Document:

Transitional Access Agreement

 EXHIBIT 10.4 
  
 TRANSITIONAL ACCESS AGREEMENT 
  
 THIS TRANSITIONAL ACCESS AGREEMENT is entered into as of October 1, 2004 (the “Execution Date”), by and between TXU Energy Retail Company
LP, TXU Business Services Company, TXU Properties Company, and TXU Electric Delivery Company (collectively referred to herein as the “TXU Companies”) and Atmos Energy Corporation (“Atmos Energy”). The aforementioned
entities are referred to collectively as the “Parties” and individually as a “Party”. 
  
 WHEREAS, TXU Gas Company (“TXU Gas”) and the TXU Companies have shared access to certain properties, facilities, software application and other
items with each other; and 
  
 WHEREAS, the Parties desire
to provide each other with the same level of access to such properties, facilities, software application (to the extent contractually authorized under the underlying software agreements) and other items (the “Access”) after the
Execution Date. 
  
 NOW, THEREFORE, in consideration of the
foregoing, the Parties agree as follows: 
  
 ARTICLE I 

ACCESS 
  
 1.1 The Access. The TXU Companies shall provide or cause to be provided to Atmos Energy the Access to the same extent as was being provided by the
TXU Companies to TXU Gas prior to the Execution Date. Atmos Energy shall provide or cause to be provided to the TXU Companies the Access to the same extent as was being provided by TXU Gas to the TXU Companies prior to the Execution Date. The Party
providing or causing to be provided the Access hereunder shall be referred to herein as the “Access Provider” and the Party receiving such Access shall be referred to herein as the “Access Recipient.” 
  
 1.2 Impracticability. The Access Provider shall not be required to
provide any Access to the extent it (a) becomes impracticable, in any material respect, as a result of a cause or causes outside the reasonable control of the Access Provider, (b) would require the Access Provider to violate any applicable laws,
rules, or regulations, or (c) would result in the breach of any agreement or other applicable contract existing on the Execution Date. 
  
 1.3 Information to be Furnished to Access Provider. The Access Recipient agrees to provide the Access Provider in a timely manner with information
necessary for, or reasonably requested by, the Access Provider to provide the Access required to be provided by the Access Provider hereunder. 
  
 1.4 Additional Resources. In providing the Access, the Access Provider shall not be obligated to (a) hire any additional employees, (b) maintain
the employment of any specific employee, or (c) purchase, lease or license any additional equipment or materials. 

 ARTICLE II 
 TERM AND TERMINATION 
  
 2.1
Term. The Access shall commence on the date this Agreement is executed and continue for a period of one (1) year, and month to month thereafter until canceled by either Party with at least 30 days’ prior written notice to the other
Party. Provided, however, Access provided to Atmos Energy by the TXU Companies to any particular property, facility, software application or other item that is related to a service covered by a Transitional Services Agreement issued in connection
with the transaction between Atmos Energy and TXU Gas shall cease at the same time the associated service is terminated. Notwithstanding anything to the contrary, this Agreement or the Access to any facility, property, software application or other
item covered hereunder may be terminated by the mutual written consent of the Parties at any time. 
  
 ARTICLE III 
 GENERAL OBLIGATIONS; STANDARD OF CARE 
  
 3.1 Indemnification by the Access Recipient. With respect to the
Access provided under this Agreement, the Access Recipient shall indemnify, defend, and hold harmless the Access Provider, as applicable, its officers, employees, agents, and consultants from and against any and all liabilities that arise out of, or
result from, the provision of Access by the Access Provider, as applicable, in accordance with this Agreement, other than liabilities arising solely from the gross negligence or willful misconduct of the Access Provider, as applicable, or its agents
or employees. Additionally, each Party will maintain policies of insurance with coverages, limits and deductibles that are reasonable and customary within the industry. 
  
 3.2 Good Faith Cooperation. The Parties will use good faith efforts to cooperate with each other in all matters
relating to the provision and receipt of the Access. 
  
 3.3
Confidentiality. It is understood that from time to time in the performance of this Agreement, that the Parties may receive, or have access to, confidential or proprietary information of the other Party. As such, each Party agrees to keep any
such information confidential and not to disclose such confidential information to third parties. Notwithstanding the forgoing, each Party will have the right to make such disclosures, if any, to governmental agencies, courts of law and to its
affiliates, attorneys, auditors and accountants, as may be reasonably necessary. In the event a Party is required to provide such confidential information in a proceeding before a governmental agency or court of law, then such Party will immediately
notify the other Party, who may seek a protective order or confidentiality agreement, whichever is applicable, and the Party in possession of such confidential information will fully cooperate with the other Party in such efforts. In the event a
Party discloses such confidential information to its affiliates, attorneys, auditors or accountants, then such Party will nevertheless continue to have the obligation to protect such confidential information of the other Party, and will remain
liable for any failure to do so. 
  

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 ARTICLE IV 
 FORCE MAJEURE 
  
 The Access
Provider will be excused for any failure or delay in performing any of its obligations under this Agreement if such failure or delay is caused by Force Majeure. For the purposes of this Agreement, “Force Majeure” means any circumstance or
event beyond the reasonable control of the Party relying upon such event or circumstance, including, without limitation: any act of God; any accident, explosion, fire, ice, earthquake, lightning, tornado, hurricane, or other severe weather condition
or calamity; any civil disturbance, labor dispute, or labor or material shortage or interruption; any sabotage or acts of terrorism; any acts of a public enemy, uprising, insurrection, civil unrest, war, or rebellion; or any action or restraint by
court order or public or governmental authority or lawfully established civilian authorities. 
  
 ARTICLE V 
 MISCELLANEOUS 
  
 5.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject
matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. 
  
 5.2 Governing Law. This Agreement shall be governed and construed and enforced in accordance with the laws of the
State of Texas as to all matters, without regard to principles of conflicts of laws that would require the application of the law of another state. 
  
 5.3 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. 
  
 5.4 Notices. Any
notice, demand, offer, request, or other communication required or permitted to be given by either Party pursuant to the terms of this Agreement shall sent to the other Party’s address set forth below, and will be deemed to be received: (i)
when placed in the United States Mail, postage pre-paid, if mailed; or (ii) when actually received, if delivered by any other means: 
  

			
	 TXU Energy Retail Company LP
 1601 Bryan Street,
42nd Floor
 Dallas,
Texas 75201
	 	 TXU Electric Delivery Company
 1601 Bryan Street,
42nd Floor
 Dallas,
Texas 75201

		
	 TXU Business Services Company
 1601 Bryan Street,
42nd Floor
 Dallas,
Texas 75201
	 	 Atmos Energy Corporation
 1800 Three Lincoln
Centre
 5430 LBJ Freeway
 Dallas, Texas
75240

		
	 TXU Properties Company
 1601 Bryan Street, 42nd Floor
 Dallas, Texas
75201
	 	 

  

 3 

 5.5 Assignability; Third-Party Beneficiaries. Neither Party may, directly or indirectly, in whole
or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other Party’s prior written consent, which consent will not be unreasonably withheld; provided, however, either Party may transfer its
interests, rights and obligations under this Agreement without consent to (i) any parent, (ii) any affiliate, (iii) any individual, bank, trustee, company or corporation as security for any note, notes, bonds or other obligations or securities of
such assignor; or (iv) any party that acquires all or substantially all of the transferring Party’s assets. Each Party shall cause the transferee of any assets necessary for the provision of any Services hereunder or of any documents or records
to which either party may be entitled to access hereunder to be bound by the terms of this Agreement with respect thereto. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective legal representatives and
permitted successors and assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement. 
  
 5.6 Severability. If any term or other provision of this Agreement is
determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal, or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to either Party. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible. 
  
 5.7 Failure Or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either Party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty, or agreement herein, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. 
  
 5.8 Amendment. No change or amendment will be made to this Agreement except by a written instrument signed on behalf of each of the Parties hereto.

  
 5.9 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same Agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties. 
  

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 IN WITNESS WHEREOF, the Parties have signed this Transitional Access Agreement effective as of the
Execution Date. 
  

			
	TXU Electric Delivery Company
		
	By:	 	 /s/  JAMES A. GREER

	Title:	 	 Vice President

	
	TXU Energy Retail Company LP
		
	By:	 	TXU Energy Retail Management Company LLC, its general partner
		
	By:	 	 /s/  ANTHONY HORTON

	Title:	 	 Treasurer and Assistant Secretary

	
	TXU Business Services Company
		
	By:	 	 /s/  ANTHONY HORTON

	Title:	 	 Senior Vice President, Treasurer

 and Assistant Secretary

	
	TXU Properties Company
		
	By:	 	 /s/  ANTHONY HORTON

	Title:	 	 Treasurer and Assistant Secretary

	
	Atmos Energy Corporation
		
	By:	 	 /s/  J. PATRICK REDDY

	Title:	 	 Senior Vice President and Chief Financial Officer

  

 5Securities Purchase Agreement

 Exhibit 10.1 
  
 COACH INDUSTRIES GROUP, INC. 
  

SECURITIES PURCHASE AGREEMENT 
  
 September 29, 2004 

 TABLE OF CONTENTS 
  

							
	 	 	 	 	 	 	Page

	 1.
	 	Agreement to Sell and Purchase	 	1
			
	 2.
	 	Fees and Warrant	 	1
			
	 3.
	 	Closing, Delivery and Payment.	 	2
	 	 	3.1	 	Closing	 	2
	 	 	3.2	 	Delivery	 	2
			
	 4.
	 	Representations and Warranties of the Company	 	3
	 	 	4.1	 	Organization, Good Standing and Qualification	 	3
	 	 	4.2	 	Subsidiaries	 	3
	 	 	4.3	 	Capitalization; Voting Rights	 	4
	 	 	4.4	 	Authorization; Binding Obligations	 	4
	 	 	4.5	 	Liabilities	 	5
	 	 	4.6	 	Agreements; Action	 	5
	 	 	4.7	 	Obligations to Related Parties	 	6
	 	 	4.8	 	Changes	 	6
	 	 	4.9	 	Title to Properties and Assets; Liens, Etc.	 	7
	 	 	4.10	 	Intellectual Property	 	8
	 	 	4.11	 	Compliance with Other Instruments	 	8
	 	 	4.12	 	Litigation	 	9
	 	 	4.13	 	Tax Returns and Payments	 	9
	 	 	4.14	 	Employees	 	9
	 	 	4.15	 	Registration Rights and Voting Rights	 	10
	 	 	4.16	 	Compliance with Laws; Permits	 	10
	 	 	4.17	 	Environmental and Safety Laws	 	11
	 	 	4.18	 	Valid Offering	 	11
	 	 	4.19	 	Full Disclosure	 	11
	 	 	4.20	 	Insurance	 	11
	 	 	4.21	 	SEC Reports	 	12
	 	 	4.22	 	Listing	 	12
	 	 	4.23	 	No Integrated Offering	 	12
	 	 	4.24	 	Stop Transfer	 	12
	 	 	4.25	 	Dilution	 	12
	 	 	4.26	 	Patriot Act	 	12
			
	 5.
	 	Representations and Warranties of the Purchaser	 	13
	 	 	5.1	 	No Shorting	 	13
	 	 	5.2	 	Requisite Power and Authority	 	13
	 	 	5.3	 	Investment Representations	 	14
	 	 	5.4	 	Purchaser Bears Economic Risk	 	14
	 	 	5.5	 	Acquisition for Own Account	 	14
	 	 	5.6	 	Purchaser Can Protect Its Interest	 	14
	 	 	5.7	 	Accredited Investor	 	14
	 	 	5.8	 	Legends	 	15
			
	 6.
	 	Covenants of the Company	 	16

  

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	 	 	6.1	 	Stop-Orders	 	16
	 	 	6.2	 	Listing	 	16
	 	 	6.3	 	Market Regulations	 	16
	 	 	6.4	 	Reporting Requirements	 	16
	 	 	6.5	 	Use of Funds	 	16
	 	 	6.6	 	Access to Facilities	 	16
	 	 	6.7	 	Taxes	 	17
	 	 	6.8	 	Insurance	 	17
	 	 	6.9	 	Intellectual Property	 	18
	 	 	6.10	 	Properties	 	18
	 	 	6.11	 	Confidentiality	 	18
	 	 	6.12	 	Required Approvals	 	19
	 	 	6.13	 	Reissuance of Securities	 	20
	 	 	6.14	 	Opinion	 	20
	 	 	6.15	 	Margin Stock	 	20
	 	 	6.16	 	Restricted Cash Disclosure	 	20
	 	 	6.17	 	Financing Right of First Refusal	 	21
			
	 7.
	 	Covenants of the Purchaser	 	21
	 	 	7.1	 	Confidentiality	 	21
	 	 	7.2	 	Non-Public Information	 	21
			
	 8.
	 	Covenants of the Company and Purchaser Regarding Indemnification	 	21
	 	 	8.1	 	Company Indemnification	 	21
	 	 	8.2	 	Purchaser’s Indemnification	 	22
			
	 9.
	 	Conversion of Convertible Note	 	22
	 	 	9.1	 	Mechanics of Conversion	 	22
			
	 10.
	 	Registration Rights.	 	24
	 10.1
	 	 	 	Registration Rights Granted	 	24
	 	 	10.2	 	Offering Restrictions	 	24
			
	 11.
	 	Miscellaneous	 	24
	 	 	11.1	 	Governing Law	 	24
	 	 	11.2	 	Survival	 	24
	 	 	11.3	 	Successors	 	24
	 	 	11.4	 	Entire Agreement	 	25
	 	 	11.5	 	Severability	 	25
	 	 	11.6	 	Amendment and Waiver	 	25
	 	 	11.7	 	Delays or Omissions	 	25
	 	 	11.8	 	Notices	 	25
	 	 	11.9	 	Attorneys’ Fees	 	26
	 	 	11.10	 	Titles and Subtitles	 	27
	 	 	11.11	 	Facsimile Signatures; Counterparts	 	27
	 	 	11.12	 	Broker’s Fees	 	27
	 	 	11.13	 	Construction	 	27

  

 ii 

			
	 LIST OF EXHIBITS
  
	  	 
	 Form of Convertible Term Note
	  	Exhibit A
	 Form of Warrant
	  	Exhibit B
	 Form of Opinion
	  	Exhibit C
	 Form of Escrow Agreement
	  	Exhibit D

  

 iii 

 SECURITIES PURCHASE AGREEMENT 
  
 THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of September 29, 2004, by and
between Coach Industries Group, Inc., a Nevada corporation (the “Company”), and Laurus Master Fund, Ltd., a Cayman Islands company (the “Purchaser”). 
  
 RECITALS 
  
 WHEREAS, the Company has authorized the sale to the Purchaser of a Convertible Term Note in the aggregate principal amount of Six Million Dollars
($6,000,000) (as amended, modified or supplemented from time to time, the “Note”), which Note is convertible into shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”) at the Fixed Conversion
Price set forth in the Note referred to below (the “Fixed Conversion Price”); 
  
 WHEREAS, the Company wishes to issue a warrant to the Purchaser to purchase up to 1,487,601 shares of the Company’s Common Stock (subject to adjustment as set forth therein) in connection with Purchaser’s
purchase of the Note; 
  
 WHEREAS, Purchaser desires to purchase
the Note and the Warrant (as defined in Section 2) on the terms and conditions set forth herein; and 
  
 WHEREAS, the Company desires to issue and sell the Note and Warrant to Purchaser on the terms and conditions set forth herein. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties and
covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
  
 1. Agreement to Sell and Purchase. Pursuant to the terms and conditions set forth in this Agreement, on the Closing
Date (as defined in Section 3), the Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase from the Company, a Note in the aggregate principal amount of $6,000,000 convertible in accordance with the terms thereof into
shares of the Company’s Common Stock in accordance with the terms of the Note and this Agreement. The Note purchased on the Closing Date shall be known as the “Offering.” A form of the Note is annexed hereto as Exhibit A. The Note
will mature on the Maturity Date (as defined in the Note). Collectively, the Note and Warrant and Common Stock issuable in payment of the Note, upon conversion of the Note and upon exercise of the Warrant are referred to as the
“Securities.” 
  
 2. Fees and Warrant. On the
Closing Date: 
  
 (a) The Company will issue and
deliver to the Purchaser a Warrant to purchase up to 1,487,601 shares of Common Stock in connection with the Offering (as amended, modified or supplemented from time to time, the “Warrant”) pursuant to 

 Section 1 hereof. The Warrant must be delivered on the Closing Date. A form of Warrant is annexed hereto
as Exhibit B. All the representations, covenants, warranties, undertakings, and indemnification, and other rights made or granted to or for the benefit of the Purchaser by the Company are hereby also made and granted in respect of the Warrant and
shares of the Company’s Common Stock issuable upon exercise of the Warrant (the “Warrant Shares”). 
  
 (b) Subject to the terms of Section 2(d) below, the Company shall pay to Laurus Capital Management, L.L.C., the manager of the Purchaser,
a closing payment in an amount equal to four percent (4.0%) of the aggregate principal amount of the Note. The foregoing fee is referred to herein as the “Closing Payment.” 
  
 (c) The Company shall pay Purchaser $39,500 on the Closing Date as reimbursement for its reasonable expenses
(including legal fees and expenses) incurred in connection with the preparation and negotiation of this Agreement and the Related Agreements (as hereinafter defined), and expenses incurred in connection with the Purchaser’s due diligence review
of the Company and its Subsidiaries (as defined in Section 6.8) and all related matters. 
  
 (d) The Closing Payment and the expenses referred to in the preceding clause (c) (net of deposits of $15,000 previously paid by the
Company) shall be paid at closing out of funds held pursuant to an Escrow Agreement (as defined below) and a disbursement letter (the “Disbursement Letter”). 
  
 3. Closing, Delivery and Payment. 
  
 3.1 Closing. Subject to the terms and conditions herein, the closing of the transactions contemplated hereby (the
“Closing”), shall take place on the date hereof, at such time or place as the Company and Purchaser may mutually agree (such date is hereinafter referred to as the “Closing Date”). 
  
 3.2 Delivery. Pursuant to the Escrow Agreement, at the Closing on the
Closing Date, the Company will deliver to the Purchaser, among other things, a Note in the form attached as Exhibit A representing the aggregate principal amount of $6,000,000 and a Warrant in the form attached as Exhibit B in the Purchaser’s
name representing 1,487,601 Warrant Shares and the Purchaser will deliver to the Company, among other things, the amounts set forth in the Disbursement Letter by certified funds or wire transfer (it being understood that $4,400,000 of the proceeds
of the Note shall be placed in the Restricted Account (as defined in the Restricted Account Agreement referred to below)). 
  

 2 

 4. Representations and Warranties of the Company. The Company hereby represents and warrants to
the Purchaser as follows (which representations and warranties are supplemented by the Company’s filings under the Securities Exchange Act of 1934 made prior to the date of this Agreement (collectively, the “Exchange Act Filings”),
copies of which have been provided to the Purchaser): 
  
 4.1
Organization, Good Standing and Qualification. Each of the Company and each of its Subsidiaries is a corporation, partnership or limited liability company, as the case may be, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each of the Company and each of its Subsidiaries has the corporate power and authority to own and operate its properties and assets, to execute and deliver the following agreements or instruments to which it
is a party: (i) this Agreement, (ii) the Note and the Warrant to be issued in connection with this Agreement, (iii) the Master Security Agreement dated as of the date hereof between the Company, certain Subsidiaries of the Company and the Purchaser
(as amended, modified or supplemented from time to time, the “Master Security Agreement”), (iv) the Registration Rights Agreement relating to the Securities dated as of the date hereof between the Company and the Purchaser (as amended,
modified or supplemented from time to time, the “Registration Rights Agreement”), (v) the Subsidiary Guaranty dated as of the date hereof made by certain Subsidiaries of the Company (as amended, modified or supplemented from time to time,
the “Subsidiary Guaranty”), (vi) the Stock Pledge Agreement dated as of the date hereof among the Company, certain Subsidiaries of the Company and the Purchaser (as amended, modified or supplemented from time to time, the “Stock
Pledge Agreement”), (vii) the Escrow Agreement dated as of the date hereof among the Company, the Purchaser and the escrow agent referred to therein, substantially in the form of Exhibit D hereto (as amended, modified or supplemented from time
to time, the “Escrow Agreement”), (viii) the Restricted Account Agreement dated as of the date hereof among the Company, the Purchaser and North Fork Bank (as amended, modified or supplemented from time to time, the “Restricted
Account Agreement”), (ix) the Restricted Account Side Letter related to the Restricted Account Agreement dated as of the date hereof between the Company and the Purchaser (as amended, modified or supplemented from time to time, the
“Restricted Account Side Letter”) and (x) all other agreements related to this Agreement and the Note and referred to herein (the preceding clauses (ii) through (x), collectively, the “Related Agreements”), to issue and sell the
Note and the shares of Common Stock issuable upon conversion of the Note (the “Note Shares”), to issue and sell the Warrant and the Warrant Shares, and to carry out the provisions of this Agreement and the Related Agreements and to carry
on its business as presently conducted. Each of the Company and each of its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign corporation, partnership or limited liability company, as the case may
be, in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so has not, or could not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the business, assets, liabilities, condition (financial or otherwise), properties, operations or prospects of the Company and it Subsidiaries, taken individually and as a whole (a
“Material Adverse Effect”). 
  
 4.2 Subsidiaries.
Each direct and indirect Subsidiary of the Company, the direct owner of such Subsidiary and its percentage ownership thereof, is set forth on Schedule 4.2. For the purpose of this Agreement, a “Subsidiary” of any person or entity
means (i) a corporation or other entity whose shares of stock or other ownership interests having ordinary voting power (other than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other persons or entities performing similar functions for such person or entity, are owned, directly or indirectly, by such person or entity or (ii) a corporation or other entity in which such
person or entity owns, directly or indirectly, more than 50% of the equity interests at such time. 
  

 3 

 4.3 Capitalization; Voting Rights. 
  
 (a) The authorized capital stock of the Company, as of the date hereof consists of 50,000,000 shares, of
which all are shares of Common Stock, par value $0.01 per share, 11,681,445 shares of which are issued and outstanding and no shares of preferred stock are authorized, issued or outstanding. The authorized capital stock of each Subsidiary of
the Company is set forth on Schedule 4.2. 
  
 (b)
Except as disclosed on Schedule 4.3, other than: (i) the shares reserved for issuance under the Company’s stock option plans; and (ii) shares which may be granted pursuant to this Agreement and the Related Agreements, there are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Company of any of its securities.
Except as disclosed on Schedule 4.3, neither the offer, issuance or sale of any of the Note or the Warrant, or the issuance of any of the Note Shares or Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a
change in the exercise or conversion price or number of any securities of the Company issuable upon exercise or conversion of any options, warrants, rights or other convertible securities outstanding, under anti-dilution or other similar provisions
contained in or affecting any such securities. 
  
 (c) All issued and outstanding shares of the Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities. 
  
 (d)
The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Company’s Certificate of Incorporation (the “Charter”). The Note Shares and Warrant Shares have been duly and validly reserved
for issuance. When issued in compliance with the provisions of this Agreement and the Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that
the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. 
  
 4.4 Authorization; Binding Obligations. All corporate, partnership or
limited liability company, as the case may be, action on the part of the Company and each of its Subsidiaries (including the respective officers and directors) necessary for the authorization of this Agreement and the Related Agreements, the
performance of all obligations of the Company and its Subsidiaries hereunder and under the other Related Agreements at the Closing and, the authorization, sale, issuance and delivery of the Note and Warrant has been taken or will be taken prior to
the Closing. This Agreement and the Related Agreements, when executed and delivered and to the extent it is a party thereto, will be valid and binding obligations of each of the Company and each of its Subsidiaries, enforceable against each such
person in accordance with their terms, except: 
  
 (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights; and 
  

 4 

 (b) general principles of equity that restrict the availability of equitable or legal
remedies. 
  
 The sale of the Note and the subsequent conversion of the Note into
Note Shares are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. The issuance of the Warrant and the subsequent exercise of the Warrant for Warrant Shares are not
and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. 
  
 4.5 Liabilities. Neither the Company nor any of its Subsidiaries has any contingent liabilities that could result in payments by the Company or any
of its Subsidiaries in excess of $50,000 in the aggregate, except current liabilities incurred in the ordinary course of business and liabilities disclosed in any Exchange Act Filings. 
  
 4.6 Agreements; Action. Except as set forth on Schedule 4.6 or as disclosed in any Exchange Act Filings: 

 
 (a) there are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which the Company or any of its Subsidiaries is a party or by which it is bound which may involve: (i) obligations (contingent or otherwise) of, or payments to, the Company in
excess of $50,000 (other than obligations of, or payments to, the Company arising from purchase or sale agreements, or service agreements entered into in the ordinary course of business); or (ii) the transfer or license of any patent, copyright,
trade secret or other proprietary right to or from the Company (other than licenses arising from the purchase of “off the shelf” or other standard products); or (iii) provisions restricting the development, manufacture or distribution of
the Company’s products or services; or (iv) indemnification by the Company with respect to infringements of proprietary rights. 
  
 (b) Since December 31, 2003, neither the Company nor any of its Subsidiaries has: (i) declared or paid any dividends, or authorized or
made any distribution upon or with respect to any class or series of its capital stock; (ii) incurred any indebtedness for money borrowed or any other liabilities (other than ordinary course obligations) individually in excess of $100,000 or, in the
case of indebtedness and/or liabilities individually less than $100,000 in excess of $250,000 in the aggregate; (iii) made any loans or advances to any person not in excess, individually or in the aggregate, of $100,000, other than ordinary course
advances for travel expenses; or (iv) sold, exchanged or otherwise disposed of any assets or rights which have a fair market value in excess of $100,000 in the aggregate, other than the sale of its inventory in the ordinary course of business.

  
 (c) For the purposes of subsections (a) and
(b) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions 
  

 5 

 involving the same person or entity (including persons or entities the Company has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 
  
 4.7 Obligations to Related Parties. Except as set forth on Schedule 4.7, there are no obligations of the Company or any of its Subsidiaries to
officers, directors, stockholders or employees of the Company or any of its Subsidiaries other than: 
  
 (a) for payment of salary for services rendered and for bonus payments; 
  
 (b) reimbursement for reasonable expenses incurred on behalf of the Company and its Subsidiaries;

  
 (c) for other standard employee benefits made
generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company); and 
  
 (d) obligations listed in the Company’s financial statements or disclosed in any of its Exchange Act
Filings. 
  
 Except as described above or set forth on Schedule 4.7, none of the
officers, directors or, to the best of the Company’s knowledge, key employees or stockholders of the Company or any members of their immediate families, are indebted to the Company, individually or in the aggregate, in excess of $50,000 or have
any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, other than passive
investments in publicly traded companies (representing less than one percent (1%) of such company) which may compete with the Company. Except as described above, no officer, director or stockholder, or any member of their immediate families, is,
directly or indirectly, interested in any material contract with the Company and no agreements, understandings or proposed transactions are contemplated between the Company and any such person. Except as set forth on Schedule 4.7, the Company is not
a guarantor or indemnitor of any indebtedness of any other person, firm or corporation (other than its wholly-owned Subsidiaries organized in the United States). 
  
 4.8 Changes. Since December 31, 2003, except as disclosed in any Exchange Act Filing or in any Schedule to this
Agreement or to any of the Related Agreements, there has not been: 
  
 (a) any change in the business, assets, liabilities, condition (financial or otherwise), properties, operations or prospects of the Company or any of its Subsidiaries, which individually or in the aggregate has had,
or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; 
  
 (b) any resignation or termination of any officer, key employee or group of employees of the Company or any of its Subsidiaries;

  

 6 

 (c) any material change, except in the ordinary course of business, in the contingent
obligations of the Company or any of its Subsidiaries by way of guaranty, endorsement, indemnity, warranty or otherwise; 
  
 (d) any damage, destruction or loss, whether or not covered by insurance, has had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; 
  
 (e) any waiver by the Company or any of its Subsidiaries of a valuable right or of a material debt owed to it; 
  
 (f) any direct or indirect loans made by the Company or any of its Subsidiaries to any stockholder, employee, officer or director of the
Company or any of its Subsidiaries, other than advances made in the ordinary course of business; 
  
 (g) any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder of the Company or
any of its Subsidiaries; 
  
 (h) any declaration
or payment of any dividend or other distribution of the assets of the Company or any of its Subsidiaries; 
  
 (i) any labor organization activity related to the Company or any of its Subsidiaries; 
  
 (j) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets owned by the Company or any of its Subsidiaries; 
  
 (k) any change in any material agreement to which the Company or any of its Subsidiaries is a party or by which either the Company or any
of its Subsidiaries is bound which either individually or in the aggregate has had, or could reasonably be expected to have, a Material Adverse Effect; 
  
 (l) any other event or condition of any character that, either individually or in the aggregate, has had, or could reasonably be expected
to have, a Material Adverse Effect; or 
  
 (m)
any arrangement or commitment by the Company or any of its Subsidiaries to do any of the acts described in subsection (a) through (l) above. 
  
 4.9 Title to Properties and Assets; Liens, Etc. Except as set forth on Schedule 4.9, each of the Company and each of its Subsidiaries has good and
marketable title to its properties and assets, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge (collectively, an “Encumbrance”), other than: 
  
 (a) (i) non-consensual Encumbrances being contested in good
faith and by appropriate proceedings for which adequate reserves have been established to the extent required by generally accepted accounting principles and (ii) those Encumbrances resulting from taxes which have not yet become delinquent;

  

 7 

 (b) liens and encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company or any of its Subsidiaries; and 
  
 (c) those that have otherwise arisen in the ordinary course of business. 
  
 All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company and its Subsidiaries are
in good operating condition and repair, reasonable wear and tear expected, and are reasonably fit and usable for the purposes for which they are being used. Except as set forth on Schedule 4.9, the Company and its Subsidiaries are in compliance with
all material terms of each lease to which it is a party or is otherwise bound. 
  
 4.10 Intellectual Property. 
  
 (a) Each of the Company and each of its Subsidiaries owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now conducted and to the Company’s knowledge, as presently proposed to be conducted (the “Intellectual Property”), without any known infringement of the rights of others.
There are no outstanding options, licenses or agreements of any kind relating to the foregoing proprietary rights, nor is the Company or any of its Subsidiaries bound by or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of
“off the shelf” or standard products. 
  
 (b) Neither the Company nor any of its Subsidiaries has received any written communications alleging that the Company or any of its Subsidiaries has violated any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity, nor is the Company or any of its Subsidiaries aware of any basis therefor. 
  
 (c) The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of
its employees made prior to their employment by the Company or any of its Subsidiaries, except for inventions, trade secrets or proprietary information that have been rightfully assigned to the Company or any of its Subsidiaries. 
  
 4.11 Compliance with Other Instruments. Neither the Company nor any of
its Subsidiaries is in violation or default of (x) any term of its Charter or Bylaws, or (y) of any provision of any indebtedness, mortgage, indenture, contract, agreement or instrument to which it is party or by which it is bound or of any
judgment, decree, order or writ, which violation or default, in the case of this clause (y), has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. The execution, delivery and

  

 8 

 performance of and compliance with this Agreement and the Related Agreements to which it is a party, and the issuance and
sale of the Note by the Company and the other Securities by the Company each pursuant hereto and thereto, will not, with or without the passage of time or giving of notice, result in any violation, or be in conflict with or constitute a default
under any such term or provision, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or any of its Subsidiaries or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties, in each case, which could reasonably be expected to have, either individually or in the aggregate,
a Material Adverse Effect. 
  
 4.12 Litigation. Except as
set forth on Schedule 4.12 hereto, there is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company or any of its Subsidiaries that prevents the Company or any of its
Subsidiaries from entering into this Agreement or the other Related Agreements, or from consummating the transactions contemplated hereby or thereby, or which has had, or could reasonably be expected to have, either individually or in the aggregate,
a Material Adverse Effect or any change in the current equity ownership of the Company or any of its Subsidiaries, nor is the Company aware that there is any basis to assert any of the foregoing. Neither the Company nor any of its Subsidiaries is a
party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company or any of its Subsidiaries currently
pending or which the Company or any of its Subsidiaries intends to initiate. 
  
 4.13 Tax Returns and Payments. Except as set forth on Schedule 4.13, each of the Company and each of its Subsidiaries has timely filed all tax returns (federal, state and local) required to be filed by it. All
taxes shown to be due and payable on such returns, any assessments imposed, and all other taxes due and payable by the Company or any of its Subsidiaries on or before the Closing, have been paid or will be paid prior to the time they become
delinquent. Except as set forth on Schedule 4.13, neither the Company nor any of its Subsidiaries has been advised: 
  
 (a) that any of its returns, federal, state or other, have been or are being audited as of the date hereof; or 
  
 (b) of any deficiency in assessment or proposed judgment to
its federal, state or other taxes. 
  
 The Company has no knowledge of any
liability of any tax to be imposed upon its properties or assets as of the date of this Agreement that is not adequately provided for. 
  
 4.14 Employees. Except as set forth on Schedule 4.14, neither the Company nor any of its Subsidiaries has any collective bargaining agreements with
any of its employees. There is no labor union organizing activity pending or, to the Company’s knowledge, threatened with respect to the Company or any of its Subsidiaries. Except as disclosed in the Exchange Act Filings or on Schedule 4.14,
neither the Company nor any of its Subsidiaries is a party to or bound by any currently effective employment contract, deferred compensation arrangement, 
  

 9 

 bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement.
To the Company’s knowledge, no employee of the Company or any of its Subsidiaries, nor any consultant with whom the Company or any of its Subsidiaries has contracted, is in violation of any term of any employment contract, proprietary
information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company or any of its Subsidiaries because of the nature of the business to be conducted by the Company or any of
its Subsidiaries; and to the Company’s knowledge the continued employment by the Company or any of its Subsidiaries of its present employees, and the performance of the Company’s and its Subsidiaries’ contracts with its independent
contractors, will not result in any such violation. Neither the Company nor any of its Subsidiaries is aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has received any notice alleging
that any such violation has occurred. Except for employees who have a current effective employment agreement with the Company or any of its Subsidiaries, no employee of the Company or any of its Subsidiaries has been granted the right to continued
employment by the Company or any of its Subsidiaries or to any material compensation following termination of employment with the Company or any of its Subsidiaries. Except as set forth on Schedule 4.14, the Company is not aware that any officer,
key employee or group of employees intends to terminate his, her or their employment with the Company or any of its Subsidiaries, nor does the Company or any of its Subsidiaries have a present intention to terminate the employment of any officer,
key employee or group of employees. 
  
 4.15 Registration
Rights and Voting Rights. Except as set forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, neither the Company nor any of its Subsidiaries is presently under any obligation, and neither the Company nor any of its
Subsidiaries has granted any rights, to register any of the Company’s or its Subsidiaries’ presently outstanding securities or any of its securities that may hereafter be issued. Except as set forth on Schedule 4.15 and except as disclosed
in Exchange Act Filings, to the Company’s knowledge, no stockholder of the Company or any of its Subsidiaries has entered into any agreement with respect to the voting of equity securities of the Company or any of its Subsidiaries. 

 
 4.16 Compliance with Laws; Permits. Neither the Company nor any of
its Subsidiaries is in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its
properties which has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no
registrations or declarations are required to be filed in connection with the execution and delivery of this Agreement or any other Related Agreement and the issuance of any of the Securities, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the execution of this Agreement or any other Related Agreement or after the Closing, as will be filed in a timely manner. Each of the Company and its Subsidiaries has all material
franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could, either individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect. 
  

 10 

 4.17 Environmental and Safety Laws. Neither the Company nor any of its Subsidiaries is in
violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, except for such violations which have not had, or could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation,. Except as set forth on Schedule 4.17, no Hazardous Materials (as defined below)
are used or have been used, stored, or disposed of by the Company or any of its Subsidiaries or, to the Company’s knowledge, by any other person or entity on any property owned, leased or used by the Company or any of its Subsidiaries. For the
purposes of the preceding sentence, “Hazardous Materials” shall mean: 
  
 (a) materials which are listed or otherwise defined as “hazardous” or “toxic” under any applicable local, state,
federal and/or foreign laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving hazardous
substances, including building materials; or 
  
 (b) any petroleum products or nuclear materials. 
  
 4.18
Valid Offering. Assuming the accuracy of the representations and warranties of the Purchaser contained in this Agreement, the offer, sale and issuance of the Securities by the Company will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state
securities laws. 
  
 4.19 Full Disclosure. Each of the
Company and each of its Subsidiaries has provided the Purchaser with all information requested by the Purchaser in connection with its decision to purchase the Note and Warrant, including all information the Company and its Subsidiaries believe is
reasonably necessary to make such investment decision. Neither this Agreement, the Related Agreements, the exhibits and schedules hereto and thereto nor any other document delivered by the Company or any of its Subsidiaries to Purchaser or its
attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby, contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances in which they are made, not misleading. Any financial projections and other estimates provided to the Purchaser by the Company or any of its Subsidiaries were based on the Company’s and its
Subsidiaries’ experience in the industry and on assumptions of fact and opinion as to future events which the Company or any of its Subsidiaries, at the date of the issuance of such projections or estimates, believed to be reasonable.

  
 4.20 Insurance. Each of the Company and each of its
Subsidiaries has general commercial, product liability, fire and casualty insurance policies with coverages which the Company believes are customary for companies similarly situated to the Company and its Subsidiaries in the same or similar
business. 
  

 11 

 4.21 SEC Reports. Except as set forth on Schedule 4.21, the Company has filed all proxy
statements, reports and other documents required to be filed by it under the Securities Exchange Act 1934, as amended (the “Exchange Act”). The Company has furnished the Purchaser with copies of: (i) its Annual Reports on Form 10-KSB for
its fiscal year ended December 31, 2003; and (ii) its Quarterly Reports on Form 10-QSB for its fiscal quarters ended March 31, 2004 and June 30, 2004, and the Form 8-K filings which it has made during the fiscal year 2004 to date (collectively, the
“SEC Reports”). Except as set forth on Schedule 4.21, each SEC Report was, at the time of its filing, in substantial compliance with the requirements of its respective form and none of the SEC Reports, nor the financial statements (and the
notes thereto) included in the SEC Reports, as of their respective filing dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except in each case where any defect was cured, prior to the Closing, by the filing of an amendment to any such SEC Report. 
  
 4.22 Listing. The Company’s Common Stock is listed for trading on
the National Association of Securities Dealers Over the Counter Bulletin Board (“NASD OTCBB”) and satisfies all requirements for the continuation of such trading. The Company has not received any notice that its Common Stock will not be
eligible to be traded on the NASD OTCBB or that its Common Stock does not meet all requirements for such trading. 
  
 4.23 No Integrated Offering. Neither the Company, nor any of its Subsidiaries or affiliates, nor any person acting on its or 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 cause the offering of the Securities pursuant to this Agreement or any of the Related Agreements to be
integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Securities pursuant to Rule 506 under the Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will the Company or any of its affiliates or Subsidiaries take any action or steps that would cause the offering of the Securities to be integrated with other offerings. 
  
 4.24 Stop Transfer. The Securities are restricted securities as of the date of this Agreement. Neither the Company
nor any of its Subsidiaries will issue any stop transfer order or other order impeding the sale and delivery of any of the Securities at such time as the Securities are registered for public sale or an exemption from registration is available,
except as required by state and federal securities laws. 
  
 4.25
Dilution. The Company specifically acknowledges that its obligation to issue the shares of Common Stock upon conversion of the Note and exercise of the Warrant is binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the Company. 
  
 4.26 Patriot Act. The Company certifies that, to the best of Company’s knowledge, neither the Company nor any of its Subsidiaries has been designated, and is not 
  

 12 

 owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. The Company hereby
acknowledges that the Purchaser seeks to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Company hereby represents, warrants and agrees that: (i) none of the cash or property
that the Company or any of its Subsidiaries will pay or will contribute to the Purchaser has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by the
Company or any of its Subsidiaries to the Purchaser, to the extent that they are within the Company’s and/or its Subsidiaries’ control shall cause the Purchaser to be in violation of the United States Bank Secrecy Act, the United States
International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Company shall promptly notify the Purchaser if any of these representations ceases to be
true and accurate regarding the Company or any of its Subsidiaries. The Company agrees to provide the Purchaser any additional information regarding the Company or any of its Subsidiaries that the Purchaser deems necessary or convenient to ensure
compliance with all applicable laws concerning money laundering and similar activities. The Company understands and agrees that if at any time it is discovered that any of the foregoing representations are incorrect, or if otherwise required by
applicable law or regulation related to money laundering similar activities, the Purchaser may undertake appropriate actions to ensure compliance with applicable law or regulation, including but not limited to segregation and/or redemption of the
Purchaser’s investment in the Company. The Company further understands that the Purchaser may release confidential information about the Company and its Subsidiaries and, if applicable, any underlying beneficial owners, to proper authorities if
the Purchaser, in its sole discretion, determines that it is in the best interests of the Purchaser in light of relevant rules and regulations under the laws set forth in subsection (ii) above. 
  
 5. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows (such representations and warranties do not lessen or obviate the representations and warranties of the Company set forth in this Agreement): 
  
 5.1 No Shorting. The Purchaser or any of its affiliates and
investment partners has not, will not and will not cause any person or entity to directly or indirectly engage in “short sales” of the Company’s Common Stock as long as the Note shall be outstanding. 
  
 5.2 Requisite Power and Authority. The Purchaser has all necessary
power and authority under all applicable provisions of law to execute and deliver this Agreement and the Related Agreements and to carry out their provisions. All corporate action on Purchaser’s part required for the lawful execution and
delivery of this Agreement and the Related Agreements have been or will be effectively taken prior to the Closing. Upon their execution and delivery, this Agreement and the Related Agreements will be valid and binding obligations of Purchaser,
enforceable in accordance with their terms, except: 
  
 (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights; and 
  
 (b) as limited by general principles of equity that restrict the availability of equitable and legal
remedies. 
  

 13 

 5.3 Investment Representations. Purchaser understands that the Securities are being offered and
sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser’s representations contained in the Agreement, including, without limitation, that the Purchaser is an “accredited investor”
within the meaning of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). The Purchaser confirms that it has received or has had full access to all the information it considers necessary or appropriate to make
an informed investment decision with respect to the Note and the Warrant to be purchased by it under this Agreement and the Note Shares and the Warrant Shares acquired by it upon the conversion of the Note and the exercise of the Warrant,
respectively. The Purchaser further confirms that it has had an opportunity to ask questions and receive answers from the Company regarding the Company’s and its Subsidiaries’ business, management and financial affairs and the terms and
conditions of the Offering, the Note, the Warrant and the Securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the Purchaser or to which the Purchaser had access. 
  
 5.4 Purchaser Bears Economic Risk. The Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable
of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. The Purchaser must bear the economic risk of this investment until the Securities are sold pursuant to: (i) an effective
registration statement under the Securities Act; or (ii) an exemption from registration is available with respect to such sale. 
  
 5.5 Acquisition for Own Account. The Purchaser is acquiring the Note and Warrant and the Note Shares and the Warrant Shares for the
Purchaser’s own account for investment only, and not as a nominee or agent and not with a view towards or for resale in connection with their distribution. The Purchaser shall not effect sales of the Note Shares or Warrant Shares in a manner
that would cause the Purchaser to be deemed an “underwriter” as defined in the Securities Act. 
  
 5.6 Purchaser Can Protect Its Interest. The Purchaser represents that by reason of its, or of its management’s, business and financial
experience, the Purchaser has the capacity to evaluate the merits and risks of its investment in the Note, the Warrant and the Securities and to protect its own interests in connection with the transactions contemplated in this Agreement and the
Related Agreements. Further, Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement or the Related Agreements. 
  
 5.7 Accredited Investor. Purchaser represents that it is an accredited investor within the meaning of Regulation D
under the Securities Act. 
  

 14 

 5.8 Legends 
  
 (a) The Note shall bear substantially the following legend: 
  
 “THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COACH INDUSTRIES GROUP, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.” 
  
 (b) The Note Shares and the
Warrant Shares, if not issued by DWAC system (as hereinafter defined), shall bear a legend which shall be in substantially the following form until such shares are covered by an effective registration statement filed with the SEC: 
  
 “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND
APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COACH INDUSTRIES GROUP, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.” 
  
 (c) The Warrant shall bear substantially the following legend: 
  
 “THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT OR THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COACH INDUSTRIES GROUP, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.” 
  

 15 

 6. Covenants of the Company. The Company covenants and agrees with the Purchaser as follows:

  
 6.1 Stop-Orders. As long as the Note and all
obligations related thereto and Warrant remains outstanding, the Company will advise the Purchaser, promptly after it receives notice of issuance by the Securities and Exchange Commission (the “SEC”), any state securities commission or any
other regulatory authority of any stop order or of any order preventing or suspending any offering of any securities of the Company, or of the suspension of the qualification of the Common Stock of the Company for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purpose. 
  
 6.2 Listing. The Company shall promptly secure the listing of the shares of Common Stock issuable upon conversion of the Note and upon the exercise of the Warrant on the NASD OTCBB (the “Principal Market”) upon which shares
of Common Stock are listed (subject to official notice of issuance) and shall maintain such listing so long as any other shares of Common Stock shall be so listed. The Company will maintain the listing of its Common Stock on the Principal Market,
and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers (“NASD”) and such exchanges, as applicable. 
  
 6.3 Market Regulations. The Company shall notify the SEC, NASD and
applicable state authorities, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to the Purchaser and promptly provide copies thereof to the Purchaser. 
  
 6.4 Reporting Requirements. The Company will timely file with the SEC all reports required to be filed pursuant to the Exchange Act and refrain
from terminating its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination. 
  
 6.5 Use of Funds. The Company agrees that it will use (i) up to
$1,200,000 of the proceeds of the Note to purchase all of the assets and equity interests of Corporate Development Services, Inc. and (ii) the remainder of the proceeds of the sale of the Note and the proceeds of the sale of the Warrant for general
corporate purposes only (it being understood that $4,400,000 of the proceeds of the Note will be deposited in the Restricted Account on the Closing Date and shall be subject to the terms and conditions of the Restricted Account Agreement and the
Restricted Account Side Letter). 
  
 6.6 Access to
Facilities. As long as the Note remains outstanding, each of the Company and each of its Subsidiaries will permit any representatives designated by the Purchaser (or any successor of the Purchaser), upon reasonable notice and during normal
business hours, at such person’s expense and accompanied by a representative of the Company, to: 
  
 (a) visit and inspect any of the properties of the Company or any of its Subsidiaries; 
  

 16 

 (b) examine the corporate and financial records of the Company or any of its Subsidiaries
(unless such examination is not permitted by federal, state or local law or by contract) and make copies thereof or extracts therefrom; and 
  
 (c) discuss the affairs, finances and accounts of the Company or any of its Subsidiaries with the directors, officers and independent
accountants of the Company or any of its Subsidiaries. 
  
 Notwithstanding the
foregoing, neither the Company nor any of its Subsidiaries will provide any material, non-public information to the Purchaser unless the Purchaser signs a confidentiality agreement and also complies with Regulation FD, under the federal securities
laws. 
  
 6.7 Taxes. Each of the Company and each of its
Subsidiaries will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company and its
Subsidiaries; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if the Company and/or such Subsidiary shall have set
aside on its books adequate reserves with respect thereto, and provided, further, that the Company and its Subsidiaries will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor. 
  
 6.8
Insurance. As long as the Note and all obligations related thereto remains outstanding, each of the Company and its Subsidiaries will keep its assets which are of an insurable character insured by financially sound and reputable insurers
against loss or damage by fire, explosion and other risks customarily insured against by companies in similar business similarly situated as the Company and its Subsidiaries; and the Company and its Subsidiaries will maintain, with financially sound
and reputable insurers, insurance against other hazards and risks and liability to persons and property to the extent and in the manner which the Company reasonably believes is customary for companies in similar business similarly situated as the
Company and its Subsidiaries and to the extent available on commercially reasonable terms. The Company, and each of its Subsidiaries will jointly and severally bear the full risk of loss from any loss of any nature whatsoever with respect to the
assets pledged to the Purchaser as security for its obligations hereunder and under the Related Agreements. At the Company’s and each of its Subsidiaries’ joint and several cost and expense in amounts and with carriers reasonably
acceptable to Purchaser, the Company and each of its Subsidiaries shall (i) keep all its insurable properties and properties in which it has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to the Company’s or the respective Subsidiary’s including business interruption insurance; (ii)
maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to the Company’s or the respective Subsidiary’s insuring against larceny, embezzlement or other criminal misappropriation of
insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of the Company or any of its Subsidiaries either directly or through governmental authority to draw upon such funds or
to direct generally the disposition of such assets; (iii) maintain public and product liability 
  

 17 

 insurance against claims for personal injury, death or property damage suffered by others; (iv) maintain all such
worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which the Company or the respective Subsidiary is engaged in business; and (v) furnish Purchaser with (x) copies of all policies and
evidence of the maintenance of such policies at least thirty (30) days before any expiration date, (y) excepting the Company’s workers’ compensation policy, endorsements to such policies naming Purchaser as “co-insured” or
“additional insured” and appropriate loss payable endorsements in form and substance satisfactory to Purchaser, naming Purchaser as loss payee, and (z) evidence that as to Purchaser the insurance coverage shall not be impaired or
invalidated by any act or neglect of the Company or any Subsidiary and the insurer will provide Purchaser with at least thirty (30) days notice prior to cancellation. The Company and each Subsidiary shall instruct the insurance carriers that in the
event of any loss thereunder, the carriers shall make payment for such loss to the Company and/or the Subsidiary and Purchaser jointly. In the event that as of the date of receipt of each loss recovery upon any such insurance, the Purchaser has not
declared an event of default with respect to this Agreement or any of the Related Agreements, then the Company and/or such Subsidiary shall be permitted to direct the application of such loss recovery proceeds toward investment in property, plant
and equipment that would comprise “Collateral” secured by Purchaser’s security interest pursuant to its security agreement if the loss recovery payment was made as a result of a claim arising from a loss to property that comprised
“Collateral”, with any surplus funds to be used by the Company and/or such Subsidiary (x) as may be required by law or (y) at the Purchaser’s option, either (i) for general corporate purposes or (ii) applied toward payment of the
obligations of the Company to Purchaser. In the event that Purchaser has properly declared an event of default with respect to this Agreement or any of the Related Agreements, then all loss recoveries received by Purchaser upon any such insurance
thereafter may be applied to the obligations of the Company hereunder and under the Related Agreements, in such order as the Purchaser may determine. Any surplus (following satisfaction of all Company obligations to Purchaser) shall be paid by
Purchaser to the Company or applied as may be otherwise required by law. 
  
 6.9 Intellectual Property. Each of the Company and each of its Subsidiaries shall maintain in full force and effect its existence, rights and franchises and all licenses and other rights to use Intellectual
Property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business. 
  
 6.10 Properties. Each of the Company and each of its Subsidiaries will keep its properties in good repair, working order and condition, reasonable
wear and tear excepted, and from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto; and each of the Company and each of its Subsidiaries will at all times comply with each provision of all
leases to which it is a party or under which it occupies property if the breach of such provision could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
  
 6.11 Confidentiality. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchaser, unless expressly agreed to by the Purchaser or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement.
Notwithstanding the foregoing, the Company may disclose Purchaser’s identity and the terms of this Agreement to its current and prospective debt and equity financing sources. 
  

 18 

 6.12 Required Approvals. For so long as twenty-five percent (25%) of the original principal amount
of the Note is outstanding, the Company, without the prior written consent of the Purchaser, shall not, and shall not permit any of its Subsidiaries to: 
  
 (a) (i) directly or indirectly declare or pay any dividends, other than dividends paid to the Company or paid by any of its direct or
indirect wholly-owned Subsidiaries to its parent, (ii) issue any preferred stock that is manditorily redeemable prior to the one year anniversary of Maturity Date (as defined in the Note) or (iii) redeem any of its preferred stock or other equity
interests. 
  
 (b) liquidate, dissolve or effect
a material reorganization (it being understood that in no event shall the Company dissolve, liquidate or merge with any other person or entity (unless (i) the Company is the surviving entity or (ii) pursuant to a transaction consummated for the sole
purpose of reincorporating the Company or a wholly-owned Subsidiary of the Company organized in the United States under the laws of a different United States jurisdiction); 
  
 (c) become subject to (including, without limitation, by way of amendment to or modification of) any
agreement or instrument which by its terms would (under any circumstances) restrict the Company’s or any of its Subsidiaries right to perform the provisions of this Agreement, any Related Agreement or any of the agreements contemplated hereby
or thereby; 
  
 (d) materially alter or change
the scope of the business of the Company and its Subsidiaries taken as a whole; 
  
 (e) (i) create, incur, assume or suffer to exist any indebtedness (exclusive of trade debt and debt incurred to finance the purchase of
equipment (not in excess of five percent (5%) of the fair market value of the Company’s and its Subsidiaries’ assets) whether secured or unsecured other than (w) unsecured indebtedness not to exceed an aggregate principal amount
outstanding of $200,000, (x) the Company’s indebtedness to the Purchaser, (y) indebtedness set forth on Schedule 6.12(e) attached hereto and made a part hereof and any refinancings or replacements thereof on terms no less favorable to
the Purchaser than the indebtedness being refinanced or replaced, and (z) any debt incurred in connection with the purchase of assets or equipment in the ordinary course of business, or any refinancings or replacements thereof on terms no less
favorable to the Purchaser than the indebtedness being refinanced or replaced; (ii) cancel any debt owing to it in excess of $50,000 in the aggregate during any 12 month period; (iii) assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person other than, solely in the case of the Company or a Subsidiary of the Company which is party to the Subsidiaries Guaranty, the Company or another Subsidiary (in the case of a
Subsidiary) or a Subsidiary (in the case of the Company), except the endorsement of negotiable instruments by the Company or any Subsidiary thereof for deposit or collection or similar transactions in the ordinary course of business or guarantees of
indebtedness otherwise permitted to be outstanding pursuant to this clause (e); and 
  

 19 

 (f) create or acquire any Subsidiary after the date hereof unless (i) such Subsidiary is
a wholly-owned Subsidiary of the Company and (ii) such Subsidiary becomes party to the Master Security Agreement, the Stock Pledge Agreement and the Subsidiary Guaranty (either by executing a counterpart thereof or an assumption or joinder agreement
in respect thereof) and, to the extent required by the Purchaser, satisfies each condition of this Agreement and the Related Agreements as if such Subsidiary were a Subsidiary on the Closing Date. 
  
 6.13 Reissuance of Securities. The Company agrees to reissue
certificates representing the Securities without the legends set forth in Section 5.8 above at such time as: 
  
 (a) the holder thereof is permitted to dispose of such Securities pursuant to Rule 144(k) under the Securities Act; or 
  
 (b) upon resale subject to an effective registration
statement after such Securities are registered under the Securities Act. 
  
 The
Company agrees to cooperate with the Purchaser in connection with all resales pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to allow such resales provided the Company and its counsel receive reasonably requested
representations from the selling Purchaser and broker, if any, and all factual conditions that would be required to render such opinions have been satisfied. 
  
 6.14 Opinion. On the Closing Date, the Company will deliver to the Purchaser an opinion acceptable to the Purchaser from the Company’s
external legal counsel. The Company will provide, at the Company’s expense, such other legal opinions in the future as are deemed reasonably necessary by the Purchaser (and acceptable to the Purchaser) in connection with the conversion of the
Note and exercise of the Warrant. 
  
 6.15 Margin Stock.
The Company will not permit any of the proceeds of the Note or the Warrant to be used directly or indirectly to “purchase” or “carry” “margin stock” or to repay indebtedness incurred to “purchase” or
“carry” “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. 
  
 6.16 Restricted Cash Disclosure. The Company agrees that, in
connection with its filing of its 8-K Report with the SEC concerning the transactions contemplated by this Agreement and the Related Agreements (such report, the “Laurus Transaction 8-K”) in a timely manner after the date hereof, it will
disclose in such Laurus Transaction 8-K the amount of the proceeds of the Note issued to the Purchaser that has been placed in a restricted cash account and is subject to the terms and conditions of this Agreement and the Related Agreements.
Furthermore, the Company agrees to disclose in all public filings required by the Commission (where appropriate) following the filing of the Laurus Transaction 8-K, the existence of the restricted cash referred to in the immediately preceding
sentence, together with the amount thereof. 
  

 20 

 6.17 Financing Right of First Opportunity. (a) The Company hereby grants to the Purchaser a right
of first opportunity to provide any Additional Financing (as defined below) to be issued by the Company and/or any of its Subsidiaries, subject to the following terms and conditions. From and after the date hereof, if the Company intends to incur
any additional indebtedness (other than indebtedness permitted under Section 6.12(e)) and/or the sale or issuance of any equity interests of the Company or any of its Subsidiaries (other than as consideration for the purchase of assets or property,
a business or another entity or other than issuances or sales to employees, officers, directors or consultants) (an “Additional Financing”), the Company and/or any Subsidiary of the Company, as the case may be, shall notify the Purchaser
of its intention to enter into such Additional Financing. In connection therewith, the Company and/or the applicable Subsidiary thereof shall submit a term sheet or other writing (a “Proposed Term Sheet”) to the Purchaser setting forth the
terms, conditions and pricing of any such Additional Financing (such financing to be negotiated on “arm’s length” terms and the terms thereof to be negotiated in good faith) proposed to be entered into by the Company and/or such
Subsidiary. The Purchaser shall have the opportunity, but not the obligation, to deliver its own proposed term sheet (the “Purchaser Term Sheet”) setting forth the terms and conditions upon which Purchaser would be willing to provide such
Additional Financing to the Company and/or such Subsidiary. The Purchaser Term Sheet shall contain terms and conditions no less favorable to the Company and/or such Subsidiary than those outlined in Proposed Term Sheet. The Purchaser shall deliver
such Purchaser Term Sheet within ten business days of receipt of each such Proposed Term Sheet. If the provisions of the Purchaser Term Sheet are at least as favorable to the Company and/or such Subsidiary, as the case may be, as the provisions of
the Proposed Term Sheet, the Company and/or such Subsidiary shall enter into and consummate the Additional Financing transaction outlined in the Purchaser Term Sheet. 
  
 Otherwise, if Purchaser elects not to provide Additional Financing the Company shall be free to consummate the Additional Financing with
another party upon terms no less favorable to the Company than those set forth in the Proposed Term Sheet. 
  
 (b) The Company will not, and will not permit its Subsidiaries to, agree, directly or indirectly, to any restriction with any person or entity which
limits the ability of the Purchaser to consummate an Additional Financing with the Company or any of its Subsidiaries. 
  
 7. Covenants of the Purchaser. The Purchaser covenants and agrees with the Company as follows: 
  
 7.1 Confidentiality. The Purchaser agrees that it will not disclose,
and will not include in any public announcement, the name of the Company, unless expressly agreed to by the Company or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement.

  
 7.2 Non-Public Information. The Purchaser agrees not to
effect any sales in the shares of the Company’s Common Stock while in possession of material, non-public information regarding the Company if such sales would violate applicable securities law. 
  
 8. Covenants of the Company and Purchaser Regarding Indemnification.

  
 8.1 Company Indemnification. The Company agrees to
indemnify, hold harmless, reimburse and defend the Purchaser, each of the Purchaser’s officers, directors, agents, 
  

 21 

 affiliates, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Purchaser which results, arises out of or is based upon: (i) any misrepresentation by the Company or any of its Subsidiaries or breach of any warranty by the
Company or any of its Subsidiaries in this Agreement, any other Related Agreement or in any exhibits or schedules attached hereto or thereto; or (ii) any breach or default in performance by Company or any of its Subsidiaries of any covenant or
undertaking to be performed by Company or any of its Subsidiaries hereunder, under any other Related Agreement or any other agreement entered into by the Company and/or any of its Subsidiaries and Purchaser relating hereto or thereto. 
  
 8.2 Purchaser’s Indemnification. Purchaser agrees to indemnify,
hold harmless, reimburse and defend the Company and each of the Company’s officers, directors, agents, affiliates, control persons and principal shareholders, at all times against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the Company which results, arises out of or is based upon: (i) any misrepresentation by Purchaser or breach of any warranty by Purchaser in this Agreement, any Related
Agreement or in any exhibits or schedules attached hereto or thereto; or (ii) any breach or default in performance by Purchaser of any covenant or undertaking to be performed by Purchaser hereunder, under any other Related Agreement, or any other
agreement entered into by the Company and Purchaser relating hereto. 
  
 9. Conversion of Convertible Note. 
  
 9.1
Mechanics of Conversion. 
  
 (a) Provided
the Purchaser has notified the Company of the Purchaser’s intention to sell the Note Shares and the Note Shares are included in an effective registration statement or are otherwise exempt from registration when sold and provided that compliance
with the following does not violate any laws, rules or regulations, including federal and state securities laws: (i) upon the conversion of the Note or part thereof, the Company shall, at its own cost and expense, take all necessary action
(including the issuance of an opinion of counsel reasonably acceptable to the Purchaser following a request by the Purchaser) to assure that the Company’s transfer agent shall issue shares of the Company’s Common Stock in the name of the
Purchaser (or its nominee) or such other persons as designated by the Purchaser in accordance with Section 9.1(b) hereof and in such denominations to be specified representing the number of Note Shares issuable upon such conversion; and (ii) the
Company warrants that after the Effectiveness Date (as defined in the Registration Rights Agreement), and subject to the terms and conditions of the Registration Rights Agreement, the Note Shares, if sold pursuant to the Registration Statement (as
defined in the Registration rights Agreement), will be freely transferable subject to the prospectus delivery requirements of the Securities Act and the provisions of this Agreement, and will not contain a legend restricting the resale or
transferability of the Note Shares. 
  
 (b)
Purchaser will give notice of its decision to exercise its right to convert the Note or part thereof by telecopying or otherwise delivering an executed and completed 
  

 22 

 notice of the number of shares to be converted to the Company (the “Notice of Conversion”). The
Purchaser will not be required to surrender the Note until the Purchaser receives a credit to the account of the Purchaser’s prime broker through the DWAC system (as defined below), representing the Note Shares or until the Note has been fully
satisfied. Each date on which a Notice of Conversion is telecopied or delivered to the Company in accordance with the provisions hereof shall be deemed a “Conversion Date.” Pursuant to the terms of the Notice of Conversion, the Company
will comply with the provisions of Section 9.1(a) within two (2) business days of the date of the delivery to the Company of the Notice of Conversion and shall request that the transfer agent to transmit the certificates representing the Conversion
Shares to the Holder by crediting the account of the Purchaser’s prime broker with the Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within three (3) business days after
receipt by the Company of the Notice of Conversion (the “Delivery Date”). 
  
 (c) The Company understands that a delay in the delivery of the Note Shares in the form required pursuant to Section 9 hereof beyond the
Delivery Date could result in economic loss to the Purchaser. In the event that the Company fails to direct its transfer agent to deliver the Note Shares to the Purchaser via the DWAC system within the time frame set forth in Section 9.1(b) above
and the Note Shares are not delivered to the Purchaser by the Delivery Date, as compensation to the Purchaser for such loss, the Company agrees to pay late payments to the Purchaser for late issuance of the Note Shares in the form required pursuant
to Section 9 hereof upon conversion of the Note in the amount equal to the greater of: (i) $500 per business day after the Delivery Date; or (ii) the Purchaser’s actual damages from such delayed delivery. Notwithstanding the foregoing, the
Company will not owe the Purchaser any late payments if the delay in the delivery of the Note Shares beyond the Delivery Date is solely out of the control of the Company and the Company is actively trying to cure the cause of the delay. The Company
shall pay any payments incurred under this Section in immediately available funds upon demand and, in the case of actual damages, after receipt of reasonable documentation of the amount of such damages. Such documentation shall show the number of
shares of Common Stock the Purchaser is forced to purchase (in an open market transaction) which the Purchaser anticipated receiving upon such conversion, and shall be calculated as the amount by which (A) the Purchaser’s total purchase price
(including customary brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (B) the aggregate principal and/or interest amount of the Note, for which such Conversion Notice was not timely honored. 
  
 Nothing contained herein or in any document referred to herein or delivered in connection
herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other charges
hereunder exceed the maximum amount permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to a Purchaser and thus refunded to the Company. 
  

 23 

 10. Registration Rights. 
  
 10.1 Registration Rights Granted. The Company hereby grants registration rights to the Purchaser pursuant to a
Registration Rights Agreement dated as of even date herewith between the Company and the Purchaser. 
  
 10.2 Offering Restrictions. Except as previously disclosed in the SEC Reports or in the Exchange Act Filings, or stock or stock options granted to
employees or directors of the Company or its Subsidiaries (these exceptions hereinafter referred to as the “Excepted Issuances”), neither the Company nor any of its Subsidiaries will issue any securities with a continuously
variable/floating conversion feature which are or could be (by conversion or registration) free-trading securities (i.e. common stock subject to a registration statement) prior to the full repayment or conversion of the Note (together with all
accrued and unpaid interest and fees related thereto) (the “Exclusion Period”). 
  
 11. Miscellaneous. 
  
 11.1
Governing Law. THIS AGREEMENT AND EACH RELATED AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER PARTY AGAINST
THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND EACH RELATED AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK. BOTH PARTIES AND THE INDIVIDUALS
EXECUTING THIS AGREEMENT AND THE RELATED AGREEMENTS ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY JURY. IN THE EVENT THAT ANY PROVISION OF THIS AGREEMENT OR ANY RELATED AGREEMENT DELIVERED IN
CONNECTION HEREWITH IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH STATUTE OR
RULE OF LAW. ANY SUCH PROVISION WHICH MAY PROVE INVALID OR UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT OR ANY RELATED AGREEMENT. 
  
 11.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and the closing of the transactions contemplated hereby to the extent provided therein. All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or
instrument. 
  
 11.3 Successors. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who
shall be a holder of the Securities from time to time, other than the holders of 
  

 24 

 Common Stock which has been sold by the Purchaser or any transferee pursuant to Rule 144 or an effective registration
statement. Purchaser may not assign its rights hereunder to a competitor of the Company. 
  
 11.4 Entire Agreement. This Agreement, the Related Agreements, the exhibits and schedules hereto and thereto and the other documents delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.

  
 11.5 Severability. In case any provision of the
Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 
  
 11.6 Amendment and Waiver. 
  

(a) This Agreement may be amended or modified only upon the written consent of the Company and the Purchaser. 
  
 (b) The obligations of the Company and the rights of the
Purchaser under this Agreement may be waived only with the written consent of the Purchaser. 
  
 (c) The obligations of the Purchaser and the rights of the Company under this Agreement may be waived only with the written consent of the
Company. 
  
 11.7 Delays or Omissions. It is agreed that no
delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement or the Related Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. All remedies, either under this Agreement or the Related Agreements,
by law or otherwise afforded to any party, shall be cumulative and not alternative. 
  
 11.8 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: 
  
 (a) upon personal delivery to the party to be notified; 
  
 (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on
the next business day; 
  
 (c) three (3) business
days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or 
  
 (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of
receipt. 
  

 25 

 All communications shall be sent as follows: 
  

			
	If to the Company, to:	 	 Coach Industries Group, Inc.
 12555 Orange Drive,
Suite 261
 Davie, Florida 33330Attention:
 Chief Financial
Officer
 Facsimile: 954-862-1456

		
	 	 	with a copy to:
		
	 	 	 Steams Weaver Miller Weissler
 Alhadeff &
Sitterson, P.A.
 150 West Flagler Street, Suite 2200
 Miami,
Florida 33130
 Attention: Michael I. Keyes, Esq.
 Facsimile:
(305) 789-3395

		
	 	 	 Joseph I. Emas, Esq.
 1224 Washington
Avenue
 Miami Beach, Florida 33139
 Facsimile:
305-531-1274

		
	If to the Purchaser, to:	 	 Laurus Master Fund, Ltd.
 c/o M&C Corporate
Services Limited
 P.O. Box 309 GT
 Ugland House, George
Town
 South Church Street
 Grand Cayman, Cayman
Islands
 Facsimile: 345-949-8080

		
	 	 	with a copy to:
		
	 	 	 John E. Tucker, Esq.
 825 Third Avenue 14th
Floor
 New York, NY 10022
 Facsimile:
212-541-4434

  
 or at such other address as the
Company or the Purchaser may designate by written notice to the other parties hereto given in accordance herewith. 
  
 11.9 Attorneys’ Fees. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including, without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 
  

 26 

 11.10 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this Agreement. 
  
 11.11 Facsimile Signatures; Counterparts. This Agreement may be executed by facsimile signatures and in any number of counterparts, each of which shall be an original, but all of which together shall constitute
one instrument. 
  
 11.12 Broker’s Fees. Except as set
forth on Schedule 11.12 hereof, each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker’s or
finder’s fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party
as a result of the representation in this Section 11.12 being untrue. 
  
 11.13 Construction. Each party acknowledges that its legal counsel participated in the preparation of this Agreement and the Related Agreements and, therefore, stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the interpretation of this Agreement to favor any party against the other. 
  
 [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK 
  

 27 

 IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES PURCHASE AGREEMENT as of the date set
forth in the first paragraph hereof. 
  

							
	 COMPANY:
	 	 PURCHASER:

		
	 COACH INDUSTRIES GROUP, INC.
	 	 LAURUS MASTER FUND, LTD.

				
	 By:
	 	  

	 	By:	 	  

	 Name:
	 	  

	 	Name:	 	  

	 Title:
	 	  

	 	Title:	 	  

  

 28 

 EXHIBIT A 
  

FORM OF CONVERTIBLE NOTE 
  

 A-1 

 EXHIBIT B 
  

FORM OF WARRANT 
  

 B-1 

 EXHIBIT C 
  

FORM OF OPINION 
  
 1. Each of the Company and each of its Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of the State
of Nevada [insert other jurisdictions] and has all requisite corporate power and authority to own, operate and lease its properties and to carry on its business as it is now being conducted. 
  
 2. Each of the Company and each of its Subsidiaries has the requisite
corporate power and authority to execute, deliver and perform its obligations under the Agreement and the Related Agreements. All corporate action on the part of the Company and each of its Subsidiaries and its officers, directors and stockholders
necessary has been taken for: (i) the authorization of the Agreement and the Related Agreements and the performance of all obligations of the Company and each of its Subsidiaries thereunder; and (ii) the authorization, sale, issuance and delivery of
the Securities pursuant to the Agreement and the Related Agreements. The Note Shares and the Warrant Shares, when issued pursuant to and in accordance with the terms of the Agreement and the Related Agreements and upon delivery shall be validly
issued and outstanding, fully paid and non assessable. 
  
 3. The
execution, delivery and performance by each of the Company and each of its Subsidiaries of the Agreement and the Related Agreements to which it is a party and the consummation of the transactions on its part contemplated by any thereof, will not,
with or without the giving of notice or the passage of time or both: 
  
 (a) Violate the provisions of their respective charter or bylaws; or 
  
 (b) Violate any judgment, decree, order or award of any court binding upon the Company or any of its Subsidiaries; or 
  
 (c) Violate any [insert jurisdictions in which counsel is
qualified] or federal law 
  
 4. The Agreement and the Related
Agreements will constitute, valid and legally binding obligations of each of the Company and each of its Subsidiaries (to the extent such person is a party thereto), and are enforceable against each of the Company and each of its Subsidiaries in
accordance with their respective terms, except: 
  
 (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights; and 
  
 (b) general principles of equity that restrict the availability of equitable or legal remedies. 

 
 5. To such counsel’s knowledge, the sale of the Note and the
subsequent conversion of the Note into Note Shares are not subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. To such counsel’s knowledge, the sale of the Warrant and the subsequent
exercise of the Warrant for Warrant Shares are not subject to any preemptive rights or, to such counsel’s knowledge, rights of first refusal that have not been properly waived or complied with. 
  

 C-1 

 6. Assuming the accuracy of the representations and warranties of the Purchaser contained in the
Agreement, the offer, sale and issuance of the Securities on the Closing Date will be exempt from the registration requirements of the Securities Act. To such counsel’s knowledge, neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy and security under circumstances that would cause the offering of the Securities pursuant to the Agreement or any
Related Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Securities pursuant to Rule 506 under the Securities Act, or any applicable exchange-related
stockholder approval provisions. 
  
 7. There is no action, suit,
proceeding or investigation pending or, to such counsel’s knowledge, currently threatened against the Company or any of its Subsidiaries that prevents the right of the Company or any of its Subsidiaries to enter into this Agreement or any of
the Related Agreements, or to consummate the transactions contemplated thereby. To such counsel’s knowledge, the Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality; nor is there any action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate. 
  

8. The terms and provisions of the Master Security Agreement and the Stock Pledge Agreement create a valid security interest in favor of the Purchaser,
in the respective rights, title and interests of the Company and its Subsidiaries in and to the Collateral (as defined in each of the Master Security Agreement and the Stock Pledge Agreement). Each UCC-1 Financing Statement naming the Company or any
Subsidiary thereof as debtor and the Purchaser as secured party are in proper form for filing and assuming that such UCC-1 Financing Statements have been filed with the Secretary of State of Nevada [Insert other jurisdictions], the security interest
created under the Master Security Agreement will constitute a perfected security interest under the Uniform Commercial Code in favor of the Purchaser in respect of the Collateral that can be perfected by filing a financing statement. After giving
effect to the delivery to the Purchaser of the stock certificates representing the ownership interests of each Subsidiary of the Company (together with effective endorsements) and assuming the continued possession by the Purchaser of such stock
certificates in the State of New York, the security interest created in favor of the Purchaser under the Stock Pledge Agreement constitutes a valid and enforceable first perfected security interest in such ownership interests (and the proceeds
thereof) in favor of the Purchaser, subject to no other security interest. No filings, registrations or recordings are required in order to perfect (or maintain the perfection or priority of) the security interest created under the Stock Pledge
Agreement in respect of such ownership interests. 
  
 9. Assuming
that North Fork Bank is a “bank” (as such term is defined in Section 9-102(a)(8) of the UCC), and that the Restricted Account (as defined in the Restricted Account Agreement) constitutes a “deposit account” (as such term is
defined in Section 9-102(a)(29) of the UCC), under the Uniform Commercial Code, the due execution and delivery of the Restricted Account Agreement perfects the Purchaser’s security interest in the Restricted Account. 
  

 C-2 

 EXHIBIT D 
  

FORM OF ESCROW AGREEMENT 
  

 D-4 

 SCHEDULE 4.2 
  
 SUBSIDIARIES 
  

							
	 NAME

	  	SHARES
AUTHORIZED

	  	 OWNERSHIP

	  	NUMBER
OF SHARES

	 Commercial Transportation Manufacturing Corp.
	  	200	  	Coach Industries Group, Inc.	  	200
				
	 Springfield Coach Industries Corporation, Inc.
	  	30,000	  	Coach Industries Group, Inc.	  	30,000
				
	 Springfield Coach Builders, Inc.
	  	5,000,000	  	Coach Industries Group, Inc.	  	5,000,000
				
	 Coach Financial Services, Inc.
	  	10,000,000	  	Coach Industries Group, Inc.	  	10,000,000

  

 1 

 SCHEDULE 4.3 
  
 NONE. 
  

 2 

 SCHEDULE 4.6 
  

 3 

 SCHEDULE 4.7. 
  
 OBLIGATIONS TO RELATED PARTIES 
  
 NONE. 
  

 4 

 SCHEDULE 4.9. 
  
 Title to Properties and Assets; Liens, Etc. 
  

NONE. 
  

 5 

 SCHEDULE 4.12 
  
 LITIGATION 
  
 NONE. 
  

 6 

 SCHEDULE 4.13 
  
 TAX RETURNS AND PAYMENTS 
  
 NONE 
  

 7 

 SCHEDULE 4.14 
  
 EMPLOYEES 
  
 NONE 
  
  

 8 

 SCHEDULE 4.15 
  
 REGISTRATION RIGHTS AND VOTING RIGHTS 
  

NONE 
  

 9 

 SCHEDULE 4.21 
  
 SEC REPORTS 
  
 NONE. 
  

 10 

 SCHEDULE 6.12(E) 
  
 INDEBTEDNESS 
  

 11 

 SCHEDULE 11.12 
  
 BROKER’S FEES 
  
 NONE. 
  

 12

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