit E	Form of Press Release
	Exhibit F	Form of Opinion of Company Counsel
	Exhibit G	Form of Secretary’s Certificate
	Exhibit H	Form of Officer’s Certificate
	Exhibit I	Form of Bill of Sale




 


SCHEDULES


 


	Schedule 3(a)	Subsidiaries
	Schedule 3(i)	SEC Documents
	Schedule 3(j)	Absence of Certain Changes
	Schedule 3(l)	Regulatory Permits
	Schedule 3(o)	Transactions with Affiliates
	Schedule 3(p)	Indebtedness and Other Contracts
	Schedule 3(q)	Absence of Litigation
	Schedule 3(u) 	Intellectual Property Rights
	Schedule 3(bb)	Ranking of Notes
	Schedule 4(d)	Use of Proceeds