Document:

THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE SECURITIES
LAWS, OR AN EXEMPTION FROM REGISTRATION THEREUNDER, IN EACH CASE, TO THE EXTENT APPLICABLE HERETO.

 

SECURED
PROMISSORY NOTE

 

	 	New
    York, New York
	$4,780,000.00	August
    19, 2019

 

FOR
VALUE RECEIVED, Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B (the “Investor”) hereby promises
to pay to Toughbuilt Industries, Inc., a Nevada corporation (the “Company”), on the date set forth below, (i)
the principal amount of Four Million Seven Hundred Eighty Thousand Dollars ($4,780,000) and (ii) interest on the unpaid principal
balance hereof at the rate set forth herein (collectively, the “Obligations”). This Promissory Note (this “Note”)
has been issued pursuant to the Note Purchase Agreement, dated as of August 19, 2019 (the “Subscription Date”),
by and among the Company and the Investor (as amended, modified, supplemented, extended, renewed, restated or replaced from time
to time, the “Note Purchase Agreement”) as payment of the purchase price of that certain Series B Senior Secured
Convertible Note of the Company, with an initial aggregate principal amount of $4,780,000 (as such note may be amended, modified,
supplemented, extended, renewed, restated or replaced from time to time in accordance with the terms thereof, the “Series
B Note”), issued pursuant to that certain Securities Purchase Agreement, dated as of August 19, 2019 by and among the
Company and the investors party thereto (as amended, modified, supplemented, extended, renewed, restated or replaced from time
to time, the “Securities Purchase Agreement”). Capitalized terms not defined herein shall have the meaning
as set forth in the Series B Note. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED,
WHETHER BY THE COMPANY, OPERATION OF LAW, COURT ORDER OR OTHERWISE, WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF THE INVESTOR.
ANY SUCH PURPORTED ASSIGNMENT OR TRANSFER WITHOUT SUCH CONSENT SHALL BE NULL AND VOID.

 

1.
Payment of Principal. The principal amount of this Note (the “Principal”), together with all unpaid
interest accrued thereon and any other Obligations payable hereunder, shall be due and payable in full upon the fortieth (40th)
anniversary of the Scheduled Series B Note Maturity Date (as defined below) (the “Maturity Date”); provided,
that the Maturity Date shall be automatically extended by one (1) calendar day for each calendar day after December 31, 2020 (the
“Scheduled Series B Note Maturity Date”), if any, that all, or any part, of the Series B Note remains outstanding.

 

    	 	 	 

     

    

 

2.
Payment of Interest. The unpaid Principal balance due hereunder shall bear interest (the “Interest”)
at an annual rate equal to 2.33% (the “Interest Rate”). Subject to Sections 3 and 7 below, Interest shall be
payable and due upon the Maturity Date. All interest shall be computed on the basis of a year of 365 or 366 days, as the case
may be, for the actual number of days (including the first day but excluding the last day) elapsed.

 

3.
Prepayment Prior to the Maturity Date.

 

(a)
Optional Prepayment. The Investor may, at its option at any time on or after the date hereof, prepay, in whole or in part,
without premium or penalty, the Obligations under this Note (each, an “Optional Prepayment”).

 

(b)
Mandatory Prepayment. Upon any Mandatory Prepayment Event (as defined below), the Investor shall promptly prepay such aggregate
outstanding Principal of this Note equal to the applicable Mandatory Prepayment Amount (as defined below) with respect to such
Mandatory Prepayment Event (each, a “Mandatory Prepayment”, and together with each Optional Prepayment, each
a “Prepayment”).

 

(c)
Mechanics of Prepayments. All Prepayments hereunder shall be made in cash, by wire transfer, in U.S. dollars and immediately
available funds, in accordance with the wire instructions delivered to the Investor by the Company on or prior to such date of
such Prepayment. At the option of the Company, prepayments may be made directly to the Company or to such other Persons as the
Company may direct in its wire instructions.

 

(d)
Cancellation of Interest upon Prepayment. Notwithstanding anything herein to the contrary, upon any Prepayment prior to
the Maturity Date (including, without limitation, any Mandatory Prepayment), the aggregate cash amount in such Prepayment shall
be applied entirely to and against any outstanding Principal under this Note, and any accrued and unpaid Interest with respect
to the Principal prepaid shall be automatically cancelled as of the date of such prepayment.

 

(d)
Definitions. For the purpose of this Note, the following definitions shall apply:

 

(i)
“Mandatory Prepayment Amount” means, as applicable, any Mandatory Prepayment Conversion Amount (as defined
below) or the Forced Mandatory Prepayment Amount (as defined below).

 

    	 	2	 

     

    

 

(ii)
“Mandatory Prepayment Event” means, as applicable, (a) receipt by the Company of irrevocable Shareholder Approval
(as defined in the Securities Purchase Agreement), and (b) (i) with respect to any Restricted Principal of the Series B Note designated
to be converted in a Conversion Notice (such aggregate amount of Principal then outstanding hereunder equal to such Restricted
Principal of the Series B Note designated to be converted in such Conversion Notice, each, a “Mandatory Prepayment Conversion
Amount”), both (A) the Company’s receipt of such Conversion Notice thereunder executed by the Investor in which
all, or any part, of the principal of the Series B Note to be converted includes any Restricted Principal and (B) the Investor’s
receipt from the Company of written confirmation that the Company’s transfer agent (the “Transfer Agent”)
has been irrevocably instructed by the Company to deliver to the Investor (or its designee) the shares of Common Stock to be issued
pursuant to such Conversion Notice in accordance with Section 3(c) of the Series B Note (in each case, as adjusted, if applicable,
to reflect the withdrawal of any Conversion Notice, in whole or in part, by the Investor, whether pursuant to Section 3(c)(ii)
of the Series B Note or otherwise), or (ii) with respect to any Principal outstanding hereunder on the Mandatory Prepayment Date
(as defined below) (the “Forced Mandatory Prepayment Amount”), the occurrence of the forty-fifth Trading Day
after the Eligible Resale Date (the “Mandatory Prepayment Date”), so long as (v) the Shareholder Approval Date
(as defined in the Securities Purchase Agreement) shall have occurred, (w) the quotient of (1) the sum of (I) the aggregate principal
of the Series A Note outstanding as of the applicable Mandatory Prepayment Date and (II) the aggregate Unrestricted Principal
(as defined in the Series B Note) of the Series B Note that would be outstanding after giving effect to such proposed Mandatory
Prepayment on such Mandatory Prepayment Date, divided by (2) the Alternate Conversion Price (as defined in the Series B Note)
as of such Mandatory Prepayment Date, does not exceed 35% of the aggregate number of shares of Common Stock of the Company outstanding
on each of the forty five Trading Days prior to and ending and including such Mandatory Prepayment Date, (x) no Equity Conditions
Failure (as defined in the Series A Note or Series B Note) exists as of such Mandatory Prepayment Date, (y) as of the Mandatory
Prepayment Date, the quotient of (A) the sum of the VWAP of the Common Stock for each Trading Day during the twenty (20) consecutive
Trading Day period ending as of the Trading Day immediately prior to the Mandatory Prepayment Date, divided by (y) twenty (20)
is greater than $1.00 (as adjusted for stock splits, stock dividends, stock combinations recapitalizations and similar events)
(the failure of the Company to satisfy this clause (y) as of the Mandatory Prepayment Date, if any, a “Minimum Price
Failure”) and (z) no Event of Default (as defined in the Series A or Series B Note) then exists and is continuing. Notwithstanding
the foregoing, the Investor (or its designee) shall not commence a Deposit/Withdrawal at Custodian with respect to such shares
of Common Stock to be issued upon conversion of Restricted Principal unless and until the Investor shall have either (x) delivered
the Mandatory Prepayment Amount to the Company or (y) delivered instructions to the Investor’s bank, broker or other financial
institution to wire the Mandatory Prepayment Amount to the Company from an account with at least an amount of cash or other Eligible
Assets (as defined below) equal to the Mandatory Prepayment Amount). “Eligible Resale Date” means later
of (i) the Shareholder Approval Date as defined in Section 4(cc) of the Securities Purchase Agreement, or (ii) the earlier
of (x) the first date on which the resale by the Buyers (as defined in the Securities Purchase Agreement) of all the Registrable
Securities (as defined in the Registration Rights Agreement) pursuant to one or more registration statements filed with the SEC
has been declared effective by the SEC (and each prospectus contained therein is available for use on such date) or (y) the first
date on which all of the Registrable Securities are eligible to be resold by the Buyers pursuant to Rule 144 (or, if a Current
Public Information Failure (as defined in the Registration Rights Agreement) has occurred and is continuing, such later date after
which the Company has cured such Current Public Information Failure).

 

    	 	3	 

     

    

 

4.
Defaults.

 

(a)
the Investor shall be deemed in default hereunder upon the occurrence of any of the following (a “Default”):

 

(i)
Failure to Pay Principal or Interest. The failure of the Investor to pay, when due, all or any part of any Principal or
Interest required to be made hereunder; or

 

(ii)
Bankruptcy, etc. The Investor shall have entered against it by a court having jurisdiction thereof a decree or order for
relief in respect to the Investor in an involuntary case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official shall
be appointed for the Investor or for any substantial part of the Investor’s property, or the winding up or liquidation of
the Investor’s affairs shall have been ordered; or the Investor shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; or the Investor shall consent to the entry of an order for such relief
in an involuntary case under any such law, or any such involuntary case shall commence, and not be dismissed within sixty (60)
days; or the Investor shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or other similar official for the Investor or for any substantial part of the Investor’s property,
or make any general assignment for the benefit of creditors.

 

(b)
Consequence of Default. Upon the occurrence of a Default, the outstanding Obligations hereunder shall, at the option of
the Company, become immediately due and payable (each, an “Investor Note Acceleration”), subject to the Investor’s
right to elect to effect Default Netting (as defined below) with respect to all, or any portion, of this Note as elected by the
Investor in a written notice to the Company. Notwithstanding the foregoing, if there shall occur a Default under Section 4(a)(ii)
above, the entire outstanding Obligations hereunder, shall automatically become immediately due and payable without any action
on the part of the Company and the Investor shall be deemed to have elected Default Netting with respect to the maximum amount
of its obligations outstanding hereunder as permitted pursuant to Section 7(h) below. Upon the occurrence of a Default, the Company
shall also have all the rights and remedies of a secured party on default under Article 9 of the Uniform Commercial Code of the
State of New York with respect to the Collateral (as hereinafter defined).

 

5.
Representations and Warranties of the Investor. The Investor represents and warrants to the Company as follows as of the
date hereof: (a) the Investor has the power and authority to execute, deliver and perform all obligations in accordance herewith;
(b) the execution, delivery and performance by the Investor of this Note are within the Investor’s legal powers, and do
not contravene any law or any contractual restriction binding on or affecting the Investor; (c) no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution,
delivery and performance by the Investor of this Note; (d) this Note constitutes the legal, valid and binding obligation of the
Investor, enforceable against the Investor in accordance with its terms, except to the extent enforceability is limited by bankruptcy,
insolvency, fraudulent conveyance, moratorium and other laws for the protection of creditors generally and by general equitable
principles; and (e) there is no pending or, to the Investor’s knowledge, threatened action or proceeding affecting the Investor
before any governmental agency or arbitrator with respect to the transactions contemplated by this Note or which may materially
adversely affect the property, assets or condition (financial or otherwise) of the Investor.

 

    	 	4	 

     

    

 

6.
Security.

 

(a)
Grant of Security Interest. As security for the due and prompt payment and performance of all payment obligations under
this Note and any modifications, replacements and extensions hereof (collectively, “Secured Obligations”),
the Investor hereby pledges and grants a security interest to the Company in all of the Investor’s right, title, and interest
in and to, initially at least $4,780,000, in the aggregate, (i) in cash, (ii) cash equivalents (including but not limited to term
deposit accounts), (iii) any Group of Ten (“G10”) currency and any notes or other securities issued by any
G10 country and (iv) any securities of a special purpose acquisition company (each, a “SPAC”) that are redeemable
for cash held in escrow by such SPAC (with a deemed fair market value, for purposes hereof, equal to the amount of cash held in
such escrow for redemption of such applicable security of such SPAC) (collectively, the “Eligible Assets”),
in each case, held by the Investor in the bank or brokerage accounts described on Schedule I attached hereto (the “Collateral”,
and such account or accounts, as applicable, collectively, the “Collateral Account”), subject to reduction
upon any reduction, offset or cancellation of this Note. So long as any Restricted Principal (as defined in the Series B Note)
remains outstanding under the Series B Note, the Investor shall keep Collateral in the Collateral Account with a fair market value
of at least the amount of Restricted Principal then outstanding.

 

(b)
Change in Collateral Account. The Investor may, with at least five (5) Trading Days’ notice to the Company, move
the Collateral from an account or accounts of the Investor to a new account or accounts (the “New Collateral Account”)
at a financial institution selected by the Investor, (but if such financial institution is not listed as a permitted financial
institution on Schedule II attached hereto, subject to the consent of the Company, not to be unreasonably withheld), and upon
such move, such New Collateral Account shall be the Collateral Account for all purposes hereunder.

 

7.
Netting Rights.

 

(a)
Securities Contract. The Company and the Investor hereby acknowledge and agree that the Securities Purchase Agreement and
the Note Purchase Agreement each is a “securities contract” as defined in 11 U.S.C. § 741 and that Investor shall
have all rights in respect of the Investor Note, the Series B Note, the Master Netting Agreement, the Securities Purchase Agreement
and the Note Purchase Agreement as are set forth in 11 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including, without limitation,
all rights of credit, deduction, setoff, offset, recoupment, and netting (collectively, “Netting” or “Net”)
as are available under this Note, the Series B Note and the Master Netting Agreement.

 

    	 	5	 

     

    

 

(b)
Investor Optional Netting. Notwithstanding anything herein to the contrary, the Investor may, (I) on or after the March
19, 2019 (such date, the “Eligible Optional Netting Date”) or (II) at any time on or after the occurrence of
a Minimum Price Failure, an Event of Default (as defined in the Series B Note) or a Change of Control (as defined in the Series
B Note) (in each case, whether or not a Redemption Notice (as defined in the Series B Note) has been delivered by the Investor
to the Company with respect thereto) or, (III) after February 19, 2019, as long as an Equity Conditions Failure exists and is
continuing, in each case, at its option and at its sole discretion, by written notice to the Company (each, an “Investor
Optional Netting Election Notice”), Net, in whole or in part, any Permitted Amount (as defined in the Master Netting
Agreement) of any Unpaid Amount (as defined in the Master Netting Agreement) owed by the Investor to the Company under this Note
or any other Underlying Agreement (as defined in the Master Netting Agreement) against (across or within each or all of the Underlying
Agreements) (x) any Unpaid Amounts owed by the Company to the Investor under the Series B Notes or (y) any Unpaid Amounts (subject
to the limitations contained in the Master Netting Agreement regarding an Equity Conditions Failure) owed by the Company to the
Investor under any other Underlying Agreement, as set forth in such written notice (each, an “Investor Optional Netting”);
provided, that no Investor Optional Netting shall occur hereunder with respect to any Mandatory Prepayment Amount that the Investor
fails to properly prepay hereunder in violation of this Note. Each Investor Optional Netting shall occur on such applicable date
as set forth by the Investor in the Investor Optional Netting Election Notice. Upon any Investor Optional Netting, (x) such portion
of Principal subject to such Investor Optional Netting shall be deemed surrendered and concurrently cancelled as of the date of
such Investor Optional Netting and (y) any accrued and unpaid Interest hereunder with respect to such portion of Principal subject
to such Investor Optional Netting shall be automatically cancelled as of the date of such Investor Optional Netting. Each Investor
Optional Netting shall be effective upon the date the Investor delivers written notice to the Company of the Investor’s
election to effect such Investor Optional Netting.

 

(c)
Netting at Redemption Date. Notwithstanding anything herein to the contrary, with respect to any required redemption of
all, or any part, of the Series B Note, solely to the extent such portion of the Conversion Amount (as defined in the Series B
Note) subject to such redemption includes Restricted Principal (such aggregate amount of Restricted Principal, each, a “Redemption
Restricted Amount”), the Investor, at its sole discretion, by written notice (each, a “Redemption Netting Election
Notice”) to the Company, may Net (each, a “Redemption Netting”) such part of the outstanding obligations
under the Series B Note equal to such Redemption Restricted Amount by the cancellation of the Redemption Restricted Amount of
the outstanding obligations under the Series B Note in exchange for the surrender and concurrent cancellation of such portion
of this Note with an amount of aggregate Principal then outstanding hereunder equal to such Redemption Restricted Amount (each
a “Redemption Netting Principal Amount”). Upon any Redemption Netting, any accrued and unpaid Interest hereunder
with respect to such Redemption Netting Principal Amount being cancelled in such Redemption Netting shall be automatically cancelled
as of the date of such Redemption Netting and, thereafter, such Redemption Netting Principal Amount of this Note shall be deemed
to be paid in full and shall be null and void. Each Redemption Netting shall occur on such applicable date as set forth by the
Investor in the Redemption Netting Election Notice. For the avoidance of doubt, if prior to the date of the applicable Redemption
Netting all, or any portion, of a Redemption Restricted Amount is converted (whether by Acceleration (as defined in the Series
B Note) or otherwise in accordance with the terms of the Series B Note) or, with respect to an Installment Amount, subject to
a Deferral (as defined in the Series B Note) or a waiver of an Equity Conditions Failure or such other event occurs whereafter
such portion of the Redemption Restricted Amount is not required to be redeemed on the Redemption Date in accordance with the
terms of the Series B Note (as amended, modified or waived on or prior to such date)(each a “Reversed Redemption Restricted
Amount”), solely with respect to such Redemption Date, no Redemption Netting shall occur with respect to such Reversed
Redemption Restricted Amount.

 

    	 	6	 

     

    

 

(d)
Automatic Netting at Maturity. Notwithstanding anything herein to the contrary, at the Maturity Date (as defined in the
Series B Note), if any amounts remain outstanding under the Series B Note and hereunder, the Investor shall automatically Net
such part of the outstanding obligations under the Series B Note equal to the aggregate Principal then outstanding hereunder (the
“Remaining Principal Amount”) by the cancellation of the Remaining Principal Amount of the outstanding obligations
under the Series B Note in exchange for the surrender and concurrent cancellation of the aggregate Principal then outstanding
hereunder (the “Maturity Netting”). Upon any Maturity Netting, any accrued and unpaid Interest hereunder with
respect to such portion of Principal being cancelled in such Maturity Netting shall be automatically cancelled as of the date
of such Maturity Netting and, thereafter, this Note shall be deemed to be paid in full and shall be null and void. The Maturity
Netting shall automatically occur on the Maturity Date (as defined in the Series B Note).

 

(e)
Event of Default Netting. Notwithstanding anything herein to the contrary, Investor may, at any time on or after the occurrence
of any Event of Default under the Series B Note, but prior to the related Event of Default Right Expiration Date (as defined in
the Series B Note, at its sole discretion, by written notice to the Company, Net all, or any part, of the outstanding obligations
under the Series B Note by the cancellation of such portion of the outstanding obligations under the Series B Note as set forth
in such written notice in exchange for the surrender and concurrent cancellation of an equal amount of Principal hereunder (each,
an “Event of Default Netting”). Upon any Event of Default Netting, any accrued and unpaid Interest hereunder
with respect to such portion of Principal being satisfied in such Event of Default Netting shall be automatically cancelled as
of the date of such Event of Default Netting. Each Event of Default Netting shall be effective upon the date the Investor delivers
notice to the Company of the Investor’s election to effect such Event of Default Netting.

 

    	 	7	 

     

    

 

(f)
Automatic Netting Upon any Bankruptcy Event of Default. Notwithstanding anything herein to the contrary, upon any Bankruptcy
Event of Default under the Series B Note, the Investor shall automatically Net such part of the outstanding obligations under
the Series B Note equal to the Remaining Principal Amount by the cancellation of the Remaining Principal Amount of the outstanding
obligations under the Series B Note in exchange for the surrender and concurrent cancellation of the aggregate Principal then
outstanding hereunder (each, a “Bankruptcy Event of Default Netting”, and together with the Investor Optional
Netting, Redemption Netting, Maturity Netting and Event of Default Netting, collectively, the “Investor Netting Rights”).
Upon any Bankruptcy Event of Default Netting, any accrued and unpaid Interest hereunder with respect to such portion of Principal
being satisfied in such Bankruptcy Event of Default Netting shall be automatically cancelled as of the date of such Bankruptcy
Event of Default Netting and, thereafter, this Note shall be deemed to be paid in full and shall be null and void. Each Bankruptcy
Event of Default Netting shall be effective upon the date of the earliest occurrence of a Bankruptcy Event (as defined in the
Series B Note) under the Series B Note.

 

(g)
Automatic Netting Upon Prohibited Transfers of this Note. If for any reason, this Note or any interest herein is pledged,
assigned or transferred to any Person other than the Company without the prior written consent of the Investor, whether by contract,
operation of law, court order or otherwise (each, a “Prohibited Transfer”), the Investor shall automatically
Net such part of the outstanding obligations under the Series B Note equal to 75% of the remaining Restricted Principal then outstanding
under the Series B Note (with the remaining 25% of the Restricted Principal of the Series B Note automatically becoming unrestricted
principal thereunder) in exchange for the surrender and concurrent cancellation of the aggregate Principal then outstanding hereunder.
Upon any Prohibited Transfer, any accrued and unpaid Interest hereunder shall be automatically cancelled as of the date of such
Prohibited Transfer and, thereafter, this Note shall be deemed to be paid in full and shall be null and void.

 

(h)
Default Netting. Notwithstanding anything herein to the contrary, Investor may, at any time on or after the occurrence
of any Investor Note Acceleration, by written notice to the Company (each, a “Default Netting Electing Notice”),
in lieu of making any payment under this Note in cash, Net all, or any part, of the outstanding obligations under the Series B
Note by the cancellation of such portion of the outstanding obligations under the Series B Note as set forth in such written notice
in exchange for the surrender and concurrent cancellation of an equal amount of Principal hereunder (each, a “Default
Netting”). Each Default Netting shall occur on such applicable date as set forth by the Investor in the Default Netting
Election Notice. Upon any Default Netting, any accrued and unpaid Interest hereunder with respect to such portion of Principal
being satisfied in such Default Netting shall be automatically cancelled as of the date of such Default Netting. Each Default
Netting shall be effective upon the date the Investor delivers notice to the Company of the Investor’s election to effect
such Netting.

 

(i)
Investor Netting Rights; Single Integrated Transaction. The Company hereby acknowledges and agrees that (i) the Investor
shall be entitled to exercise the Investor Netting Rights through any means permissible under applicable law, including without
limitation, set-off and Netting and (ii) the Obligations of the Investor hereunder and the obligations of the Company under the
Series B Note issued pursuant to the Securities Purchase Agreement arise in a single integrated transaction and constitute related
and interdependent obligations within such transaction.

 

    	 	8	 

     

    

 

8.
Miscellaneous.

 

(a)
Full Recourse. The parties hereby acknowledge and agree that this Note is a full recourse obligation of the Investor.

 

(b)
No Oral Waivers or Modifications. No provision of this Note may be waived or modified orally, but only in a writing signed
by the Company and the Investor.

 

(c)
Governing Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the Borough of Manhattan in the City of New York,
New York, 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. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(d)
No Severability. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction or other similar authority (a “Severability Event”), this entire Note
shall be automatically terminated and shall thereafter be null and void and all remaining payment obligations hereunder of the
Investor to the Company shall be automatically cancelled, ab initio.

 

(e)
Currency. Principal and interest due hereunder shall be payable in lawful money of the United States of America and shall
be payable to the Company at the address of the Company, or at such other address as may be specified in a written notice to the
Investor given by the Company. The Company has provided the Investor with wire transfer instructions pursuant to which payments
may be made under this Note and such wire transfer instruction shall be valid for the entire period of this Note.

 

    	 	9	 

     

    

 

(f)
Weekend; Holidays. If any payment on this Note shall become due on a Saturday, Sunday or a bank or legal holiday in the
State of New York, such payment shall be made on the next succeeding business day in the State of New York.

 

(g)
Usury. If interest payable under this Note is in excess of the maximum permitted by law, the interest chargeable hereunder
shall be reduced to the maximum amount permitted by law and any excess over the maximum amount permitted by law shall be credited
to the Principal balance of this Note and applied to the same and not to the payment of Interest.

 

(h)
Remedies.

 

(i)
No failure on the part of the Company to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the Company of any right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy. In addition, the exercise of any right or remedy
of the Company at law or equity or under this Note shall not be deemed to be an election of Company’s rights or remedies
under this Note or at law or equity.

 

(ii)
No failure on the part of the Investor to exercise, and no delay in exercising, any right, power or remedy hereunder (including,
without limitation, any Netting permitted hereunder) shall operate as a waiver thereof; nor shall any single or partial exercise
by the Investor of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right,
power or remedy. The remedies herein provided are cumulative and are not exclusive of any remedies provided by law. In addition,
the exercise of any right or remedy of the Investor at law or equity or under this Note shall not be deemed to be an election
of Investor’s rights or remedies under this Note or at law or equity.

 

(i)
Waiver of Presentment. The Investor hereby waives presentment, diligence, protest and demand, notice of protest, demand
and dishonor and nonpayment of this Note.

 

[Signature
Page Follows]

 

    	 	10	 

     

    

 

IN
WITNESS WHEREOF, this Note has been executed as of the date first written above.

 

	 	ALTO
    OPPORTUNITY MASTER FUND, SPC - SEGREGATED MASTER PORTFOLIO B
	 	 	 
	 	By:	               
	 	Name:
    	 
	 	Title:	 

 

Agreed
and accepted as of

this
19th day of August, 2019 by:

 

	TOUGHBUILT
    INDUSTRIES, INC.	 
	 	 	 
	By:	               	 
	Name:
    	 	 
	Title:	 	 

 

    	 	11	 

     

    

 

Schedule
I

 

Collateral
Account

 

Bank:

Bank Address:

Account
Number:

Account Name:

 

    	 

     

    

 

Schedule
II

 

Permitted
Financial Institutions

 

Pershing
LLC or any of their affiliates

HSBC
NA, or any of their affiliates

BNP
Paribas, or any of their affiliates

Wells
Fargo Bank or any of their affiliates

Cowen
& Co. or any of their affiliates

UBS
AG or any of their affiliates

Citibank
NA or any of their affiliates

Bank
of America Merrill Lynch or any of their affiliates

Deutsche
Bank, AG or any of their affiliates

Fidelity
Investments, FMR LLC or any of their affiliates

Morgan
Stanley or any of their affiliates

First
Republic Bank or any of their affiliatesEXECUTION
COPY

 

GUARANTY

 

This
GUARANTY, dated as of August 19, 2019 (this “Guaranty”), is made by each of the undersigned (each a “Guarantor”,
and collectively, the “Guarantors”), in favor of Alto Opportunity Master Fund, SPC - Segregated Master Portfolio
B, in its capacity as collateral agent (in such capacity, the “Collateral Agent” as hereinafter further defined)
for the “Buyers” party to the Securities Purchase Agreement (each as defined below).

 

W
I T N E S S E T H :

 

WHEREAS,
Toughbuilt Industries, Inc., a Nevada corporation (the “Company”), and each party listed as a “Buyer”
on the Schedule of Buyers attached thereto (collectively, the “Buyers”) are parties to the Securities Purchase
Agreement, dated as of August 19, 2019 (as amended, restated, extended, replaced or otherwise modified from time to time, the
“Securities Purchase Agreement”), pursuant to which the Company shall be required to sell, and the Buyers shall
purchase or have the right to purchase, the “Notes” and “Warrants” issued pursuant thereto (as such Notes
or Warrants may be amended, restated, extended, replaced or otherwise modified from time to time in accordance with the terms
thereof, collectively, the “Notes” or “Warrants”, respectively);

 

WHEREAS,
the Securities Purchase Agreement requires that the Guarantors execute and deliver to the Collateral Agent, (i) a guaranty guaranteeing
all of the obligations of the Company under the Securities Purchase Agreement, the Notes and the other Transaction Documents (as
defined below); and (ii) a Security and Pledge Agreement, dated as of August 19, 2019, granting the Collateral Agent a lien on
and security interest in all of their assets and properties (the “Security Agreement”); and

 

WHEREAS,
each Guarantor has determined that the execution, delivery and performance of this Guaranty directly benefits, and is in the best
interest of, such Guarantor.

 

NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities
Purchase Agreement, each Guarantor hereby agrees with each Buyer as follows:

 

Section
1. Definitions. Reference is hereby made
to the Securities Purchase Agreement and the Notes for a statement of the terms thereof. All terms used in this Guaranty and the
recitals hereto which are defined in the Securities Purchase Agreement or the Notes, and which are not otherwise defined herein
shall have the same meanings herein as set forth therein. In addition, the following terms when used in the Guaranty shall have
the meanings set forth below:

 

“Bankruptcy
Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable
bankruptcy, insolvency or similar laws).

 

“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in New York City are authorized
or required by law to remain closed.

 

“Buyer”
or “Buyers” shall have the meaning set forth in the recitals hereto.

 

    	 	 	 

     

    

 

“Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or
other equivalents (however designated and whether or not voting) of corporate stock (including, without limitation, any warrants,
options, rights or other securities exercisable or convertible into equity interests or securities of such Person), and (ii) with
respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.

 

“Collateral”
means all assets and properties of the Company and each Guarantor, wherever located and whether now or hereafter existing
and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation,
the collateral described in Section 2 of the Security Agreement.

 

“Collateral
Agent” shall have the meaning set forth in the recitals hereto.

 

“Company”
shall have the meaning set forth in the recitals hereto.

 

“Governmental
Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other
political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity
exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Guaranteed
Obligations” shall have the meaning set forth in Section 2 of this Guaranty.

 

“Guarantor”
or “Guarantors” shall have the meaning set forth in the recitals hereto.

 

“Indemnified
Party” shall have the meaning set forth in Section 13(a) of this Guaranty

 

“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under
any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions,
or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

 

“Notes”
shall have the meaning set forth in the recitals hereto.

 

“Obligations”
shall have the meaning set forth in Section 3 of the Security Agreement.

 

“Other
Taxes” shall have the meaning set forth in Section 12(a)(iv) of this Guaranty.

 

“Paid
in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Guaranteed Obligations.

 

“Person”
means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental Authority.

 

“Securities
Purchase Agreement” shall have the meaning set forth in the recitals hereto.

 

    	 	2	 

     

    

 

“Security
Agreement” shall have the meaning set forth in the recitals hereto.

 

“Subsidiary”
means any Person in which a Guarantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity
or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration
of such Person, and all of the foregoing, collectively, “Subsidiaries”.

 

“Taxes”
shall have the meaning set forth in Section 12(a) of this Guaranty.

 

“Transaction
Party” means the Company and each Guarantor, collectively, “Transaction Parties”.

 

“Warrants”
shall have the meaning set forth in the recitals hereto.

 

Section
2. Guaranty.

 

(a)
The Guarantors, jointly and severally, hereby unconditionally and irrevocably, guaranty to the Collateral Agent, for the benefit
of the Collateral Agent and the Buyers, the punctual payment, as and when due and payable, by stated maturity or otherwise, of
all Obligations, including, without limitation, all interest, make-whole and other amounts that accrue after the commencement
of any Insolvency Proceeding of the Company or any Guarantor, whether or not the payment of such interest, make-whole and/or other
amounts are enforceable or are allowable in such Insolvency Proceeding, and all fees, interest, premiums, penalties, causes of
actions, costs, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under any of
the Transaction Documents (all of the foregoing collectively being the “Guaranteed Obligations”), and agrees
to pay any and all costs and expenses (including counsel fees and expenses) incurred by the Collateral Agent in enforcing any
rights under this Guaranty or any other Transaction Document. Without limiting the generality of the foregoing, each Guarantor’s
liability hereunder shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Company
to the Collateral Agent or any Buyer under the Securities Purchase Agreement and the Notes but for the fact that they are unenforceable
or not allowable due to the existence of an Insolvency Proceeding involving any Transaction Party.

 

(b)
Each Guarantor, and by its acceptance of this Guaranty, the Collateral Agent and each Buyer, hereby confirms that it is the intention
of all such Persons that this Guaranty and the Guaranteed Obligations of each Guarantor hereunder not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar foreign, federal, provincial, state, or other applicable law to the extent applicable to this Guaranty and
the Guaranteed Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Collateral Agent, the Buyers
and the Guarantors hereby irrevocably agree that the Guaranteed Obligations of each Guarantor under this Guaranty at any time
shall be limited to the maximum amount as will result in the Guaranteed Obligations of such Guarantor under this Guaranty not
constituting a fraudulent transfer or conveyance.

 

    	 	3	 

     

    

 

Section
3. Guaranty Absolute; Continuing Guaranty;
Assignments.

 

(a)
The Guarantors, jointly and severally, guaranty that the Guaranteed Obligations will be paid strictly in accordance with the terms
of the Transaction Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Collateral Agent or any Buyer with respect thereto. The obligations of each Guarantor under
this Guaranty are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against
any Guarantor to enforce such obligations, irrespective of whether any action is brought against any Transaction Party or whether
any Transaction Party is joined in any such action or actions. The liability of any Guarantor under this Guaranty shall be as
a primary obligor (and not merely as a surety) and shall be irrevocable, absolute and unconditional irrespective of, and each
Guarantor hereby irrevocably waives, to the extent permitted by law, any defenses it may now or hereafter have in any way relating
to, any or all of the following:

 

(i)
any lack of validity or enforceability of any Transaction Document;

 

(ii)
any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from any Transaction Document, including, without limitation, any increase
in the Guaranteed Obligations resulting from the extension of additional credit to any Transaction Party or extension of the maturity
of any Guaranteed Obligations or otherwise;

 

(iii)
any taking, exchange, release or non-perfection of any Collateral;

 

(iv)
any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed
Obligations;

 

(v)
any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of
any Transaction Party;

 

(vi)
any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations,
or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations
or any other Obligations of any Transaction Party under the Transaction Documents or any other assets of any Transaction Party
or any of its Subsidiaries;

 

(vii)
any failure of the Collateral Agent or any Buyer to disclose to any Transaction Party any information relating to the business,
condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party now or hereafter
known to the Collateral Agent or any Buyer (each Guarantor waiving any duty on the part of the Collateral Agent or any Buyer to
disclose such information);

 

(viii)
taking any action in furtherance of the release of any Guarantor or any other Person that is liable for the Obligations from all
or any part of any liability arising under or in connection with any Transaction Document without the prior written consent of
the Collateral Agent; or

 

(ix)
any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation
by the Collateral Agent or any Buyer that might otherwise constitute a defense available to, or a discharge of, any Transaction
Party or any other guarantor or surety.

 

    	 	4	 

     

    

 

(b)
This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Collateral Agent, any Buyer, or any other Person upon the insolvency,
bankruptcy or reorganization of any Transaction Party or otherwise, all as though such payment had not been made.

 

(c)
This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations
(other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each
Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon each Guarantor and its respective successors
and assigns. This Guaranty shall inure to the benefit of and be enforceable by the Collateral Agent, the Buyers, and their respective
successors, and permitted pledgees, transferees and assigns. Without limiting the generality of the foregoing sentence, the Collateral
Agent or any Buyer may pledge, assign or otherwise transfer all or any portion of its rights and obligations under and subject
to the terms of any Transaction Document to any other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Collateral Agent or such Buyer (as applicable) herein or otherwise, in each case as
provided in the Securities Purchase Agreement or such Transaction Document.

 

Section
4. Waivers. To the extent permitted by
applicable law, each Guarantor hereby waives promptness, diligence, protest, notice of acceptance and any other notice or formality
of any kind with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Collateral Agent
exhaust any right or take any action against any Transaction Party or any other Person or any Collateral. Each Guarantor acknowledges
that it will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set
forth in this Section 4 is knowingly made in contemplation of such benefits. The Guarantors hereby waive any right to revoke
this Guaranty, and acknowledge that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future. Without limiting the foregoing, to the extent permitted by applicable law, each Guarantor hereby unconditionally
and irrevocably waives (a) any defense arising by reason of any claim or defense based upon an election of remedies by the Collateral
Agent or any Buyer that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any
of the other Transaction Parties, any other guarantor or any other Person or any Collateral, and (b) any defense based on any
right of set-off or counterclaim against or in respect of the Guaranteed Obligations of such Guarantor hereunder. Each Guarantor
hereby unconditionally and irrevocably waives any duty on the part of the Collateral Agent or any Buyer to disclose to such Guarantor
any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or
prospects of any other Transaction Party or any of its Subsidiaries now or hereafter known by the Collateral Agent or a Buyer.

 

    	 	5	 

     

    

 

Section
5. Subrogation. No Guarantor may exercise
any rights that it may now or hereafter acquire against any Transaction Party or any other guarantor that arise from the existence,
payment, performance or enforcement of any Guarantor’s obligations under this Guaranty, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or
remedy of the Collateral Agent or any Buyer against any Transaction Party or any other guarantor or any Collateral, whether or
not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the
right to take or receive from any Transaction Party or any other guarantor, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until there
has been Payment in Full of the Guaranteed Obligations. If any amount shall be paid to a Guarantor in violation of the immediately
preceding sentence at any time prior to Payment in Full of the Guaranteed Obligations and all other amounts payable under this
Guaranty, such amount shall be held in trust for the benefit of the Collateral Agent and shall forthwith be paid to the Collateral
Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Transaction Document, or to be held as Collateral for any Guaranteed Obligations
or other amounts payable under this Guaranty thereafter arising. If (a) any Guarantor shall make payment to the Collateral Agent
of all or any part of the Guaranteed Obligations, and (b) there has been Payment in Full of the Guaranteed Obligations, the Collateral
Agent will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest
in the Guaranteed Obligations resulting from such payment by such Guarantor.

 

Section
6. Representations, Warranties and Covenants.

 

(a)
Each Guarantor hereby represents and warrants as of the date first written above as follows:

 

(i)
such Guarantor (A) is a corporation, limited liability company or limited partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization as set forth on the signature pages hereto, (B) has all requisite
corporate, limited liability company or limited partnership power and authority to conduct its business as now conducted and as
presently contemplated and to execute, deliver and perform its obligations under this Guaranty and each other Transaction Document
to which such Guarantor is a party, and to consummate the transactions contemplated hereby and thereby and (C) is duly qualified
to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary except where the failure to be so qualified (individually
or in the aggregate) would not result in a Material Adverse Effect.

 

(ii)
The execution, delivery and performance by such Guarantor of this Guaranty and each other Transaction Document to which such Guarantor
is a party (A) have been duly authorized by all necessary corporate, limited liability company or limited partnership action,
(B) do not and will not contravene its charter, articles, certificate of formation or by-laws, its limited liability company or
operating agreement or its certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual
restriction binding on such Guarantor or its properties do not and will not result in or require the creation of any lien, security
interest or encumbrance (other than pursuant to any Transaction Document) upon or with respect to any of its properties, and (C)
do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any
material permit, license, authorization or approval applicable to it or its operations or any of its properties.

 

    	 	6	 

     

    

 

(iii)
No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is
required in connection with the due execution, delivery and performance by such Guarantor of this Guaranty or any of the other
Transaction Documents to which such Guarantor is a party (other than expressly provided for in any of the Transaction Documents).

 

(iv)
This Guaranty has been duly executed and delivered by each Guarantor and is, and each of the other Transaction Documents to which
such Guarantor is or will be a party, when executed and delivered, will be, a legal, valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as may be limited by the Bankruptcy Code or other applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or similar laws and equitable principles
(regardless of whether enforcement is sought in equity or at law).

 

(v)
There is no pending or, to the best knowledge of such Guarantor, threatened action, suit or proceeding against such Guarantor
or to which any of the properties of such Guarantor is subject, before any court or other Governmental Authority or any arbitrator
that (A) if adversely determined, could reasonably be expected to have a Material Adverse Effect or (B) relates to this Guaranty
or any of the other Transaction Documents to which such Guarantor is a party or any transaction contemplated hereby or thereby.

 

(vi)
Such Guarantor (A) has read and understands the terms and conditions of the Securities Purchase Agreement and the other Transaction
Documents, and (B) now has and will continue to have independent means of obtaining information concerning the affairs, financial
condition and business of the Company and the other Transaction Parties, and has no need of, or right to obtain from the Collateral
Agent or any Buyer, any credit or other information concerning the affairs, financial condition or business of the Company or
the other Transaction Parties.

 

(vii)
There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived.

 

(b)
Each Guarantor covenants and agrees that until Payment in Full of the Guaranteed Obligations, it will comply with each of the
covenants (except to the extent applicable only to a public company) which are set forth in Section 4 of the Securities Purchase
Agreement as if such Guarantor were a party thereto.

 

    	 	7	 

     

    

 

Section
7. Right of Set-off. Upon the occurrence
and during the continuance of any Event of Default, the Collateral Agent and any Buyer may, and is hereby authorized to, at any
time and from time to time, without notice to the Guarantors (any such notice being expressly waived by each Guarantor) and to
the fullest extent permitted by law, set-off and apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Collateral Agent or any Buyer to or for the credit or
the account of any Guarantor against any and all obligations of the Guarantors now or hereafter existing under this Guaranty or
any other Transaction Document, irrespective of whether or not the Collateral Agent or any Buyer shall have made any demand under
this Guaranty or any other Transaction Document and although such obligations may be contingent or unmatured. The Collateral Agent
and each Buyer agrees to notify the relevant Guarantor promptly after any such set-off and application made by the Collateral
Agent or such Buyer, provided that the failure to give such notice shall not affect the validity of such set-off and application.
The rights of the Collateral Agent or any Buyer under this Section 7 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Collateral Agent or such Buyer may have under this Guaranty or any other
Transaction Document in law or otherwise.

 

Section
8. Limitation on Guaranteed Obligations.

 

(a)
Notwithstanding any provision herein contained to the contrary, each Guarantor’s liability hereunder shall be limited to
an amount not to exceed as of any date of determination the greater of:

 

(i)
the amount of all Guaranteed Obligations, plus interest thereon at the applicable Interest Rate as specified in the Note; and

 

(ii)
the amount which could be claimed by the Collateral Agent from any Guarantor under this Guaranty without rendering such claim
voidable or avoidable under the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law after taking into account, among other things, Guarantor’s right of contribution
and indemnification.

 

(b)
Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability
of such Guarantor hereunder without impairing the guaranty hereunder or affecting the rights and remedies of the Collateral Agent
or any Buyer hereunder or under applicable law.

 

(c)
No payment made by the Company, any Guarantor, any other guarantor or any other Person or received or collected by the Collateral
Agent or any other Buyer from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action
or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of
the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder
which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Guaranteed Obligations
or any payment received or collected from such Guarantor in respect of the Guaranteed Obligations), remain liable for the Guaranteed
Obligations up to the maximum liability of such Guarantor hereunder until after all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall have been Paid in Full.

 

Section
9. Notices, Etc. Any notices, consents,
waivers or other communications required or permitted to be given under the terms of this Guaranty must be in writing and will
be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one
(1) Business Day after deposit with an nationally recognized overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same. All notices and other communications provided for hereunder shall be
sent, if to any Guarantor, to the Company’s address and/or facsimile number, or if to the Collateral Agent or any Buyer,
to it at its respective address and/or facsimile number, each as set forth in Section 9(f) of the Securities Purchase Agreement

 

    	 	8	 

     

    

 

Section
10.  Governing Law; Jurisdiction. All questions
concerning the construction, validity, enforcement and interpretation of this Guaranty 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 jurisdiction other than the State
of New York. Each Guarantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or under any
of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim, obligation or defense 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 Section 9(f) of the Securities Purchase Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Buyers
from bringing suit or taking other legal action against any Guarantor in any other jurisdiction to collect on a Guarantor’s
obligations or to enforce a judgment or other court ruling in favor of the Collateral Agent or a Buyer.

 

Section
11. WAIVER OF JURY TRIAL, ETC. EACH GUARANTOR
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY, ANY OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

Section
12. Taxes.

 

(a)
All payments made by any Guarantor hereunder or under any other Transaction Document shall be made in accordance with the terms
of the respective Transaction Document and shall be made without set-off, counterclaim, withholding, deduction or other defense.
Without limiting the foregoing, all such payments shall be made free and clear of and without deduction or withholding for any
present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on the net income of the Collateral Agent or any Buyer by the jurisdiction in which the Collateral Agent or
such Buyer is organized or where it has its principal lending office (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities, collectively or individually, “Taxes”). If any Guarantor shall be required
to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under any other Transaction Document:

 

    	 	9	 

     

    

 

(i)
the amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings
(including Taxes on amounts payable to the Collateral Agent or any Buyer pursuant to this sentence) the Collateral Agent or each
Buyer receives an amount equal to the sum it would have received had no such deduction or withholding been made,

 

(ii)
such Guarantor shall make such deduction or withholding,

 

(iii)
such Guarantor shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable
law, and

 

(iv)
as promptly as possible thereafter, such Guarantor shall send the Collateral Agent or each Buyer an official receipt (or, if an
official receipt is not available, such other documentation as shall be satisfactory to the Collateral Agent, as the case may
be) showing payment. In addition, each Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration
or enforcement of, or otherwise with respect to, this Guaranty or any other Transaction Document (collectively, “Other
Taxes”).

 

(b)
Each Guarantor hereby indemnifies and agrees to hold each Indemnified Party harmless from and against Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 12) paid
by any Indemnified Party as a result of any payment made hereunder or from the execution, delivery, registration or enforcement
of, or otherwise with respect to, this Guaranty or any other Transaction Document, and any liability (including penalties, interest
and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. This indemnification shall be paid within thirty (30) days from the date on which
the Collateral Agent or such Buyer makes written demand therefor, which demand shall identify the nature and amount of such Taxes
or Other Taxes.

 

(c)
If any Guarantor fails to perform any of its obligations under this Section 12, such Guarantor shall indemnify the Collateral
Agent and each Buyer for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations
of the Guarantors under this Section 12 shall survive the termination of this Guaranty and the payment of the Obligations
and all other amounts payable hereunder.

 

Section
13.  Indemnification.

 

(a)
Without limitation of any other obligations of any Guarantor or remedies of the Collateral Agent or the Buyers under this Guaranty
or applicable law, except to the extent resulting from such Indemnified Party’s gross negligence or willful misconduct,
as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal, each Guarantor shall, to the
fullest extent permitted by law, indemnify, defend and save and hold harmless the Collateral Agent and each Buyer and each of
their affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”)
from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party in connection
with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Transaction
Party enforceable against such Transaction Party in accordance with their terms.

 

    	 	10	 

     

    

 

(b)
Each Guarantor hereby also agrees that none of the Indemnified Parties shall have any liability (whether direct or indirect, in
contract, tort or otherwise) or any fiduciary duty or obligation to any of the Guarantors or any of their respective affiliates
or any of their respective officers, directors, employees, agents and advisors, and each Guarantor hereby agrees not to assert
any claim against any Indemnified Party on any theory of liability, for special, indirect, consequential, incidental or punitive
damages arising out of or otherwise relating to the facilities, the actual or proposed use of the proceeds of the advances, the
Transaction Documents or any of the transactions contemplated by the Transaction Documents.

 

Section
14. Miscellaneous.

 

(a)
Each Guarantor will make each payment hereunder in lawful money of the United States of America and in immediately available funds
to the Collateral Agent or each Buyer, at such address specified by the Collateral Agent or such Buyer from time to time by notice
to the Guarantors.

 

(b)
No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by each Guarantor, the Collateral Agent and each Buyer, and
then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

(c)
No failure on the part of the Collateral Agent or any Buyer to exercise, and no delay in exercising, any right or remedy hereunder
or under any other Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right
hereunder or under any Transaction Document preclude any other or further exercise thereof or the exercise of any other right
or remedy. The rights and remedies of the Collateral Agent and the Buyers provided herein and in the other Transaction Documents
are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights and remedies of
the Collateral Agent and the Buyers under any Transaction Document against any party thereto are not conditional or contingent
on any attempt by the Collateral Agent or any Buyer to exercise any of their respective rights or remedies under any other Transaction
Document against such party or against any other Person.

 

(d)
Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

 

    	 	11	 

     

    

 

(e)
This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations
(other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each
Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon each Guarantor and its respective successors
and assigns. This Guaranty shall inure, together with all rights and remedies of the Collateral Agent hereunder, to the benefit
of and be enforceable by the Collateral Agent, the Buyers, and their respective successors, and permitted pledgees, transferees
and assigns. Without limiting the generality of the foregoing sentence, the Collateral Agent or any Buyer may pledge, assign or
otherwise transfer all or any portion of its rights and obligations under and subject to the terms of the Securities Purchase
Agreement or any other Transaction Document to any other Person in accordance with the terms thereof, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the Collateral Agent or such Buyer (as applicable)
herein or otherwise, in each case as provided in the Securities Purchase Agreement or such Transaction Document. None of the rights
or obligations of any Guarantor hereunder may be assigned or otherwise transferred without the prior written consent of each Buyer.

 

(f)
This Guaranty and the other Transaction Documents reflect the entire understanding of the transaction contemplated hereby and
shall not be contradicted or qualified by any other agreement, oral or written, entered into before the date hereof.

 

(g)
Section headings herein are included for convenience of reference only and shall not constitute a part of this Guaranty for any
other purpose.

 

Section
15. Currency Indemnity.

 

If,
for the purpose of obtaining or enforcing judgment against Guarantor in any court in any jurisdiction, it becomes necessary to
convert into any other currency (such other currency being hereinafter in this Section 15 referred to as the “Judgment
Currency”) an amount due under this Guaranty in any currency (the “Obligation Currency”) other than
the Judgment Currency, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding
(a) the date of actual payment of the amount due, in the case of any proceeding in the courts of courts of the jurisdiction that
will give effect to such conversion being made on such date, or (b) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of which such conversion is made pursuant to this Section
15 being hereinafter in this Section 15 referred to as the “Judgment Conversion Date”).

 

If,
in the case of any proceeding in the court of any jurisdiction referred to in the preceding paragraph, there is a change in the
rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt of the amount due in immediately
available funds, the Guarantors shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary
to ensure that the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the
date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of’
the Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion
Date. Any amount due from the Guarantors under this Section 15 shall be due as a separate debt and shall not be affected
by judgment being obtained for any other amounts due under or in respect of this Guaranty.

 

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    	 	12	 

     

    

 

IN
WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by its respective duly authorized officer, as of the date
first above written.

 

	

        
	GUARANTORS:
	 	TOUGHBUILT
                                         TECHNOLOGIES, INC.

	 	 	 
	 	By:	                      
	 	Name:	 
	 	Title:	 

 

[Signatures
continue on following page]

 

    	 	 	 

     

    

 

	

ACCEPTED
BY:

	 
	 	 
	ALTO
                                         OPPORTUNITY MASTER FUND,

SPC
- SEGREGATED MASTER PORTFOLIO B,
 as Collateral Agent

	 
	 	 
	By:	                  	 
	Name:	 	 
	Title:

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