Document:

Exhibit

EXHIBIT 10(hh)

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Execution Version

COMMITMENT AGREEMENT

January 23, 2019 (the “Commitment Agreement Date”)

Athene Annuity and Life Company (“Insurer”) is pleased to provide, on the following terms, the non-participating single premium group annuity contract, supported by a dedicated separate account and guaranteed by its general account (the “Contract”) for the Weyerhaeuser Pension Plan (the “Plan”) in consideration of the mutual promises made and representations, warranties and covenants contained in this Commitment Agreement (this “Commitment Agreement”).  For purposes of this Commitment Agreement, capitalized terms will have the meaning set forth in paragraph 9.  By signing this Commitment Agreement, Insurer, Weyerhaeuser Company (the “Company”), and State Street Global Advisors Trust Company, acting solely in its capacity as the independent fiduciary of the Plan (the “Independent Fiduciary”), agree as follows:  

		
	1.
	GAC Issuance and GAC Issuance True-Up Premium.  Insurer agrees to issue the Contract as follows: 

		
	a.
	Specimen GAC Form Issuance.  On the Scheduled GAC Issuance Date, subject to Insurer’s receipt of the Premium Due Date Transfers and any GAC Issuance True-Up Premium due to Insurer and subject to the terms of paragraphs 1.b. and 1.c., Insurer irrevocably agrees to issue the Contract with an effective date that is the Premium Due Date and in accordance with this Commitment Agreement and the Contract, irrevocably commits to make payments owed to Payees under the Contract on and after the Annuity Start Date; provided that, if the parties are unable to complete the take over of administration services regarding payments under the Contract pursuant to paragraph 6 prior to the Annuity Start Date, Insurer shall make a bulk payment to the Plan Trust (or in such other manner as the parties agree) equal to the Aggregate Monthly Payment as defined in the Contract) for each month until administration is transferred to Insurer pursuant to paragraph 6.  The Contract will be in substantially the form of the specimen group annuity contract (the “Specimen GAC Form”) attached hereto as Schedule 1 with such updates agreed upon pursuant to and in accordance with paragraph 2.

		
	b.
	Form of Annuities and Payments under the Contract.  The type, description and forms of annuities (e.g., single life annuity, joint and survivor annuity), payments under the Contract and other terms of the Contract will be consistent with the terms of Insurer’s proposal dated January 18, 2019 (the “Proposal”) as updated to reflect (i) any modifications contemplated in Insurer’s Final Annuity Quote Sheet dated January 23, 2019 (the “Final Annuity Quote Sheet”) and (ii) any modifications mutually agreed to between the parties after the Commitment Agreement Date and before the 35th Business Day prior to the Scheduled GAC Issuance Date.  Subject to Insurer’s receipt of the Premium Due Date Transfers, Insurer will make payments to Payees commencing on the Annuity Start Date in accordance with the Proposal and the Final Annuity Quote Sheet until the Contract has been issued and, for the avoidance of doubt, will make such payments even if the Contract has not been issued by Insurer as of the Annuity Start Date.  The original annuity exhibit to the Contract will be consistent with the Payees (including annuitants, contingent annuitants, alternate payees and beneficiaries) on the Tab titled DG2 of the Base File.

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

		
	c.
	Necessary Data.  As a condition to Insurer’s issuing of the Contract, the Company will deliver or cause to be delivered to Insurer the data necessary for Insurer to prepare the annuity exhibit and the information necessary for Insurer to draft provisions of the Contract and administer the payments thereunder, including but not limited to, information such as factor tables and sample calculations.  If there are any delays in the delivery of the foregoing information based on the delivery dates set forth in Schedule 7 or such other delivery dates as may be designated by Insurer, Insurer may refer any Payee who contacts Insurer to the Company Contact for assistance and Insurer may, in its sole discretion, delay the mailing of Welcome Kits and annuity certificates.  Insurer may exclude from the annuity exhibit any Payee for which Insurer has not been provided each of the following:  (i) name, (ii) gender, (iii) date of birth and (iv) social security or federal taxpayer identification number.  Notwithstanding the foregoing, if the (1) name, (2) gender, (3) date of birth or (4) social security or federal taxpayer identification number for a Payee that is provided in accordance with this paragraph 1.d.ii is determined to be incorrect after the Scheduled GAC Issuance Date, any adjustments or amendments to the Contract shall be made solely in accordance with the terms of the Contract.

		
	d.
	GAC Issuance True-Up Premium.  Schedule 8 provides a description of the methodologies and procedures by which Insurer will calculate the GAC Issuance True-Up Premium. Insurer and the Company will cooperate in good faith so that Insurer can calculate the GAC Issuance True-Up Premium, subject to the following acknowledgements, limitations and conditions:

		
	i.
	GAC Issuance Data.  To the extent that the Company discovers or has any Data Corrections after the Commitment Agreement Date and prior to the date that is 35 Business Days prior to the Scheduled GAC Issuance Date (the “GAC Issuance Data Notice Date”), the Company will provide written notice of such Data Correction as promptly as reasonably practicable to Insurer.  Insurer will only be responsible for incorporating into the calculation of the GAC Issuance True-Up Premium those Data Corrections that have been notified to Insurer by the Company on or prior to the GAC Issuance Data Notice Date together with any other Data Corrections identified by Insurer (the “GAC Issuance Data”).  Such incorporation is subject to Insurer’s agreement with such Data Corrections and any limitations on incorporating such Data Corrections into the GAC Issuance True-Up Premium set forth in Schedule 8.  

		
	ii.
	GAC Issuance Annuity Exhibit.  Twenty Business Days prior to the Scheduled GAC Issuance Date, Insurer will deliver to the Company a proposed annuity exhibit utilizing and consistent with the Base File and the GAC Issuance Data.  Fifteen Business Days prior to the Scheduled GAC Issuance Date, the Company will respond to Insurer with any questions on the annuity exhibit.  Insurer and the Company will cooperate in good faith to resolve any discrepancies on or prior to the eleventh Business Day prior to the Scheduled GAC Issuance Date and Insurer will reflect in the annuity exhibit any changes that have been agreed to on or prior to such eleventh Business Day.  Insurer may exclude from the annuity exhibit any Payee for which Insurer has not been provided each of the following:  (1) name, (2) gender, (3) date of birth and (4) social security or federal taxpayer identification number. 

iii. GAC Issuance True-Up Premium.  Eight Business Days prior to the Scheduled GAC Issuance Date, Insurer will send the calculation of the GAC Issuance True-Up Premium to the Company for review.  Five Business Days prior to the Scheduled GAC Issuance Date, the Company will respond 

2

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

to Insurer with any questions on the GAC Issuance True-Up Premium. Insurer and the Company will cooperate in good faith to resolve any discrepancies on or prior to the third Business Day prior to the Scheduled GAC Issuance Date. If the Company and Insurer cannot resolve any dispute with respect to the GAC Issuance True-Up Premium on or prior to the date that is three Business Days prior to the Scheduled GAC Issuance Date, then Insurer’s determination will control for purposes of the GAC Issuance True-Up Premium, but the Company or the Independent Fiduciary may immediately commence an arbitration dispute pursuant to Schedule 4 with respect to the GAC Issuance True-Up Premium.
iv. GAC Issuance True-Up Premium Payment.  The GAC Issuance True-Up Premium will be paid on the Scheduled GAC Issuance Date as follows: (A) if the GAC Issuance True-Up Premium is a positive number, then the Independent Fiduciary will irrevocably direct the Plan Trustee to pay to Insurer an amount, in Cash, equal to the GAC Issuance True-Up Premium, plus interest calculated in accordance with Schedule 8, and Insurer will deposit the Cash into the designated separate account that supports the Contract; or (B) if the GAC Issuance True-Up Premium is a negative number, then Insurer will pay to the Plan Trust an amount, in Cash, equal to the absolute value of the GAC Issuance True-Up Premium plus interest calculated in accordance with Schedule 8.  

		
	2.
	Negotiation of Modified GAC Form.  After the Commitment Agreement Date, Insurer, the Company and the Independent Fiduciary will each use commercially reasonable efforts to revise the Specimen GAC Form to reflect such revisions that were mutually agreed to by the parties prior to the Commitment Agreement Date and will use commercially reasonable efforts to negotiate any additional revisions to the Specimen GAC Form (the “Modified GAC Form”) and related forms of annuity certificates, subject to the following acknowledgements, limitations and conditions: 

		
	a.
	Regulatory Approvals.  Insurer will use reasonable best efforts to obtain regulatory approvals, to the extent required by applicable law, of the Modified GAC Form prior to the Scheduled GAC Issuance Date, and in the event that any approval, to the extent required by applicable law, is not granted, or if the Contract is disapproved, Insurer, the Independent Fiduciary and the Company will cooperate in good faith to mutually agree on modifications to the Contract to address the requests of the Washington State Office of the Insurance Commissioner, if any, and, to the extent possible, to preserve the provisions included in the Modified GAC Form. Insurer will use reasonable best efforts to obtain regulatory approvals, to the extent required by applicable law, of customized annuity certificates prior to the annuity certificate mailing date set forth in paragraph 5.b.

		
	b.
	Contract Issuance.  Following the negotiation of the Modified GAC Form and the receipt of any related regulatory approvals for all negotiated changes to the Specimen GAC Form in accordance with paragraph 2.a., subject to Insurer’s receipt of the Premium Due Date Transfers and any GAC Issuance True-Up Premium due to Insurer, Insurer will issue the Contract on the Scheduled GAC Issuance Date using the Modified GAC Form in lieu of the Specimen GAC Form, subject to and in accordance with paragraphs 1.a., 1.b. and 1.c..  Such Contract will have an effective date that is the Premium Due Date.

3

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

		
	3.
	Premium Due Date Transfers.  So long as the conditions to closing set forth in paragraph 8 have been satisfied, the Independent Fiduciary will irrevocably direct the Plan Trustee to pay Insurer, per the instructions set forth in Schedule 11, $[***] (the “Premium Amount”) on the Premium Due Date by:

		
	(x) 
	assigning, transferring and delivering to Insurer, by the Cut-Off Time, all rights, title and interests in and to each Eligible Asset, and

		
	(y)
	paying to Insurer an amount in Cash equal to [***].

In addition, on the Premium Due Date, the Independent Fiduciary will irrevocably direct the Plan Trustee to pay or cause to be paid to Insurer the Interim Asset Cash Flows (such payment, together with the payment of the Premium Amount, the “Premium Due Date Transfers”).  If on or following the Premium Due Date, the Plan, the Plan Trust or the Company [***], then the Plan or the Plan Trust shall [***]; otherwise, then the Independent Fiduciary will irrevocably direct the Plan Trustee to [***].  On or before the Premium Due Date, the Independent Fiduciary will irrevocably direct the Plan Trustee to transfer the Eligible Assets to Insurer on the Premium Due Date or to instruct The Depository Trust Clearing Corporation to transfer the Eligible Assets to Insurer on the Premium Due Date.  Insurer will deposit the Premium Amount into the dedicated separate account that supports the Contract. [***]. [***].  [***].

		
	a.
	Schedule 2 Updates.  On the second Business Day after the Commitment Agreement Date, Insurer will deliver to the Company an updated Schedule 2 that reflects the Asset Market Value of each Schedule 2 Asset [***].  If the Company, Insurer and Independent Fiduciary, despite using commercially good faith efforts, cannot resolve any dispute with respect to any such information on or prior to the Premium Due Date, then Insurer’s determination will control for purposes of the Premium Due Date Transfers but the Company or the Independent Fiduciary may immediately commence an arbitration dispute pursuant to Schedule 4 with respect to any such information.  On the Premium Due Date, Insurer will, if needed, update Schedule 2 to reflect [***].  Insurer will, if needed, further update Schedule 2 to reflect [***].  

		
	b.
	[***].  On and as of the Business Day prior to the Premium Due Date, Insurer will provide to the Company [***] information in the form of Schedule 5 [***].  Prior to the Premium Due Date, the Company will confirm to Insurer in writing that such information is accurate and complete or will provide any additions, deletions or corrections to such information.  If the Company and Insurer have a dispute with respect to any such information and, despite using commercially good faith efforts, cannot resolve such dispute on or prior to the Business Day prior to the Premium Due Date, then Insurer’s [***] information will control for purposes of the Premium Due Date Transfers but the Company may immediately commence an arbitration dispute pursuant to Schedule 4 with respect to any such information.  

		
	c.
	[***].  By written notice to the other party on or before the fifth Business Day following the Premium Due Date, the Company or Insurer may identify [***] and the parties will work in good faith for seven Business Days following the receipt of such notice to agree on [***].  If the parties agree that [***] within such seven Business Days following the receipt of such notice, then, on or before the date that is three Business Days following such agreement, the Independent Fiduciary will irrevocably direct the Plan Trustee to promptly pay or cause to be paid to Insurer an amount, in Cash, per instructions on Schedule 11, equal to [***], and, simultaneously with receipt of such payment, Insurer will return [***] to the Plan Trust 

4

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

together with [***]. Simultaneously with such payment and return, the Company and Insurer will [***].  If the Company, Insurer and the Independent Fiduciary cannot resolve any dispute with respect to any [***], then [***].    
		
	d.
	[***].  By written notice to the other party on or before the fifth Business Day following the Premium Due Date, the Company or Insurer may identify [***], and the parties will work in good faith for seven Business Days following the receipt of such notice to agree [***].  If the parties agree that [***] within such seven Business Days following the receipt of such notice, then, on or before the date that is three Business Days following such agreement, the Independent Fiduciary will irrevocably direct the Plan Trustee to promptly pay or cause to be paid to Insurer an amount, in Cash, per instructions in Schedule 11, equal to [***].  Simultaneously with such payment, the Company and Insurer will [***].  If Company Insurer and the Independent Fiduciary cannot resolve any dispute with respect to any [***], then [***]. 

		
	e.
	Interest Payments.  Any payment made to Insurer pursuant to paragraph 3.c or 3.d shall also include an amount, in Cash, equal to the interest on such payment calculated at an annual rate equal to [***], from the Premium Due Date through but excluding the date of such payment.

		
	f.
	Additional Actions with respect to Assets.  The Independent Fiduciary will irrevocably direct the Plan Trustee to promptly give or cause to be given all notices that are required, under applicable law and the terms of each Eligible Asset, in connection with the sale, assignment, transfer and delivery of the Eligible Assets on the Premium Due Date.  The Independent Fiduciary will irrevocably direct the Plan Trustee to and Insurer will promptly execute, deliver, record or file or cause to be executed, delivered, recorded or filed any and all releases, affidavits, waivers, notices or other documents that the Company or Insurer may reasonably request in order to implement the transfer of the Eligible Assets to Insurer.

		
	g.
	Risk of Loss on Transferred Assets; Gains on Transferred Assets.  Insurer acknowledges and agrees that, if the Premium Due Date Transfers occur, then, from and after the Commitment Agreement Date, Insurer bears any and all risks associated with each Transferred Asset.  

		
	h.
	Available Assets.  The Company will cause the Plan Trust to have sufficient Cash or other assets (whether by means of a Cash contribution or otherwise) to enable the Plan Trustee to pay all amounts that it is directed to pay to Insurer by the Independent Fiduciary pursuant to this Commitment Agreement. 

		
	i.
	Dedicated Separate Account.  Insurer will deposit the Premium Amount into the dedicated separate account that supports the Contract.

		
	4.
	Public Announcements.  

		
	a.
	Press Releases.  The Company and Insurer have the right to issue a transaction announcement or press release regarding the transactions contemplated by this Commitment Agreement, a copy of which will be provided to the other party for review no less than two Business Days prior to the issuance thereof, and the party issuing the transaction announcement or press release will consider in good faith any comments made by the other party; provided, however, that, if the Company has not issued a transaction announcement or press release, Insurer will not issue a transaction announcement or press release without the prior written consent of the Company; provided, further, that nothing contained in this paragraph 4.a. will prevent Insurer from (i) communicating with Payees, including through communications posted to Insurer’s website or (ii) discussing or disclosing the transactions contemplated

5

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

by this Commitment Agreement so long as such disclosure does not reference the Plan or the Company’s name, industry, workforce, or other information that could reasonably allow a third party to identify the Company and/or the Plan.
		
	b.
	SEC Filings.  If the Company concludes that disclosure of this Commitment Agreement is required by the rules of the Securities and Exchange Commission (“SEC”), (i) the Company and Insurer will cooperate to make a request by the Company to the SEC for confidential treatment of information relating to the pricing of the Contract and such other information as the Company and Insurer mutually conclude is competitively sensitive from the perspective of the Company or Insurer or otherwise merits confidential treatment and (ii) the Company will include Insurer in any material correspondence (written or oral) with the SEC regarding such application for confidential treatment, and the Company and Insurer will otherwise reasonably cooperate in connection with such request, including by the Company proposing to redact confidential portions of documents as to which the SEC staff seeks disclosure.

		
	c.
	No Insurer Communications.  Except to the extent the Company has provided prior written consent, from the Commitment Agreement Date until the issuance of any annuity certificate by Insurer to an annuitant, other than as provided for in this Commitment Agreement, (i) Insurer will cause the employees of its retirement services business unit not to initiate any contact or communication with any participant or beneficiary of the Plan in connection with any transactions other than those transactions contemplated by this Commitment Agreement and (ii) Insurer will not, and will cause all of its affiliates not to, provide any of their respective insurance agents, wholesalers, retailers or other representatives with any contact information of such participants and beneficiaries of the Plan obtained from the Company or any of its representatives in connection with the transactions contemplated by this Commitment Agreement, except for those representatives of Insurer or any of their respective affiliates who need to know such information for purposes of the transactions contemplated by this Commitment Agreement and agree to comply with the requirements of this Commitment Agreement. However, this paragraph 4.c. will not restrict employees of Insurer’s retirement services business unit from contacting any participant or beneficiary of the Plan in connection with, or to facilitate, Insurer’s performance of its obligations under the Contract, the annuity certificates or this Commitment Agreement. Until the mailing of the Welcome Kit by Insurer to annuitants, other than as provided for in this Commitment Agreement, if any participant or beneficiary of the Plan contacts an employee of Insurer’s retirement services business unit, Insurer and the Company will cooperate to coordinate on a response to such participant or beneficiary of the Plan.

		
	5.
	Welcome Kits and Annuity Certificates.  

		
	a.
	Welcome Kits.  On or before April 15, 2019 (or such other date agreed to by the parties) (the “Welcome Kit Mailing Date”), Insurer will mail a welcome kit to each annuitant under the Contract (the “Welcome Kit”).  Insurer will send a preliminary draft of the Welcome Kit to the Company and the Independent Fiduciary as soon as practicable and Insurer will consider in good faith any comments made by the Company or the Independent Fiduciary on the “Frequently Asked Questions” section of the Welcome Kit on or before the fifth Business Day after it receives the preliminary draft of the Welcome Kit from Insurer.

		
	b.
	Annuity Certificates.  Insurer will mail an annuity certificate to each applicable Payee on or before the later of (i) 20 Business Days after the Contract is issued and (ii) 120 Business Days after the date on 

6

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

which the Welcome Kit is mailed to Payees, in each case, subject to receiving regulatory approvals for any such annuity certificate, if needed.  To the extent that any changes are made to the forms of annuity certificates or the related benefit terms after the Company, the Independent Fiduciary and Insurer have agreed on the forms of annuity certificates to be filed and the related benefit terms, the mailing of an annuity certificate to each applicable Payee shall be extended by the number of days elapsed since the Company, the Independent Fiduciary and Insurer had first agreed on the forms of such annuity certificates and the related benefit terms. Each annuity certificate will include a statement informing a Payee of his or her right to obtain a copy of the Contract (redacted to exclude information concerning other annuitants), how to obtain such copy of the Contract [***]. The rights of a Payee are not conditioned on the issuance of the annuity certificates, and any delay in issuing a certificate shall not have any effect on the date as of which the Payee has enforceable rights against Insurer.

		
	6.
	Administration and Transfer.  

		
	a.
	Administrative Transition.  The Company will provide or cause to be provided to Insurer the information needed to administer the payments under the Contract and will complete or cause to be completed all processes set forth in Schedule 7.  The Company and Insurer will use commercially reasonable efforts to take or cause to be taken all actions and do or cause to be done all things necessary to coordinate the takeover by Insurer of all administration responsibilities necessary to effectively provide recordkeeping and administration services regarding payments under the Contract commencing on the Annuity Start Date.  The Company will provide Insurer with final census data in good order on or before January 30, 2019 in order for Insurer to provide recordkeeping and administration services regarding payments under the Contract commencing on the Annuity Start Date.  Insurer will conduct a data integrity review of all data elements (including if any potential Payee was deceased prior to the date of the Premium Due Date Transfers) in accordance with Insurer’s standard verification practices and procedures.  The Company agrees to cooperate with Insurer in the takeover of such recordkeeping and administration services, including ensuring that any third-party service provider provides Insurer with any information or records relating to the Plan benefits and the Payees in its possession.  The Company will make subject matter experts available to promptly address any questions Insurer may have regarding the benefit provisions, including but not limited to forms of annuity, eligibility conditions, administrative practices and calculation methodology. Insurer shall perform all of its obligations contemplated under this Agreement and the Contract in material compliance with all applicable laws.

		
	b.
	Call Center and Company Contact.  Insurer will maintain, at its cost and expense, a toll-free phone number and/or a website (the “Call Center”) which will be available starting from the Welcome Kit Mailing Date for Payees to contact Insurer with questions related to the Contract and the annuity certificates.  For a period of five years following the Premium Due Date, the Company will maintain, at its cost and expense, a point of contact (the “Company Contact”) to which Insurer may refer Payees who pose questions related to their Plan benefits.  In the event that a Payee contacts the Company with questions related to the Contract and the annuity certificates, the Company may refer the Payee to the Call Center.  In the event that a Payee contacts Insurer with questions related to their Plan benefits, Insurer may refer the Payee to the Company Contact.  

7

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

		
	7.
	 Representations and Warranties.

		
	a.
	Insurer Representations and Warranties.  Insurer hereby represents and warrants to the Company and the Independent Fiduciary as of the Commitment Agreement Date and as of the Premium Due Date that:

		
	i.
	Due Organization, Good Standing and Corporate Power.  Insurer is a life insurance company, duly organized, validly existing and in good standing under the laws of the State of Iowa.  Insurer is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement and the Contract makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material.  Insurer has all requisite corporate power and legal authority to enter into and carry out its obligations under this Commitment Agreement and the Contract and to consummate the transactions contemplated to be undertaken by Insurer in this Commitment Agreement and the Contract.

		
	ii.
	Authorization of Commitment Agreement and Enforceability.  Insurer has received all necessary corporate approvals and no other action on the part of Insurer is necessary to authorize the execution, delivery and performance of this Commitment Agreement and the Contract, and the consummation of the transactions contemplated to be undertaken by Insurer in this Commitment Agreement and the Contract.  This Commitment Agreement has been duly executed and delivered by Insurer, and is a valid and binding obligation of Insurer, enforceable against Insurer in accordance with its terms, subject to the applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (“Enforceability Exceptions”).

		
	iii.
	No Conflict.  The execution, delivery and performance of this Commitment Agreement and the Contract by Insurer, and the consummation by Insurer of the transactions contemplated to be undertaken by Insurer in this Commitment Agreement do not (1) violate or conflict with any provision of its certificates or articles of incorporation, bylaws, code of regulations, or the comparable governing documents, (2) except for the filings and approvals of state insurance governmental authorities in the states listed on Schedule 10, violate or conflict with any law or order of any governmental authority applicable to Insurer, (3) require any governmental or governmental agency approval other than any filing made or approval received as of the Commitment Agreement Date and filings with and approvals of state insurance governmental authorities in the states listed on Schedule 10 or (4) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which Insurer is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on Insurer’s ability to consummate the transactions and perform its obligations contemplated by this Commitment Agreement.  No filing or approval is required to issue the annuity certificates in accordance with the Contract, other than any filing made or approval 

8

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

received as of the Commitment Agreement Date and filings with and approvals of state insurance governmental authorities in the states listed on Schedule 10.
		
	iv.
	Compliance with Laws.  The business of insurance conducted by Insurer has been and is being conducted in material compliance with applicable laws, and none of the licenses, permits or governmental approvals required for the continued conduct of the business of Insurer as such business is currently being conducted will lapse, terminate, expire or otherwise be impaired as a result of the consummation of the transactions contemplated to be undertaken by Insurer in this Commitment Agreement, except as, in either case, would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Insurer to perform its obligations under this Commitment Agreement.

		
	v.
	Accuracy of Information.  To Insurer’s Knowledge (x) all material information provided by Insurer to the Company or the Independent Fiduciary (other than any component incorporated into the calculation of the Premium Amount or the GAC Issuance True-Up Premium not calculated, determined or provided by Insurer, including the Base File, and any information provided by Insurer based on any such component) in connection with the transactions contemplated by this Commitment Agreement was, as of the date indicated on such information, true and correct in all material respects and (y) no change has occurred since the date indicated on such information that Insurer has not publicly disclosed or disclosed to the recipient of such information that would cause such information, taken as a whole, to be materially false or misleading.

		
	vi.
	Relationship to the Plan.  Insurer is not (1) a trustee of the Plan, (2) a plan administrator (within the meaning of ERISA § 3(16)(A) and the Code § 414(g)) with respect to the Plan) or (3) an employer any of whose employees are covered by the Plan.  Schedule 6 sets forth a true and complete list of (x) Insurer and Insurer’s affiliates that are investment managers within the meaning of ERISA § 3(38)(B) and (y) without duplication of clause (x), Insurer and Insurer’s affiliates that are registered as investment advisers under the Investment Advisers Act of 1940; provided, however, that solely with respect to the representation and warranty as to Schedule 6 to be made by Insurer on and as of the Premium Due Date, Insurer may update Schedule 6 through the Premium Due Date by providing a written update to the Company so that the information included therein is current on and as of the Premium Due Date.  BlackRock Financial Management, Inc. (“BlackRock”) is not an affiliate of Insurer.

		
	vii.
	No Post-Closing Liability.  Following receipt by Insurer of the Premium Due Date Transfers, the Plan, the Company and the Independent Fiduciary and their respective affiliates and representatives will not have any liability to pay any annuity payment under the Contract.

		
	viii.
	The Contract.  The Contract, when executed, will be duly executed and delivered by Insurer and will be a valid and binding obligation of Insurer and enforceable against Insurer by the Company and each Payee in accordance with its terms, subject to the Enforceability Exceptions.  At all times, the right to a benefit and all other provisions under the Contract, in accordance with the Contract’s terms, will be enforceable by the sole choice of the Payee to whom the benefit is owed under the Contract, subject to the Enforceability Exceptions. In the event that the Company, as the contract holder, ceases to exist, notifies Insurer that it will cease to perform its obligations under the Contract, or no longer has obligations under the Contract, the Contract will remain a valid and

9

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

binding obligation of Insurer, irrevocable and in full force and effect, and enforceable against Insurer by each Payee in accordance with its terms, subject to the Enforceability Exceptions.  
		
	ix.
	Litigation.  As of the Commitment Agreement Date, there is no action pending or, to Insurer’s Knowledge, threatened against Insurer that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or restrict Insurer’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

		
	x.
	No Commissions.  No fees, commissions or payments are or will be owed by Insurer to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract for which any other party, or its respective affiliates or representatives, could be liable.

		
	xi.
	RBC Ratio.  As of the Commitment Agreement Date, Insurer’s most recent Projected RBC Ratio is [***], and, to Insurer’s Knowledge, no event (including a change to financial market metrics) has occurred between the date of Insurer’s most recent Projected RBC Ratio and the Commitment Agreement Date that would be expected to cause Insurer’s Projected RBC Ratio to [***].

		
	x.
	Sophisticated Investor. Insurer is a sophisticated investor with experience in the purchase of publicly traded debt of the type to be included in the Transferred Assets. Insurer has had access to such information as it deems necessary in order to make its decision to acquire the Transferred Assets from the Plan. Insurer acknowledges and agrees that neither the Company, the Independent Fiduciary, nor the Plan has given any investment advice or rendered any opinion to Insurer as to whether the acquisition of the Transferred Assets is prudent.

		
	b.
	Company Representations and Warranties.  The Company is acting solely in its non-fiduciary, settlor and Plan sponsor capacity in regard to the transactions contemplated by this Commitment Agreement and hereby represents and warrants to Insurer and the Independent Fiduciary as of the Commitment Agreement Date and as of the Premium Due Date that:

		
	i.
	Due Organization, Good Standing and Corporate Power.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington.  The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement and the Contract makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material.  The Company has all requisite corporate power and legal authority to enter into and carry out its obligations under this Commitment Agreement and the Contract and to consummate the transactions contemplated to be undertaken by the Company in this Commitment Agreement and the Contract.  

		
	ii.
	Authorization of Commitment Agreement and Enforceability.  The Company has received all necessary corporate approvals and no other action on the part of the Company is necessary to authorize the execution, delivery and performance of this Commitment Agreement and the Contract, and the consummation of the transactions contemplated to be undertaken by the Company in this Commitment Agreement and the Contract.  This Commitment Agreement and the

10

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Contract have been (or will be) duly executed and delivered by the Company, and each is (or when executed will be) a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.  
		
	iii.
	No Conflict.  The execution, delivery and performance of this Commitment Agreement and the Contract by the Company, and the consummation by the Company of the transactions contemplated to be undertaken by the Company in this Commitment Agreement do not (1) violate or conflict with any provision of the Plan and any documents and instruments governing the Plan as contemplated under ERISA § 404(a)(1)(D) (the “Plan Governing Documents”), the certificates or articles of incorporation, bylaws, code of regulations, or the comparable governing documents of the Company, (2) violate or conflict with any law or order of any governmental authority applicable to the Company or the Plan Governing Documents, (3) require any governmental or governmental agency approval or (4) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which the Company is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on the Company’s ability to consummate the transactions and perform its obligations contemplated by this Commitment Agreement.

		
	iv.
	Accuracy of Information.  Notwithstanding anything to the contrary in the Company NDA, to the Company’s Knowledge, (1) the mortality experience data file(s) provided by or on behalf of the Company to Insurer identified on Schedule 9 did not contain any misstatements or omissions that were, in the aggregate, material, and (2) the data in respect of benefit amounts, forms of annuities, date of birth, date of death, state of residence, gender, plan indicator, lump-sum indicator, hourly/salaried indicator, status (beneficiary in pay or participant), years of service and any other relevant information, in each case, with respect to the Payees that was furnished by or on behalf of the Company to Insurer, was not generated using any materially incorrect systematic assumptions or material omissions.

		
	v.
	Compliance with ERISA.  The Plan and Plan Trust are maintained under and subject to ERISA and, to the Company’s Knowledge, are in compliance with ERISA in all material respects.  To the Company’s Knowledge, no event has occurred that is reasonably likely to result in the Plan losing its status as qualified by the Code for preferential tax treatment under Code §§ 401(a) and 501(a).  All Plan amendments necessary to effect the transactions contemplated by this Commitment Agreement and the Contract have been duly executed and, to the extent that they require authorization by the Company, have been, or will be by the Premium Due Date, duly authorized and made by the Company.

		
	vi.
	Plan Investments.  Neither Insurer nor any of Insurer’s affiliates is a fiduciary of the Plan who either (A) has or exercises any discretionary authority or control with respect to the investment of Plan Assets that are or will be involved in the transactions contemplated by the Commitment Agreement or the Contract or (B) renders investment advice (within the meaning of ERISA § 3(21)(A)(ii) or Code § 4975(e)(3)(B)) with respect to such assets.  There are no commingled investment vehicles that hold Plan Assets, the units of which are or will be Plan Assets involved in the transactions

11

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

contemplated by this Commitment Agreement or the Contract.  No Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or the Contract are or will be managed by any investment manager listed on Schedule 6, and no investment advisor listed on Schedule 6 renders or will render investment advice (within the meaning of ERISA § 3(21)(A)(ii)) with respect to those assets.  The Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or the Contract will, immediately prior to the Commitment Agreement Date, be exclusively managed by BlackRock.  BlackRock has not engaged and will not engage any sub-managers or advisors with respect to its management of the Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or the Contract.  Investment advice (within the meaning of ERISA § 3(21)(A)(ii)) with respect to the Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or the Contract is and will be exclusively rendered by BlackRock.
		
	vii.
	Independent Fiduciary.  The Independent Fiduciary has been duly appointed as independent fiduciary of the Plan with respect to the purchase of one or more group annuity contracts to (1) be the sole fiduciary responsible for selecting one or more insurers to provide annuities in accordance and compliance with the ERISA Requirements, (2) determine whether the transactions contemplated by this Commitment Agreement and the Contract satisfy ERISA, (3) represent the interests of the Plan and its participants and beneficiaries in connection with the negotiation of a commitment agreement and, to the extent set forth in the IF Engagement Letter, the terms of any agreements with Insurer, including the Contract and the annuity certificates, (4) direct the Plan Trustee on behalf of the Plan to transfer the Premium Due Date Transfers in connection with the consummation of the transactions contemplated by this Commitment Agreement and any amounts required pursuant to paragraphs 1.d.iv., 3.c. and 3.d. and (5) take all other actions on behalf of the Plan necessary to effectuate the foregoing to the extent set forth in the IF Engagement Letter.

		
	viii.
	Plan Trustee is Directed Trustee.  The Plan Trustee has been duly appointed as the directed trustee of the Plan Trust and is obligated to follow the Independent Fiduciary’s directions to effectuate and consummate the transactions contemplated by this Commitment Agreement and the IF Engagement Letter consistent with the Plan Trust Agreement.  

		
	ix.
	Litigation.  There is no action pending or, to the Company’s Knowledge, threatened against the Company or the Plan that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or restrict such party’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

		
	x.
	No Commissions.  No fees, commissions or payments are or will be owed by the Company to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract for which any other party, or its respective affiliates or representatives, could be liable. 

		
	c.
	Independent Fiduciary Representations and Warranties.  The Independent Fiduciary hereby represents and warrants to the Company and Insurer as of the Commitment Agreement Date and as of the Premium Due Date and, with respect to paragraph 7.c.v. only, as of any other date on which the Plan Trustee pays 

12

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Cash or assets to Insurer in connection with the transactions contemplated by this Commitment Agreement or the Contract, that:
		
	i.
	Due Organization, Good Standing and Corporate Power.  The Independent Fiduciary is a trust company, duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts.  The Independent Fiduciary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material.  The Independent Fiduciary has all requisite corporate power and legal authority to enter into and carry out its obligations under this Commitment Agreement and to consummate the transactions contemplated to be undertaken by the Independent Fiduciary in this Commitment Agreement.  

		
	ii.
	Authorization of Commitment Agreement and Enforceability.  The Independent Fiduciary has received all necessary corporate approvals and no other action on the part of the Independent Fiduciary is necessary to authorize the execution, delivery and performance of this Commitment Agreement, and the consummation of the transactions contemplated to be undertaken by the Independent Fiduciary in this Commitment Agreement.  This Commitment Agreement has been duly executed and delivered by the Independent Fiduciary and is a valid and binding obligation of the Independent Fiduciary, enforceable against the Independent Fiduciary, in accordance with its terms, subject to the Enforceability Exceptions.

		
	iii.
	No Conflict.  The execution, delivery and performance of this Commitment Agreement by the Independent Fiduciary, and the consummation by the Independent Fiduciary of the transactions contemplated to be undertaken by the Independent Fiduciary in this Commitment Agreement do not (1) violate or conflict with any provision of its certificates or articles of incorporation, bylaws, code of regulations, or the comparable governing documents, (2) violate or conflict with any law or order of any governmental authority applicable to the Independent Fiduciary, (3) require any governmental or governmental agency approval, (4) violate or conflict with any law or order of any governmental authority applicable to any provision of the Plan Governing Documents or (5) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which the Independent Fiduciary is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on the Independent Fiduciary’s ability to consummate the transactions and perform its obligations contemplated by this Commitment Agreement.

		
	iv.
	Independent Fiduciary Compliance with ERISA.

		
	1.
	The Independent Fiduciary meets the requirements of, and in the transactions contemplated by this Commitment Agreement and the Contract is acting as, an “investment manager” under ERISA § 3(38), and further constitutes a “qualified professional asset manager” under the U.S. Department of Labor Prohibited Transaction Class Exemption 84-14 solely with respect to the transfer of assets to Insurer in connection with the transactions contemplated by this 

13

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Commitment Agreement and the Contract (but not the selection of such assets or the management of such assets prior to the transfer).  
		
	2.
	The Independent Fiduciary has accepted, and has not rescinded or terminated, its designation as the sole fiduciary of the Plan with authority to select one or more insurers to issue one or more group annuity contracts in the IF Engagement Letter (a true and correct copy of which has been provided to Insurer, except that the fees to be paid to the Independent Fiduciary and indemnification provisions have been redacted), and the Independent Fiduciary reaffirms its fiduciary status as set forth in the IF Engagement Letter.  

		
	3.
	The Independent Fiduciary has accepted, and has not rescinded or terminated, appointment as independent fiduciary of the Plan with respect to the purchase of one or more group annuity contracts to (a) be the sole fiduciary responsible for selecting one or more insurers to provide annuities in accordance and compliance with the ERISA Requirements, (b) determine whether the transactions contemplated by this Commitment Agreement and the Contract satisfy the ERISA Requirements, (c) represent the interests of the Plan and its participants and beneficiaries in connection with the negotiation of a commitment agreement and, to the extent set forth in the IF Engagement Letter, the terms of any agreements with Insurer, including the Contract and the annuity certificates, (d) direct the Plan Trustee on behalf of the Plan to transfer the Premium Due Date Transfers in connection with the consummation of the transactions contemplated by this Commitment Agreement and the Contract and any amounts required pursuant to paragraphs 1.d.iv., 3.c. and 3.d. and (e) take all other actions on behalf of the Plan necessary to effectuate the foregoing to the extent set forth in the IF Engagement Letter. 

		
	4.
	The Independent Fiduciary is fully qualified and has the requisite expertise together with its reliance on its consultant, Mercer Health & Benefits LLC (“Mercer”), and its counsel, K&L Gates LLP, to serve as an independent fiduciary in connection with the transactions contemplated by this Commitment Agreement and Contract, and it is independent of the Company and Insurer within the meaning of 29 C.F.R. § 2570.31(j). The Independent Fiduciary has ensured that Mercer has established commercially reasonable ethical walls between the personnel working on the transactions contemplated in the Commitment Agreement and the Contract and the personnel working on other matters involving the Company, Insurer or any of their respective affiliates.

		
	i.
	ERISA Related Determinations.  

		
	1.
	The Independent Fiduciary has selected Insurer to issue the Contract as set forth in this Commitment Agreement and such selection, the transactions contemplated by this Commitment Agreement, including the purchase of the Contract, the Plan’s use of assets for the purchase of the Contract as contemplated by this Commitment Agreement and the Contract (including its terms) each satisfies the ERISA Requirements.  The Independent Fiduciary has delivered a certification confirming the foregoing, executed by a duly authorized officer of the Independent Fiduciary, to the Annuity Committee.

		
	2.
	The transactions contemplated by this Commitment Agreement and the purchase of the Contract do not result in a Non-Exempt Prohibited Transaction, provided that the 

14

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

representations in paragraphs 7.a.vi and 7.b.vi are true and correct in all material respects as of the Premium Due Date.
		
	3.
	The Plan Trust (I) will receive no less than “adequate consideration” for the Transferred Assets and (II) will pay no more than “adequate consideration” for the Contract, in each case within the meaning of “adequate consideration” under ERISA § 408(b)(17)(B) and Code § 4975(f)(10).

		
	ii.
	Litigation.  There is no action pending or, to the Independent Fiduciary’s Knowledge, threatened against the Independent Fiduciary that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or restrict such party’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

		
	iii.
	No Commissions.  No fees, commissions or payments are or will be owed by the Independent Fiduciary to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract for which any other party, or its respective affiliates or representatives, could be liable. 

		
	8.
	Conditions to Closing. The parties’ obligations to consummate the transactions contemplated by this Commitment Agreement in connection with the Premium Due Date Transfers, including the Independent Fiduciary’s obligation to direct the Plan Trustee to consummate the transactions contemplated by this Commitment Agreement, are subject to the conditions that:

		
	a.
	The Independent Fiduciary will have confirmed that the transactions contemplated by this Commitment Agreement continue to satisfy the ERISA Requirements because an Independent Fiduciary MAC has not occurred or, if an Independent Fiduciary MAC has occurred, it is not continuing on the Premium Due Date;

		
	b.
	No court or government agency has taken any action after the Commitment Agreement Date that would (i) cause the consummation of the transactions contemplated by this Commitment Agreement to violate the law or (ii) cause the Plan to fail to remain qualified under Code Section 401(a); and

		
	c.
	Each of the representations and warranties of each of the other parties set forth in paragraph 7 shall be true and correct in all material respects as of the Commitment Agreement Date and as of the Premium Due Date.

		
	9.
	Definitions.  For purposes of this Commitment Agreement, the following defined terms will have the following meanings:

		
	a.
	“Annuity Committee” means the named fiduciary under the Plan with authority to appoint an independent fiduciary in connection with an annuity purchase transaction.

		
	b.
	“AAA” is defined in Schedule 4.

		
	c.
	“Annuity Start Date” means May 1, 2019.

		
	d.
	“Approved Firm” is defined in Schedule 4.

15

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

		
	e.
	“Asset Market Value” means (i) the close-of-market Fair Market Value of a Schedule 2 Asset as of the close of business on the Business Day prior to the Commitment Agreement Date, plus (ii) accrued interest on such Schedule 2 Asset as of the close of business on the Business Day prior to the Commitment Agreement Date.  [***]. [***].

		
	f.
	“Authorized Persons” is defined in paragraph 12.d.

		
	g.
	“Base File” means the data file titled “[***]”, provided on behalf of the Company to Insurer via email with a link to a secure website at 3:11 p.m. eastern time on January 7, 2019.

		
	h.
	“BlackRock” is defined in paragraph 7.8.vi.

		
	i.
	“Business Day” means any day other than a Saturday, a Sunday or a day on which banks located in New York, New York are authorized or required by law to close.

		
	j.
	“Call Center” is defined in paragraph 6.b.

		
	k.
	“Cash” means a wire transfer, through the Federal Reserve System, of currency of the United States of America.

		
	l.
	“Check Register” is defined in Schedule 7.

		
	m.
	“Code” means the Internal Revenue Code of 1986 and the applicable Treasury Regulations issued thereunder.

		
	n.
	“Commitment Agreement” is defined in the preamble.

		
	o.
	“Commitment Agreement Date” is defined in the preamble.

		
	p.
	“Company” is defined in the preamble.

		
	q.
	“Company Contact” is defined in paragraph 6.b.

		
	r.
	“Contract” is defined in the preamble.

		
	s.
	“Cut-Off Time” means 1:00 p.m. eastern time on the Premium Due Date.

		
	t.
	“Data Corrections” is defined in Schedule 8.

		
	u.
	“Data Load File” is defined in Schedule 7.

		
	v.
	“Data Load File Sign-Off” is defined in Schedule 7.

		
	w.
	“Eligible Asset” means a Schedule 2 Asset (i) that [***], and (ii) to which the Plan Trust has valid title, free and clear of all Liens, other than Permitted Liens on the Premium Due Date at the time of transfer.

		
	x.
	“Enforceability Exceptions” is defined in paragraph 8.a.ii.

		
	y.
	“ERISA” means Employee Retirement Income Security Act of 1974, as amended, and any federal agency regulations promulgated thereunder that are currently in effect and applicable.

		
	z.
	“ERISA Requirements” means all of the applicable requirements of ERISA and applicable guidance promulgated thereunder, including Interpretive Bulletin 95-1.

		
	aa.
	“Fair Market Value” means the fair market value as of the applicable date for a Schedule 2 Asset in an amount equal to the fair market value as of such date for such Schedule 2 Asset as indicated (i) by the primary pricing source set forth in the table below that corresponds to the applicable asset class of such Schedule 2 Asset, (ii) if such primary pricing source is not available or no fair market value is indicated by such primary pricing source for such Schedule 2 Asset, by the secondary pricing source set forth in the table below that corresponds to the applicable asset class of such Schedule 2 Asset, or (iii) if neither such primary nor secondary pricing source is available or no fair market value is indicated by either such source for such Schedule 2 Asset, by the tertiary pricing source, if any, set forth in the table below that 

16

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

corresponds to the applicable asset class of such Schedule 2 Asset.  For any applicable pricing source, the [***] will be used.  

	
				
	Asset Class
	Primary Pricing Source
	Secondary Pricing Source
	Tertiary Pricing Source

	[***]
	[***]
	[***]
	[***]

	[***]
	[***]
	[***]
	[***]

	[***]
	[***]
	[***]
	[***]

	[***]
	[***]
	[***]
	[***]

	[***]
	[***]
	[***]
	[***]

		
	bb.
	“Final Annuity Quote Sheet” is defined in paragraph 1.b.

		
	cc.
	“Final Production Data File” is defined in Schedule 7.

		
	dd.
	“GAC Issuance Data” is defined in paragraph 1.d.i.

		
	ee.
	“GAC Issuance Data Notice Date” is defined in paragraph 1.d.i.

		
	ff.
	“GAC Issuance True-Up Premium” is defined in Schedule 8.

		
	gg.
	[***].

		
	hh.
	“IF Engagement Letter” means the Engagement Letter dated December 6, 2018 between the Annuity Committee and the Independent Fiduciary appointing Independent Fiduciary to act as an independent fiduciary in connection with an annuity purchase.

		
	ii.
	“Indemnified Party” is defined in paragraph 10.

		
	jj.
	“Independent Fiduciary” is defined in the preamble.

		
	kk.
	“Independent Fiduciary MAC” means (i) the occurrence of a material adverse change, as determined in the Independent Fiduciary’s sole discretion, in or directly affecting Insurer after the Commitment Agreement Date that would cause the selection of Insurer and the purchase of the Contract to fail to satisfy the ERISA Requirements, or (ii) the occurrence of a change in ERISA Requirements after the Commitment Agreement Date that would cause the selection of Insurer and the Plan’s purchase of the Contract to fail to satisfy ERISA Requirements.

		
	ll.
	[***].

		
	mm.
	“Insurer” is defined in the Preamble.

		
	nn.
	“Interim Asset Cash Flows” means, with respect to the Transferred Assets, the aggregate amount paid by the issuer of each asset to the record owner as of any day during the period from and including the Commitment Agreement Date and to but excluding the date that the Premium Due Date Transfers occur, (i) with respect to any coupon, plus (ii) with respect to cash flows received on such assets, including but not limited to principal payments, principal redemptions and tender offers but not including coupons described in clause (i).  Interim Asset Cash Flows will not include any payments made with respect to any Transferred Assets that were due prior to the Commitment Agreement Date and any other cash flows not principal- or interest-related (such as class action payment receipt and litigation payment) relevant to events occurring prior to the Commitment Agreement Date. For purposes of paragraph 3.b, which relates to “Schedule 2 Assets” instead of “Transferred Assets,” the reference in this definition to “Transferred Assets” shall instead refer to “Schedule 2 Assets.” [***].

		
	oo.
	“Knowledge” means actual knowledge after making appropriate inquiry. 

17

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

		
	pp.
	“Lien” means any lien, mortgage, security interest, pledge, deposit, encumbrance, restrictive covenant or other similar restriction.

		
	qq.
	“Mid Price” means, for any applicable pricing source set forth in the definition of Fair Market Value, the mid price as provided by the pricing source.

		
	rr.
	[***].

		
	ss.
	“Modified GAC Form” is defined in paragraph 2.

		
	tt.
	“NDA” is defined in paragraph 11.b.

		
	uu.
	“Non-Exempt Prohibited Transaction” means a transaction prohibited by ERISA § 406 or Code § 4975, for which no statutory exemption or U.S. Department of Labor class exemption is available.

		
	vv.
	“Payee” means any payee under the Contract, including annuitants, contingent annuitants, alternate payees and beneficiaries, as applicable.

		
	ww.
	“Permitted Liens” means: 

		
	i.
	any Liens created by operation of law in respect of restrictions on transfer of securities (other than restrictions relating to the transfer of a Transferred Asset on the Premium Due Date in violation of applicable law); or 

		
	ii.
	with respect to any Transferred Asset, any transfer restrictions or other limitations on assignment, transfer or the alienability of rights under any indenture, debenture or other similar governing agreement to which such assets are subject (other than restrictions relating to the transfer of such an asset on the Premium Due Date in violation of any such restriction).

		
	xx.
	“Plan” is defined in the preamble.

		
	yy.
	“Plan Asset” means an asset of the Plan within the meaning of ERISA.

		
	zz.
	“Plan Governing Documents” is defined in paragraph 8.b.iii.

		
	aaa.
	“Plan Trust” means the Weyerhaeuser Company Master Retirement Trust. 

		
	bbb.
	“Plan Trustee” means The Bank of New York Mellon in its capacity as trustee for the Plan Trust.

		
	ccc.
	“Preliminary Production Data File” is defined in Schedule 7.

		
	ddd.
	“Premium Amount” is defined in paragraph 3.

		
	eee.
	“Premium Due Date” means [***]. 

		
	fff.
	“Premium Due Date Transfers” is defined in paragraph 3.

		
	ggg.
	“Projected RBC Ratio” means, as of the day of determination, the projection of the RBC Ratio as of [***].

		
	hhh.
	“Proposal” is defined in paragraph 1.b.

		
	iii.
	“RBC Ratio” means the company action level risk-based capital ratio of Insurer, which will be calculated in a manner consistent with the requirements and methodologies prescribed under Iowa law, as applied by Insurer in the ordinary course of its business, consistent with its historic practice.

		
	jjj.
	“Schedule 2 Asset” means each asset listed from time to time on Schedule 2, [***]. 

		
	kkk.
	“Scheduled GAC Issuance Date” means on or before the date that is [***] Business Days after the Commitment Agreement Date or, if applicable, and, if later, by the date that is five Business Days following the final resolution of any arbitration disputes in accordance with Schedule 4, or such later date agreed upon by the Company and Insurer.

		
	lll.
	“SEC” is defined in paragraph 4.b.

		
	mmm.
	“Specimen GAC Form” is defined in paragraph 1.a.

18

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

		
	nnn.
	“Transferred Asset” means each Eligible Asset transferred to and received by Insurer by the Cut-Off Time on the Premium Due Date.  Until valid title to an Eligible Asset has transferred to Insurer, such asset is not a Transferred Asset.

		
	ooo.
	“Transferred Asset Market Value” means (i) the close-of-market Fair Market Value of a Transferred Asset as of the close of business on the Business Day prior to the Commitment Agreement Date, plus (ii) accrued interest on such Transferred Asset as of the close of business on the Business Day prior to the Commitment Agreement Date.

		
	ppp.
	“Transferred Asset Valuation” means the sum of the Transferred Asset Market Value for each Transferred Asset.

		
	qqq.
	“Update File” is defined in Schedule 7.

		
	rrr.
	“Welcome Kit” is defined in paragraph 5.a.

		
	sss.
	“Welcome Kit Mailing Date” is defined in paragraph 5.a.

		
	10.
	Indemnification by Insurer.

From and after the Premium Due Date, Insurer agrees to indemnify, defend and hold the Company, the Independent Fiduciary, and the Plan, and their respective affiliates, officers, directors, stockholders, employees, Plan fiduciaries, agents and other representatives (each, an “Indemnified Party”) harmless from and against any and all actual, but not potential or contingent, losses, damages, costs and expenses (in each case, including reasonable out of pocket expenses and reasonable fees and expenses of counsel) to the extent arising out of or relating to the portion of any action, lawsuit, proceeding, investigation, demand or other claim against such Indemnified Party by a third party that is threatened or brought against or that involves an Indemnified Party and that arises out of or relates to (a) any breach by Insurer of a representation, warranty or covenant under this Commitment Agreement or the Contract, or (b) any failure by Insurer to make, or cause to be made, any payments required to be made by Insurer pursuant to the Contract or the annuity certificates.

		
	11.
	Miscellaneous.  

		
	a.
	This Commitment Agreement, together with the Schedules to this Commitment Agreement, which are incorporated by reference and made a part of this Commitment Agreement as if fully set forth herein, and the NDA together constitute the sole and entire agreement of the parties to this Commitment Agreement with respect to the subject matter contained herein and therein.  [***].  The parties each hereby acknowledge that they jointly and equally participated in the drafting of this Commitment Agreement and all other agreements contemplated hereby, and no presumption will be made that any provision of this Commitment Agreement will be construed against any party by reason of such role in the drafting of this Commitment Agreement or any other agreement contemplated hereby.  No amendment of any of the provisions hereof shall be effective unless set forth in writing and signed by each party hereto.  No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving.  No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Commitment Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. 

19

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

		
	b.
	Notwithstanding anything to the contrary in the Mutual Non-Disclosure Agreement, dated as of October 31, 2018, among the Company, [***] (the “NDA”), (i) nothing in this Commitment Agreement or the NDA shall be construed to prohibit Insurer, the Company, the Plan, or the Independent Fiduciary from [***], and (ii) Insurer will not be required to return or destroy any Confidential Information (as defined in the NDA) and will not be restricted in its use or disclosure of any Confidential Information related to Payees, annuity payments under the Contract or the pricing or underwriting of the Contract, received from another party, provided, that Insurer will use such Confidential Information only in compliance with all applicable laws relating to privacy of personally identifying information and only for purposes of performing its obligations under this Commitment Agreement and the Contract. 

		
	c.
	This Commitment Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).  Any legal suit, action, or proceeding arising out of or relating to this Commitment Agreement or the transactions contemplated hereby may be instituted in the courts of the State of New York in each case located in the city of New York and County of New York, and each party hereby irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action, or proceeding.  The parties agree that irreparable damage may occur if any provisions of this Commitment Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to seek equitable relief, including injunctive relief or specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.  To the fullest extent permitted by law, none of the parties will be liable to any other party for any punitive or exemplary damages of any nature in respect of matters arising out of this Commitment Agreement.

		
	d.
	Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission) and shall be given:

		
	i.
	if to Insurer:

Athene Annuity and Life Company
450 Lexington Avenue
New York, NY 10017
[***]
[***] (with a copy by first class mail to the address above)

with a copy (which shall not constitute notice) to:
    
Athene Holding Ltd.
2121 Rosecrans Avenue, Suite 5300
El Segundo, CA 90245
[***]
[***]

20

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

		
	ii.
	if to the Company:

Weyerhaeuser Company
220 Occidental Ave. S. 
Seattle, WA 98104
[***]
[***] (with a copy by first class mail to the address above)  

with a copy (which shall not constitute notice) to:
Frost Brown Todd
150 3rd Avenue South
Suite 1900
Nashville, TN 37201
[***]
[***] (with a copy by first class mail to the address above)

		
	iii.
	If to Independent Fiduciary:

State Street Global Advisors Trust Company
1 Iron Street
Boston, MA 02210
[***]
[***] (with a copy by first class mail to the address above)
with a copy (which shall not constitute notice) to:
K&L Gates LLP
K&L Gates Center
210 Sixth Avenue
Pittsburgh, PA 15222-2613
[***]
[***] (with a copy by first class mail to the address above)

or such other address or email address as such party may hereafter specify for the purpose by notice to the other parties hereto.  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt.
		
	e.
	Insurer will comply, and will ensure that all of its affiliates, agents, and subcontractors comply, with all applicable laws and regulations governing the confidential information of all Payees, including those laws

21

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

relating to privacy, data security and protection and the safeguarding of such information, and its maintenance, disclosure and use.  Insurer will maintain administrative, technical and physical safeguards to protect the privacy and security of the confidential information related to Payees in its custody or under its control. Insurer will comply in all material respects with any internal written policies relating to the confidential information of any Payee in its custody or under its control as in effect from time to time.  Insurer acknowledges that it is solely responsible from and after the Commitment Agreement Date for any Data Breach.  For purposes of this paragraph 11.e., “Data Breach” means any act or omission by Insurer or its agents, subcontractors or service providers (“Authorized Persons”) that compromises either the security, confidentiality or integrity of Payee data in its custody or under its control or the physical, technical, administrative or organizational safeguards put in place by Insurer (or any Authorized Persons) that relate to the protection of the security, confidentiality or integrity of any personally identifying information of any Payee in its custody or under its control.
		
	f.
	Insurer, the Company and the Independent Fiduciary shall not assign or transfer this Commitment Agreement or any of its rights or obligations hereunder without the prior written consent of the other parties.  Any assignment or transfer in violation of this paragraph 11.f. will be null and void from the outset, without any effect whatsoever.

		
	g.
	This Commitment Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank]

22

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

IN WITNESS WHEREOF, the Company, Insurer, and the Independent Fiduciary have executed this Commitment Agreement as of the date first written above.

	
		
	Weyerhaeuser Company 
	Athene Annuity and Life Company

	By: /s/ Russell Hagen                                            
	By: /s/ Sean Brennan                                           

	Print Name: Russell Hagen
	Print Name: Sean Brennan

	Title: SVP, CFO
	Title: Head of Pension Risk Transfer

	
		
	STATE STREET GLOBAL ADVISORS TRUST COMPANY, acting solely in its capacity as    Independent Fiduciary of the Plan
	 

	By: /s/ Denise Sisk                                                
	 

	Print Name: Denise Sisk
	 

	Title: Managing Director
	 

23

Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 1
to
Commitment Agreement

MODIFIED GAC FORM

Attached

1

Schedule 1 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Group Annuity Contract

Athene Annuity and Life Company
7700 Mills Civic Parkway
West Des Moines, Iowa 50266-3862

	
		
	Contract-Holder:
	Plan:

	[ABC Company]
	[Pension Plan of ABC Company]

	 
	Trust: [XYZ Trust]

	Group Annuity Contract No.: [123456]
	Jurisdiction:  [Ohio]

	Effective date:  [12/01/2017]
	Contribution Amount as of Effective Date:  $[999,999]

	 
	Contribution Adjustment Amount: [None, as of 12/01/2017]

	 
	Total Contribution Amount as of

	 
	[Date]: $[999,999]

	Pages Attached: 1-[ž], Cash and Transferred Assets Exhibit and Annuity Exhibits

	[ABC Company
	ATHENE ANNUITY AND LIFE COMPANY

	123 Anywhere St.
	7700 Mills Civic Parkway

	Small Town, VA 12345]
	West Des Moines, Iowa 50266-3862

	By:                                                                                   
	By:                                                                                          

	 
	       [Name]

	Print Name:                                                                     
	       Title: [President]

	Title:                                                                                
	By:                                                                                         

	 
	      [Name]

	Date:                                                                               
	       Title: [Secretary]

	 
	Date:                                                                                      

Single-Premium Non-Participating Group Annuity Contract supported by the Separate Account and the General Account, as provided herein, and providing for an irrevocable commitment to make Annuity Payments, subject to the provisions of this Contract.  The Annuity Payments hereunder do not vary based on any gains or losses of the assets allocated to the Separate Account or the General Account.

Group Annuity Contract supported by a Dedicated Separate Account
[***]

501988675 v5

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

TABLE OF CONTENTS
	
				
	PROVISION I
	DEFINITIONS, SEPARATE ACCOUNT OPPERATIONS, AND
	1
	

	 
	TERMINATION OF CONTRACT
	 

	1.1
	Definitions
	1
	

	1.2
	Agreement to Pay Contribution Amount; Deposit into the Separate Account
	5
	

	1.3
	Agreement to Make Annuity Payments
	6
	

	1.4
	The Separate Account that Supports this Contract
	6
	

	1.5
	Investments Held in Separate Account
	6
	

	1.6
	Insulation of Separate Account Assets
	7
	

	1.7
	Expenses; Establishing Reserves; Withdrawal of Assets from the Separate Account
	7
	

	1.8
	Process for Making Annuity Payments
	8
	

	1.9
	Rights of Covered Lives and Contingent Lives
	8
	

	1.10
	Termination of Contract
	8
	

	1.11
	Small Account Conversion
	8
	

	PROVISION II
	PAYMENT TERMS AND CONDITIONS FOR FORMS OF ANNUITIES
	9
	

	2.1
	Covered Lives, Contingent Lives, and Beneficiaries
	9
	

	2.2
	Annuity Forms
	9
	

	2.3
	No Assignment by Covered Lives and Contingent Lives
	20
	

	2.4
	Proof of Continued Existence for Life Annuities; Escheatment
	20
	

	2.5
	Misstatements
	21
	

	2.6
	Overpayments and Underpayments
	21
	

	2.7
	Concerning Designations
	22
	

	2.8
	Concerning Qualified Domestic Relations Orders
	23
	

	2.9
	Payments to Representatives
	24
	

	2.10
	Certificates
	24
	

	PROVISION III
	GENERAL TERMS
	24
	

	3.1
	General Understanding
	24
	

	3.2
	Confidentiality
	24
	

	3.3
	Communications
	25
	

	3.4
	Currency; Payments
	25
	

	3.5
	Reliance on Records; Correction of Errors
	25
	

	3.6
	Contract-Holder
	26
	

	3.7
	No Implied Waiver
	26
	

	3.8
	Changes
	26
	

	3.9
	Limitation on Payments
	27
	

	3.10
	Consideration; Entire Contracts - Construction
	27
	

	3.11
	Third Party Beneficiaries
	27
	

CASH AND TRANSFERRED ASSETS EXHIBIT

ANNUITY EXHIBITS

Group Annuity Contract supported by a Dedicated Separate Account
[***]

501988675 v5

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

[GA-[123456]

[ABC Company]
ANNUITY EXHIBIT
Covered Lives
Annuity Commencement Date: [December 1, 2017]
Annuity Form: Life

	
								
	Covered Life
	Covered Life Social
	Covered Life
	Covered Life Date
	Covered Life
	[Lump Sum Death
	[Month of
	[COLA

	 
	Security Number
	Gender
	of Birth
	Amount
	Benefit Amount]
	Increase]
	Percentage]

[***]
501988675 v5                                31

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 2
to 
Commitment Agreement

[***]

Attached

1

Schedule 2 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 3
to
Commitment Agreement

[***]

Attached

1
Schedule 3 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 4
to
Commitment Agreement

ARBITRATION DISPUTE RESOLUTION
		
	1.
	Availability of Arbitration.  Arbitration is available as a means of dispute resolution only to the extent the Commitment Agreement explicitly states that the Company or Independent Fiduciary may commence arbitration in accordance with this schedule.  Absent such explicit authorization, arbitration is not available.

		
	2.
	Rules and Procedures.  Where this Commitment Agreement explicitly states that arbitration is available as a means of dispute resolution for a dispute between the parties, such dispute shall be resolved by arbitration conducted by one arbitrator, in accordance with Commercial Arbitration Rules and Expedited Procedures for Large, Complex Commercial Disputes of the American Arbitration Association ("AAA"), as such rules and procedures are in effect at the time of the arbitration, except as they may be modified herein or by mutual agreement of the parties.

		
	3.
	Location.  The seat of the arbitration shall be New York City, New York, at a mutually agreed upon location, or in the absence of agreement at the New York City offices of the AAA.

		
	4.
	Arbitrator.  The parties shall jointly engage a mutually agreed upon firm to serve as the arbitrator (such firm, the "Approved Firm"), within five Business Days after a dispute notice is delivered by either party to the other party to resolve any arbitration dispute.  If the parties are unable to engage an Approved Firm within such time period on such terms, then the AAA shall appoint an arbitrator within three Business Days thereafter.

		
	5.
	Damages. The arbitrator shall resolve any arbitration dispute within the range of difference between (a) any amounts or values as calculated or determined by Insurer and (b) any amounts or values as calculated or determined by the Company.  The arbitrator will have no authority to award any other damages other than as provided for herein.

		
	6.
	Judgment.  Any arbitration award shall be final and binding on the parties.  The parties shall undertake to carry out any award without delay and waive their respective rights to any form of recourse based on grounds other than personal conflict of interest of the arbitrator that was undisclosed at the time of the arbitrator's appointment.  Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over the parties, as applicable, or their respective assets.

		
	7.
	Costs.  The Company and Insurer shall share the fees and disbursements of the arbitrator equally (i.e., on a  50%/50% basis).  The parties shall each bear their own costs and expenses incurred in connection with prosecuting and/or defending any arbitration dispute.

		
	8. 
	[***].

		
	9.
	Amended Schedules.  If applicable, the parties will promptly amend the schedules hereto to reflect any arbitration decision.

1

Schedule 4 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 5
to
Commitment Agreement

[***]

	
					
	 
	 
	 
	[***]
	[***]

	[***]
	[***]
	[***]
	[***]
	[***]

	[***]                 [***]
	[***]
	[***]
	[***]                [***]
	[***]                [***]

1
Schedule 5 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 6
to
Commitment Agreement

INVESTMENT MANAGERS AND INVESTMENT ADVISERS

None.

1
Schedule 6 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 7
to
Commitment Agreement

ADMINISTRATION AND TRANSFER

This Schedule 7 sets forth the actions that the Company and Insurer will take or cause to be taken at the times identified in the table below.  All delivery dates after the first delivery date assume the prior delivery, to a party responsible for a subsequent deliverable, of relevant materials needed from other parties, on or prior to the required delivery dates set forth below, including cooperation of other parties in resolving any open issues.

Defined Terms

"Check Register" means an electronic file showing gross amounts, net amounts and deductions with respect to payments to each Payee.  Dates shown for the Check Register can be changed if mutually agreed upon.

"Final Production Data File" means the complete updated Preliminary Production Data File, reflecting all corrections since the Preliminary Production Data File and any addendums thereto.

"Preliminary Production Data File" means the preliminary production data file, as populated based on information from the recordkeeper's internal system.

"Update File" means an itemized list of updates that should be made to the file that was last delivered.

1
Schedule 7 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

	
				
	Deliverable
	Delivery Date
	Action by the Company/Plan
	Action by Insurer

	Preliminary Production Data File
	January 30, 2019
	Delivery Preliminary Production Data File
	Receive and reconcile Preliminary Production Data File to begin data cleanse and data mapping

	Check Register (as of February 1, 2019)
	January 30, 2019
	Deliver Check Register
	Receive Check Register

	Final Production Data File
	March 15, 2019
	Deliver Final Production Data File
	Receive Final Production Data File

	Check Register (as of April 1, 2019)
	March 19, 2019
	Deliver Check Register
	Receive Check Register

	Update File
	April 1, 2019
	Deliver Update File
	Receive Update File

	Update File
	April 22, 2019
	Delivery Update File
	Receive Update File

2
Schedule 7 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 8
to
Commitment Agreement

GAC ISSUANCE TRUE-UP PREMIUM
This Schedule 8 provides a description of the methodologies and procedures by which Insurer will calculate the GAC Issuance True-Up Premium.

[***].

[***].  [***].  [***].

[***].   [***].

a.    [***];
b.    [***];
c.    [***];
d.    [***];
e.    [***];
f.    [***];
g.    [***];
h.    [***]; or,
i.    [***].

[***].   [***].

1
Schedule 8 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

[***].   [***].   [***].   [***].   [***].   [***].

2
Schedule 8 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 9
to
Commitment Agreement

HISTORICAL MORTALITY DATA

The data file titled [***], provided on behalf of the Company to Insurer via email with direction to a secure website at 9:53 a.m. eastern time on January 9, 2019.

1
Schedule 9 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 10
to
Commitment Agreement

STATE INSURANCE GOVERNMENTAL AUTHORITIES

1.    Arkansas
2.    Connecticut
3.    Florida
4.    Georgia
5.    Idaho
6.    Iowa
7.    Louisiana
8.    Maryland
9.    Massachusetts
10.    Minnesota
11.    Mississippi
12.    Montana
13.    New Hampshire
14.    Ohio
15.    Oklahoma
16.    South Dakota
17.    Vermont
18.    Washington
19.    West Virginia
20.    District of Columbia
21.    Puerto Rico

1
Schedule 10 to Commitment Agreement, dated January 23, 2019
CONFIDENTIAL

CONFIDENTIAL TREATMENT REQUESTED

THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT THE CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]

Schedule 11
to
Commitment Agreement

[***]

[***]

	
		
	[***]

	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

[***]

	
		
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

1
Schedule 11 to Commitment Agreement, dated January 23, 2019
CONFIDENTIALExhibit 4.1

 

WORKHORSE GROUP INC.

 

SHARES OF COMMON STOCK 

SUBSCRIPTION AGREEMENT

 

This Agreement, dated as of
February 11, 2019, is made and entered into between Workhorse Group Inc., a Nevada corporation (the “Company”), and
_____________________________ (the “Investor”). This Agreement sets forth the terms under which the Investor will purchase
from the Company ________________ shares of the Company’s $0.001 par value per share Common Stock (the “Shares”
or the “Securities”) for a purchase price of $0.____ per share and an aggregate purchase price of $_________________________
(the “Purchase Price”) as set forth below.

 

NOTICE TO INVESTOR: THE
SECURITIES PURCHASED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS.
SUCH SECURITIES MAY BE NOT OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR EXEMPTION THEREFROM. FURTHER RESTRICTIONS ON TRANSFERABILITY OF THE SECURITES
ARE CONTAINED IN THIS AGREEMENT.

 

1. Subscription.
Subject to the terms of this Agreement, the Investor hereby irrevocably subscribes for the Securities, and on the date hereof will
tender the Purchase Price in the form of a certified check or bank check or wired funds payable to “Workhorse Group Inc.”

 

2. Representations
and Warranties of Investor. The Investor is making the following representations, warranties and agreements with the intent
that they be relied upon in determining his suitability to purchase the Securities, and the Investor agrees that such representations,
warranties and agreements shall survive the date of this Agreement and his purchase of the Securities. Investor hereby represents
and warrants to, and agrees with, the Company, and each of its officers, directors, persons who control the Company and affiliates
of the foregoing, as follows:

 

2.1 Investor
meets at least one of the following standards, and accordingly, is an “accredited investor” within the meaning of Rule
501 promulgated under the 1933 Act (please initial the applicable alternative in the space provided):

 

_____A natural person
whose individual net worth, or joint net worth with that person's spouse, at the time of purchase, exceeds $1,000,000, excluding
the value of the primary residence of such natural person, calculated by subtracting from the estimated fair market value of the
property the amount of debt secured by the property, up to the estimated fair market value of the property;

 

     

     

    

 

______ A natural person who
had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and who reasonably expects to reach the same income level in the current year;

 

______ A corporation, partnership,
Massachusetts or similar business trust, or an organization described in Section 501(c)(3) of the Internal Revenue Code, with
total assets in excess of $5,000,000, which was not formed for the specific purpose of acquiring the Securities;

 

______ An
employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment
decision is to be made by a plan fiduciary, as defined in Section 3 (21) of such Act, which is either a bank, insurance company,
or registered investment adviser; or an employee benefit plan with total assets in excess of $5,000,000, or a self-directed employee
benefit plan, whose investment decisions are made solely by persons that are Accredited Investors;

 

______ A trust, with total
assets in excess of $5,000,000, which was not formed for the specific purpose of acquiring the Securities, whose purchase is directed
by a sophisticated person;

 

______ A bank, savings and
loan, or similar institution, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; an insurance company; an investment company registered under or a business development
company as defined in the Investment Company Act of 1940; or a Small Business Investment Company licensed by the U.S. Small Business
Administration;

 

______ A director or executive
officer of the Company; or

 

______ An entity in which
all of the equity owners are Accredited Investors under the above paragraphs.

 

2.2 The
Investor (i) is, if a natural person, at least twenty-one (21) years of age, and (ii) is a bona fide permanent resident of and
is domiciled in the state shown in the address line of Investor’s signature page to this Agreement, and has no present intention
of becoming a resident of any other state or jurisdiction.

 

2.3 The
Investor has received if requested or has access to and has reviewed the Company’s reports and filings required to be filed
by the Company with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934
(the “Exchange Act”), including, without limitation the Company’s Form 10-K filed March 14, 2018, Form 10-K/A
filed May 9, 2018, Form 10-Q filed November 7, 2018, and Forms 8-K filed November 7, 2018, November 13, 2018, December 3, 2018,
December 6, 2018, January 2, 2019, and February 5, 2019.

 

    2 

     

    

 

2.4 The
Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits
and risks of an investment in the Securities, including the Risk Factors attached hereto as Exhibit A (which the Investor has received
and reviewed), and of making an informed investment decision, and is not utilizing any other person to be the Investor’s
representative in connection with evaluating such merits and risks.

 

2.5 The
Investor is acquiring the Securities for his own account, for investment purposes only, and not with a view toward the resale,
resyndication, distribution, subdivision or fractionalization thereof, and has no present intention of selling or transferring
or otherwise distributing the same. The Investor has no need for liquidity in this investment, has the ability to bear the economic
risk of this investment, at the present time and in the foreseeable future, can afford a complete loss of this investment, and
this investment constitutes an appropriate investment for and is not in violation of any investment restrictions (whether by statute,
contract or otherwise) binding upon the Investor.

 

2.6 The
Investor is aware that all documents, records and books pertaining to this investment are available at the offices of the Company
at 100 Commerce Drive, Loveland, Ohio 45140, and acknowledges that all documents, records and books pertaining to this investment
requested by the Investor have been made available to the Investor and the persons the Investor has retained, if any, to advise
him with respect to this investment, and the Investor and such persons have been supplied with such additional information concerning
this investment as has been requested.

 

2.7 The
Investor has been given the opportunity to discuss his investment in, and the operation of, the Company with the Company’s
management and has been given all information that the Investor has requested and which the Investor deems relevant to his decision
to invest in the Company. The Investor has consulted such legal, financial and tax advisers as have been necessary to evaluate
the merits and risks of this investment. The Investor acknowledges and is aware that the Company has a limited financial and operating
history.

 

2.8 The
Investor agrees that the Securities (including any interest therein) will not be sold or otherwise disposed of by the Investor
unless either (i) the sale or other disposition will be pursuant to a registration statement under the Securities Act of 1933,
as amended (the “1933 Act”), and any applicable securities laws of any state or other jurisdiction; or (ii) the Investor
shall have notified the Company in writing of any desire on the part of the Investor to sell or dispose of all or part of the such
Securities and of the manner and terms of the proposed transaction, and the Company shall have been advised in writing by counsel
acceptable to it that no registration of such Securities under the 1933 Act, or the rules and regulations then in effect thereunder,
or any applicable state securities laws, is required in connection with the proposed sale or other disposition. The Investor acknowledges
that the Company is under no obligation whatsoever in connection with any such registration or exemption. The Investor acknowledges
that all certificates evidencing ownership of the Securities, or any replacement thereof, shall bear an appropriate legend to the
effect that the securities evidenced by such certificate or instruments are subject to these terms.

 

    3 

     

    

 

2.9 All
information provided by the Investor to the Company is true and correct in all respects as of the date hereof, and if there should
be any material change in such information either prior to the Company accepting the Investor’s subscription or thereafter,
the Investor will immediately furnish such revised or corrected information to the Company.

 

2.10 The
Investor understands that no federal or state agency has passed on or made any recommendation or endorsement of the Securities
and that the Company is relying on the truth and accuracy of the representations, warranties and agreements made by him in offering
the Securities for sale to him without having first registered the same under the 1933 Act.

 

2.11 The
Investor acknowledges that there have been no representations, guarantees or warranties made to him by the Company, its officers,
directors, controlling persons, agents or employees or any other person, expressly or by implication, with respect to the amount
of or type of consideration, profit or loss (including tax benefits) to be realized, if any, as a result of his investment.

 

2.12 Investor
acknowledges and understands that the Company possesses material non-public information not known to Investor that may affect the
value of the Securities (the “Information”), that the Company is unable to disclose to Investor. Investor understands,
based on his experience, the disadvantage to which Investor is subject due to the disparity of information between the Company
and the Investor. Notwithstanding this, Investor has deemed it appropriate to engage in the transaction contemplated hereby.

 

2.13Investor agrees that
the Company and its affiliates, principals, stockholders, partners, employees and agents shall have no liability to Investor, whatsoever
due to or in connection with Company's use or non-disclosure of the Information or otherwise as a result of the transaction contemplated
hereby, and Investor hereby irrevocably waives any claim that he might have based on the failure of the Company to disclose the
Information.

 

2.14 Investor
has all requisite authority (and in the case of an individual, the capacity) to purchase the Securities, enter into this Agreement
and to perform all the obligations required to be performed by Investor hereunder, and such purchase will not contravene any law,
rule or regulation binding on Investor or any investment guideline or restriction applicable to Investor.

 

3. Indemnification.
The Investor agrees to indemnify and hold harmless the Company and its directors and officers, their affiliates or anyone acting
on behalf of the Company from and against any and all damages, losses, costs and expenses (including reasonable attorneys, fees)
which they may incur by reason of the failure of the Investor to fulfill any of the terms or conditions of this Agreement, or by
reason of any breach of the representations and warranties made by the Investor herein, or in any document provided by the Investor
to the Company.

 

4. Transferability.
The Investor agrees that he shall not transfer or assign this Agreement or any interest herein, and any such transfer or assignment
purported to be made shall be null and void and of no effect.

 

    4 

     

    

 

5. Down
Round Protection. If, prior to the six month anniversary of the date hereof, the Company issues shares of its Common Stock
for a purchase price per share less than the purchase price per share hereunder (a “Down Round”), the Company will
issue additional Shares (for no additional consideration) to Investor such that the effective purchase price per Share (calculated
by dividing the Purchase Price by the total Shares (including the additional Shares)) is equal to the purchase price per share
paid in the Down Round. The issuance of shares of Common Stock by the Company in connection with the following shall not constitute
a Down Round for purposes of this Agreement: (i) the exercise of stock options or the conversion of convertible securities in each
case issued to employees, directors of, or consultants to the Company pursuant to a plan, agreement or arrangement approved by
the Board of Directors of the Company; (ii) a dividend or distribution payable to holders of capital stock of the Company; or (iii)
a subdivision (by stock split, recapitalization or otherwise) of outstanding shares of the Company into a greater number of shares.

 

6. General
Provisions.

 

6.1 This
Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, or representation
or communication, whether oral or written, between the parties relating to the transactions contemplated herein or the subject
matter hereof.

 

6.2 This
Agreement may be executed in more than one counterpart which shall, in the aggregate, be deemed to be the original instrument and
agreement between the parties, and copies signed and transmitted electronically in a form readable by the recipient or by facsimile
are as binding as if the original was signed in person.

 

6.3 Any
and all notices or other communications required or permitted by this Agreement or by law to be served on or given to any party
hereto by any other party hereto shall be, unless otherwise required by law, in writing and deemed duly served and given when actually
received either (i) in an electronic form readable by the recipient, or (ii) when delivered by facsimile, or (iii) when delivered
by hand, by recognized express delivery services or via the United States mail, certified or registered, return, receipt requested,
postage prepaid, addressed to the Company at its principal offices at 100 Commerce Drive, Loveland, Ohio 45140, and to the Investor
at its address as set forth on the signature page to this Agreement or otherwise transmitted to the Company from time to time.

 

6.4 No
term hereof may be changed, waived, discharged or terminate orally, but only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is sought.

 

6.5 The
headings in this Agreement are for the purposes and convenience of reference only and shall not be deemed to constitute a part
hereof.

 

    5 

     

    

 

6.6 This
Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Nevada, without reference
to its principles of conflict of laws. Any action to enforce the terms of this Agreement shall be brought in a court of competent
jurisdiction located in Hamilton County, Ohio.

 

6.7 The
benefits of this Agreement shall inure, and the obligations of this Agreement shall be binding upon, the personal representatives,
heirs, legatees, permitted successors and assigns of the parties hereto.

 

6.8 The
Investor agrees that the Investor may not cancel, terminate, or revoke this Agreement or any agreement of the Investor made hereunder.
The Company shall have the sole right, at its complete discretion, to accept or reject this subscription, in whole or in part,
for any reason and that the same shall be deemed to be accepted by the Company only when it is signed by a duly authorized officer
of the Company and delivered to the Investor.

 

6.9 Except
as otherwise provided in this Agreement, each party to this Agreement shall pay any and all fees and expenses that such party may
incur in connection with the negotiation, execution and closing of the transactions contemplated by this Agreement.

 

(Signatures start on next page)

 

    6 

     

    

 

WORKHORSE GROUP INC.

SUBSCRIPTION AGREEMENT

SIGNATURE PAGE

 

IN WITNESS WHEREOF, the Investor
has executed this Subscription Agreement on the date indicated below.

 

	 	 	 
	NAME of Subscriber (print/type)	 	NAME of Subscriber (print/type)
	 	 	 
	 	 	 
	Authorized SIGNATURE of Subscriber	 	Authorized SIGNATURE of Subscriber
	 	 	 
	 	 	 
	Address	 	Address
	 	 	 
	 	 	 
	City                           State                           Zip	 	City                           State                           Zip
	 	 	 
	 	 	 
	Home Telephone	 	Home Telephone
	 	 	 
	 	 	 
	Business Telephone	 	Business Telephone
	 	 	 
	 	 	 
	Social Security Number	 	Social Security Number
	 	 	 
	Date Signed: _________________	 	Date Signed: ________________

 

If the Investor is a corporation, partnership,
trust or other entity, or is otherwise acting as a fiduciary, the name and capacity (title) of the individual executing this Agreement
on the Investor’s behalf should be printed or typed below the signature.

 

    7 

     

    

 

PLEASE SUPPLY THE FOLLOWING INFORMATION:

 

Manner in which title is to be held; (Check one)

 

	
        __________ Individual Ownership

         

         
	__________Partnership*
	
        _________ Individual Retirement Account

         

         
	_________ Trust *
	
        _________Qualified Retirement Plan

         

         
	_________Corporation*
	
        __________Other:

         

        ________________________________

        (Please indicate)
	_________Limited Liability Company*

 

		*	In the case of a partnership, state names of all partners and attach a copy of the partnership
agreement. In the case of a corporation, attach a copy of the articles of incorporation together with the resolution of the board
of directors authorizing this investment. In the case of a limited liability company, attach a copy of the articles of organization
and operating agreement and a copy of any required member or manager resolutions authorizing this investment. In the case of a
trust, attach a copy of the trust agreement.

 

    8 

     

    

 

ACCEPTANCE

 

Workhorse Group Inc. hereby
accepts and agrees to be bound by the foregoing subscription subject to the terms and conditions hereof as of the date indicated
below.

 

	 	WORKHORSE GROUP INC.
	 	 	 
	 	By: 	                      
	 	 	 
	 	Name: 	 
	 	 	 
	 	Title: 	 

 

	 	Date Signed: 	 

 

    9 

     

    

 

EXHIBIT A

 

RISK FACTORS

 

Investing in our Common Stock involves a high
degree of risk. Before purchasing our Common Stock, you should read and consider carefully the following risk factors as well as
all other information contained and incorporated by reference in this prospectus supplement and the accompanying base prospectus,
including our consolidated financial statements and the related notes. Each of these risk factors, either alone or taken together,
could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment
in our Common Stock. There may be additional risks that we do not presently know of or that we currently believe are immaterial,
which could also impair our business and financial position. If any of the events described below were to occur, our financial
condition, our ability to access capital resources, our results of operations and/or our future growth prospects could be materially
and adversely affected and the market price of our Common Stock could decline. As a result, you could lose some or all of any investment
you may make in our Common Stock.

 

Risks Relating to Our Business

 

We have incurred substantial net losses since our inception and anticipate
that we will continue to incur substantial net losses for the foreseeable future. We may never achieve or sustain profitability.

 

We have incurred net losses amounting to $123.9
million for the period from inception (February 20, 2007) through September 30, 2018. We have had net losses in each quarter since
our inception. We expect that we will continue to incur net losses for the foreseeable future. We may incur significant losses
in the future for several reasons, including the other risks described in this prospectus, and we may encounter unforeseen expenses,
difficulties, complications, delays and other unknown events. Accordingly, we may not be able to achieve or maintain profitability.
Our management is developing plans to alleviate the negative trends and conditions described above but there is no guarantee that
such plans will be successfully implemented. There is no assurance that even if we successfully implement our business plan, that
we will be able to curtail our losses. If we incur additional significant operating losses, our stock price may decline significantly.

 

We have yet to achieve positive cash flow and, given our projected
funding needs, our ability to generate positive cash flow is uncertain.

 

We have had negative cash flow from operating activities
of $17.3 million and $28.3 million for the nine months ended September 30, 2018 and 2017. We
anticipate that we will continue to have negative cash flow from operations for the foreseeable future. We continue our efforts
to develop positive material margins with the goal of offsetting research and development, sales and marketing and general
and administrative expenses. Further, we may need to make significant capital expenditures in order to increase sales and
commence significant operations at our Union City facility. Our business also will at times require significant amounts of working
capital to support our growth. Although we have entered into a Credit Agreement with Marathon, we may need to acquire inventory
outside of such Credit Agreement to support our anticipated increase in production. An inability to generate positive cash flow
for the foreseeable future may adversely affect our ability to raise needed capital for our business on reasonable terms, diminish
supplier or customer willingness to enter into transactions with us, and have other adverse effects that would decrease our long-term
viability. There can be no assurance we will achieve positive cash flow in the foreseeable future.

 

    10 

     

    

 

We need access to additional financing in 2019 and beyond, which
may not be available to us on acceptable terms or at all. Our auditor’s report for the fiscal years ended December 31, 2017
and 2016 includes a going concern opinion due to our lack of sales, negative working capital and stockholders’ deficit. If
we cannot access additional financing when we need it and on acceptable terms, our business may fail.

 

Our business plan to design, produce, sell and
service commercial electric vehicles through our Union City facility will require substantial continued capital investment. Our
research and development activities will also require substantial continued investment. For the year ended December 31, 2017, our
independent registered public accounting firm issued a report on our 2017 financial statements that contained an explanatory paragraph
stating that the lack of sales, negative working capital and stockholders’ deficit, raise substantial doubt about our ability
to continue as a going concern. We expect that we will have a going concern for the year ended December 31, 2018. For example,
our existing capital resources, will be insufficient to fund our operations beyond the beginning of March 2019. Moreover, as of
the date hereof, we have approximately $11.3 million of outstanding indebtedness and $6.6 million in outstanding account payables.
Our cash flow from operations is not expected to be sufficient to satisfy our debt obligations. In the event, we do not consummate
a sale of Surefly, Inc. in which we receive sufficient proceeds, we may not be able to repay our outstanding indebtedness. Accordingly,
we will need additional financing. We will also need additional financing beyond 2019. If we are not able to obtain additional
financing and/or substantially increase revenue from sales, we will default on our debt obligations and be unable to continue as
a going concern. As a result, we may have to liquidate our assets and may receive less than the value at which those assets are
carried on our consolidated financial statements, and investors will likely lose a substantial part or all of their investment.
We cannot be certain that additional financing will be available to us on favorable terms when required, or at all, particularly
given that we do not now have a committed credit facility with any government or financial institution. Further, if there remains
doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional
funding on acceptable terms or at all. If we cannot obtain additional financing when we need it and on terms acceptable to us,
we will not be able to continue as a going concern.

 

The development of our business in the near future is contingent
upon the receipt and fulfillment of orders from UPS and other key customers for the purchase of E-GENs and N-GENs and if we are
unable to perform under these orders, our business may fail.

 

On June 4, 2014, the Company entered into a Vehicle
Purchase Agreement with UPS which outlined the relationship by which the Company would sell vehicles to UPS. To date, we have received
six separate orders totaling up to 1,405 vehicles from UPS. The most recent order is from Q1 2018, which was amended in May 2018.
The May 2018 UPS Agreement provides that UPS will purchase 1,000 N-GENs. UPS is initially committed to purchase 50 N-GENs that
will be designed and developed with the input from UPS’s automotive engineering team and deployed as a test fleet. This order
is expected to account for substantially all of our revenues over the next six months and, if UPS purchases additional vehicles,
UPS would account for a greater percentage of our revenues and we will become more dependent upon them. The timing of the balance
of the 950 N-GENs will be on a timeframe solely determined by UPS, which is entitled to reduce or cancel the order in its sole
discretion based on the result of the test fleet. We will need to raise additional capital in order to satisfy our obligations
under the May 2018 UPS Agreement. There is no guarantee that we will be able to perform under these orders and if we and the vehicles
do not perform, that UPS will purchase additional vehicles from our company. Also, there is no assurance that UPS will not terminate
its agreement with our company pursuant to the termination provisions therein. Further, we will need significant financing to fulfill
any future orders and we are not able to raise the required capital to purchase required parts and pay certain vendors, we may
not be able to comply with UPS’s deadlines. Accordingly, despite the receipt of the orders from UPS, there is no assurance,
due our financial constraints and status as a development stage company, that we will be able to deliver such vehicles or that
it will receive additional orders whether from UPS or other potential customers.

 

If we are unable to perform under our orders with
UPS, our business will be significantly negatively impacted.

 

Our limited operating history makes it difficult for us to evaluate
our future business prospects and make decisions based on those estimates of our future performance.

 

Our revenue increased from $6.4 million in 2016
to $10.8 million in 2017. However, our revenue for the nine months ended September 30, 2018 decreased to $742 thousand from $4.9
million for the comparable period in 2017. As evidenced by the fluctuations in our revenue, a significant portion of our activities
are still focused on research and development. We have a limited operating history and have generated limited revenue. As
we begin to fully implement our manufacturing capabilities, it is difficult, if not impossible, to forecast our future results
based upon our historical data. Because of the uncertainties related to our lack of historical operations, we may be hindered in
our ability to anticipate and timely adapt to increases or decreases in revenues or expenses. If we make poor budgetary
decisions as a result of unreliable historical data, we could be less profitable or incur losses, which may result in a decline
in our stock price.

 

    11 

     

    

 

Our obligations to Marathon, which holds
a secured loan, are secured by a security interest in substantially all of our assets, so if we default on those obligations, Marathon
could foreclose on, liquidate and/or take possession of our assets. If that were to happen, we could be forced to curtail, or even
to cease, our operations.

 

All amounts due under the loan payable to Marathon
are secured by our assets. As a result, if we default on our obligations under the secured loan, Marathon could foreclose on its
security interest and liquidate or take possession of some or all of these assets, which would harm our business, financial condition
and results of operations and could require us to curtail, or even to cease our operations.

 

We are subject to certain covenants set
forth in the Marathon Credit Agreement. Upon an event of default, including a breach of a covenant, we may not be able to make
accelerated payments under the Credit Agreement.

 

Under the Marathon Credit Agreement, so long as
the loan remains outstanding, we are subject to various negative covenants, including but not limited to, restrictions on incurring
additional indebtedness or additional encumbrances, dividends and other restricted payments, mergers and acquisitions or dispositions
of property as well as certain affirmative covenants, including maintaining minimum liquidity and maximum total leverage and debt
service coverage ratios. We have the ability to cure a breach of the total leverage ratio or the debt service coverage ratio covenant
through the sale of equity; however, such equity cures are limited under the Credit Agreement and the proceeds of such equity cures
must be used to repay the loans. Further, 35% of the net cash proceeds from the issuance of capital stock after the nine-month
anniversary of the closing of the Credit Agreement must be used to prepay the loans. Also, all payments received under subject
purchase orders must be used to prepay the Tranche Two Loans under the Credit Agreement. In addition, under the Credit agreement,
an event of default occurs upon any of the following: (i) non-payment of principal or interest, (ii) violations of covenants,
(iii) bankruptcy, (iv) material judgments, (v) change of control, and (vi) material adverse change. Upon an event of default, the
outstanding principal amount of the loan plus any other amounts owed to Marathon will become immediately due and payable at Marathon’s
election and Marathon could foreclose on our assets. A default would also likely significantly diminish the market price of our
Common Stock.

 

We offer no financing on our vehicles. As such, our business is dependent
on cash sales, which may adversely affect our growth prospects.

 

While most of our current customers are well-established
companies with significant purchasing power, many of our potential smaller and medium-sized customers may need to rely on credit
or leasing arrangements to gain access to our vehicles. Unlike some of our competitors who provide credit or leasing services for
the purchase of their vehicles, we do not provide, and currently do not have commercial arrangements with a third party that provides,
such financial services. We believe the current limited availability of credit or leasing solutions for our vehicles could adversely
affect our revenues and market share in the commercial electric vehicle market.

 

Worsening economic conditions may result in decreased demand for
our products which could harm our operating results.

 

Uncertainty and negative trends in general economic
conditions in the United States and abroad, including significant tightening of credit markets, historically have created a difficult
environment for companies in our industry. Many factors, including factors that are beyond our control, may have a detrimental
impact on our operating performance. These factors include general economic conditions, unemployment levels, energy costs and interest
rates, as well as events such as natural disasters, acts of war, terrorism and catastrophes. These conditions may result in a decline
in the demand for our products by potential customers or result in the delay of our development of new products and/or enhancements
to our existing products for our existing customers. There can be no assurance that economic conditions will remain favorable for
our business or that demand for our products will remain at current levels. Reduced demand for our products would negatively impact
our growth and revenue.

 

    12 

     

    

 

Our business, prospects, financial condition and operating results
will be adversely affected if we cannot reduce and adequately control the costs and expenses associated with operating our business,
including our material and production costs.

 

We
incur significant costs and expenses related to procuring the materials, components and services required to develop and produce
our electric vehicles. We have secured supply agreements for our critical components including our batteries. However, these are
dependent on volume to ensure that they are available at a competitive price. Historically our cost projections have been higher
than the revenue generated from the sale of such vehicles, excluding vehicles purchased under voucher programs. As a result, we
have lost money on each medium-duty vehicle sold without an associated voucher. In our efforts to be cash flow break even and effectively
compete in the market place, we continually work on cost-down initiatives to reduce our cost structure through engineering efforts,
negotiations with suppliers in an effort to refine our build of materials and through third party relationships including the development
of potential partners. If we do not reduce our costs and expenses, our net losses will continue, which will negatively impact our
business and stock price.  If we do not reduce our costs and expenses,
our net losses will continue which will negatively impact our business and stock price.

 

Increases in costs, disruption of supply or
shortage of lithium-ion cells could harm our business. [shortage, price dropping]

 

The cost of lithium-ion cells has generally decreased
over the last several years. However, this trend may reverse and we may experience increases in the cost. Further, we may experience
a sustained interruption in the supply or shortage of lithium-ion cells. Any such increase, supply interruption or shortage could
materially and negatively impact our business, prospects, financial condition and operating results. The prices for these lithium-ion
cells can fluctuate depending on market conditions and global demand for these materials and could adversely affect our business
and operating results. We are exposed to multiple risks relating to lithium-ion cells including:

 

	 	●	the inability or unwillingness of current battery manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells we may require going forward;
	 	 	 
	 	●	disruption in the supply of cells due to quality issues or recalls by battery cell manufacturers;
	 	 	 
	 	●	an increase in the cost of raw materials used in the cells; and
	 	 	 
	 	●	fluctuations in the value of the Japanese yen against the U.S. dollar in the event our purchasers of lithium-ion cells are denominated in Japanese yen.

 

 Our
business is dependent on the continued supply of battery cells for the battery packs used in our vehicles. While we believe several
sources of the battery cells are available for such battery cells, we have fully qualified only Panasonic for the supply of the
cells used in such battery packs and have limited flexibility in changing cell suppliers. Any disruption in the supply of battery
cells could disrupt production of our vehicles until such time as a different supplier is fully qualified. Furthermore, fluctuations
or shortages in petroleum, tariff or trade issues and other economic or tax conditions may cause us to experience significant increases
in freight charges. Substantial increases in the prices for the battery cells or prices charged to us, would increase our operating
costs, and could reduce our margins if we cannot recoup the increased costs through increased vehicle prices. Any attempts to increase
vehicle prices in response to increased costs in our battery cells could result in cancellations of vehicle orders and therefore
materially and adversely affect our brand, image, business, prospects and operating results.

  

The demand for commercial electric vehicles depends, in part, on
the continuation of current trends resulting from dependence on fossil fuels. Extended periods of low diesel or other petroleum-based
fuel prices could adversely affect demand for our vehicles, which would adversely affect our business, prospects, financial condition
and operating results.

 

We believe that much of the present and projected
demand for commercial electric vehicles results from concerns about volatility in the cost of petroleum-based fuel, the dependency
of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency
and alternative forms of energy, as well as the belief that climate change results in part from the burning of fossil fuels. If
the cost of petroleum-based fuel decreased significantly, the outlook for the long-term supply of oil to the United States improved,
the government eliminated or modified its regulations or economic incentives related to fuel efficiency and alternative forms of
energy, or if there is a change in the perception that the burning of fossil fuels negatively impacts the environment, the demand
for commercial electric vehicles could be reduced, and our business and revenue may be harmed.

 

    13 

     

    

 

Diesel and other petroleum-based fuel prices have
been extremely volatile, and we believe this continuing volatility will persist. Lower diesel or other petroleum-based fuel prices
over extended periods of time may lower the perception in government and the private sector that cheaper, more readily available
energy alternatives should be developed and produced. If diesel or other petroleum-based fuel prices remain at deflated levels
for extended periods of time, the demand for commercial electric vehicles may decrease, which would have an adverse effect on our
business, prospects, financial condition and operating results.

 

Our future growth is dependent upon the willingness of operators
of commercial vehicle fleets to adopt electric vehicles and on our ability to produce, sell and service vehicles that meet their
needs. This often depends upon the cost for an operator adopting electric vehicle technology as compared to the cost of traditional
internal combustion technology. When the price of oil is low, as it recently has been, it is difficult to convince commercial fleet
operations to change to more expensive electric vehicles.

 

Our growth is dependent upon the adoption of electric
vehicles by operators of commercial vehicle fleets and on our ability to produce, sell and service vehicles that meet their needs.
The entry of commercial electric vehicles into the medium-duty commercial vehicle market is a relatively new development, particularly
in the United States, and is characterized by rapidly changing technologies and evolving government regulation, industry standards
and customer views of the merits of using electric vehicles in their businesses. This process has been slow as without including
the impact of government or other subsidies and incentives, the purchase prices for our commercial electric vehicles currently
is higher than the purchase prices for diesel-fueled vehicles. Our growth has also been negatively impacted by the relatively low
price of oil over the last few years.

 

If the market for commercial electric vehicles does not develop as
we expect or develops more slowly than we expect, our business, prospects, financial condition and operating results will be adversely
affected.

 

As part of our sales efforts, we must educate fleet
managers as to the economical savings we believe they will benefit from during the life of the vehicle. As such, we believe that
operators of commercial vehicle fleets should consider a number of factors when deciding whether to purchase our commercial electric
vehicles (or commercial electric vehicles generally) or vehicles powered by internal combustion engines, particularly diesel-fueled
or natural gas-fueled vehicles. We believe these factors include:

 

	 	●	the difference in the initial purchase prices of commercial electric vehicles and vehicles with comparable gross vehicle weight powered by internal combustion engines, both including and excluding the impact of government and other subsidies and incentives designed to promote the purchase of electric vehicles;
	 	 	 
	 	●	the total cost of ownership of the vehicle over its expected life, which includes the initial purchase price and ongoing operating and maintenance costs;
	 	 	 
	 	●	the availability and terms of financing options for purchases of vehicles and, for commercial electric vehicles, financing options for battery systems;
	 	 	 
	 	●	the availability of tax and other governmental incentives to purchase and operate electric vehicles and future regulations requiring increased use of nonpolluting vehicles;
	 	 	 
	 	●	government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;
	 	 	 
	 	●	fuel prices, including volatility in the cost of diesel;
	 	 	 
	 	●	the cost and availability of other alternatives to diesel fueled vehicles, such as vehicles powered by natural gas;
	 	 	 
	 	●	corporate sustainability initiatives;

 

    14 

     

    

 

	 	●	commercial electric vehicle quality, performance and safety (particularly with respect to lithium-ion battery packs);
	 	 	 
	 	●	the quality and availability of service for the vehicle, including the availability of replacement parts;
	 	 	 
	 	●	the limited range over which commercial electric vehicles may be driven on a single battery charge;
	 	 	 
	 	●	access to charging stations and related infrastructure costs, and standardization of electric vehicle charging systems;
	 	 	 
	 	●	electric grid capacity and reliability; and
	 	 	 
	 	●	macroeconomic factors.

 

If, in weighing these factors, operators of commercial
vehicle fleets determine that there is not a compelling business justification for purchasing commercial electric vehicles, particularly
those that we produce and sell, then the market for commercial electric vehicles may not develop as we expect or may develop more
slowly than we expect, which would adversely affect our business, prospects, financial condition and operating results.

 

If our customers are unable to efficiently and effectively integrate
our electric vehicles into their existing commercial fleets our sales may suffer and our business, prospects, financial condition
and operating results may be adversely affected.

 

Our sales strategy involves a comprehensive plan
for the pilot and roll-out of our electric vehicles, as well as the ongoing replacement of existing commercial vehicles with our
electric vehicles, that is tailored to the individual needs of our customers. If we are unable to develop and execute fleet integration
strategies or fleet management support services that meet our customers’ unique circumstances with minimal disruption to
their businesses, our customers may not realize the economic benefits they expect from our electric vehicles. If this were to occur,
our customers may not order additional vehicles from us, which could adversely affect our business, prospects, financial condition
and operating results.

 

We currently do not have long-term supply contracts with guaranteed
pricing which exposes us to fluctuations in component, materials and equipment prices. Substantial increases in these prices would
increase our operating costs and could adversely affect our business, prospects, financial condition and operating results.

 

Because we currently do not have long-term supply
contracts with guaranteed pricing, we are subject to fluctuations in the prices of the raw materials, parts and components and
equipment we use in the production of our vehicles. Substantial increases in the prices for such raw materials, components and
equipment would increase our operating costs and could reduce our margins if we cannot recoup the increased costs through increased
vehicle prices. Any attempts to increase the announced or expected prices of our vehicles in response to increased costs could
be viewed negatively by our customers and could adversely affect our business, prospects, financial condition and operating results.

 

The failure of certain key suppliers to provide us with components
could have a severe and negative impact upon our business.

 

We have secured supply agreements for our critical
components including our batteries. However, the agreements are dependent on volume to ensure that they are available at a competitive
price. Further, we rely on a small group of suppliers to provide us with components for our products. If these suppliers become
unwilling or unable to provide components or if we are unable to meet certain volume requirements in our existing supply agreements,
there are a limited number of alternative suppliers who could provide them and the price for them could be substantially higher.
Changes in business conditions, wars, governmental changes, and other factors beyond our control or which we do not presently anticipate
could negatively affect our ability to receive components from our suppliers. Further, it could be difficult to find replacement
components if our current suppliers fail to provide the parts needed for these products. A failure by our major suppliers to provide
these components could severely restrict our ability to manufacture our products and prevent us from fulfilling customer orders
in a timely fashion.

 

    15 

     

    

 

If we are unable to scale our operations at our Union City facility
in an expedited manner from our limited low volume production to high volume production, our business, prospects, financial condition
and operating results could be adversely affected.

 

We are currently assembling our orders at our Union
City facility which is acceptable for our existing orders. To satisfy increased demand, we will need to quickly scale operations
in our Union City facility as well as scale our supply chain including access to batteries. Such a substantial and rapid increase
in operations will be extremely difficult, will strain our management capabilities and require additional finance personnel and
other resources which we currently do not possess. Our business, prospects, financial condition and operating results could be
adversely affected if we experience disruptions in our supply chain, if we cannot obtain materials of sufficient quality at reasonable
prices or if we are unable to scale our Union City facility.

 

We depend upon key personnel and need additional personnel. The loss
of key personnel or the inability to attract additional personnel may adversely affect our business and results of operations.

 

Our success depends on the continuing services
of Duane Hughes, CEO, and top management. Although we entered into an Executive Retention Agreement with Mr. Hughes as Chief Executive
Officer, Paul Gaitan as Chief Financial Officer and Julio Rodriguez as Chief Information Officer, we cannot assure you that we
will be able to retain their services. The loss of any of these individuals could have a material and adverse effect on our business
operations. Additionally, the success of our operations will largely depend upon our ability to successfully attract and maintain
competent and qualified key management personnel. As with any company with limited resources, there can be no guarantee that we
will be able to attract such individuals or that the presence of such individuals will necessarily translate into profitability
for our company. Our inability to attract and retain key personnel may materially and adversely affect our business operations.
Any failure by our management to effectively anticipate, implement, and manage the changes required to sustain our growth would
have a material adverse effect on our business, financial condition, and results of operations.

 

We face intense competition. Some of our competitors have substantially
greater financial or other resources, longer operating histories and greater name recognition than we do and could use their greater
resources and/or name recognition to gain market share at our expense or could make it very difficult for us to establish market
share.

 

Companies currently competing in the fleet logistics
market offering alternative fuel medium-duty trucks include Ford Motor Company and Freightliner. Ford and Freightliner are currently
selling alternative fuel fleet vehicles including hybrids. Ford and Freightliner have substantially more financial resources, established
market positions, long-standing relationships with customers, vendors and dealers, and who have more significant name recognition,
technical, marketing, sales, financial and other resources than we do. Although we believe that HorseFly, our Unmanned Aerial System
(UAS), is unique in the marketplace in that it currently does not have any competitors when it comes to a UAS that works in combination
with a truck, there are better financed competitors in this emerging industry, including Google and Amazon. While we are seeking
to partner with existing delivery companies to improve their efficiencies in the last mile of delivery, our competitors are seeking
to redefine the delivery model using drones from a central location requiring extended flight patterns. Our competitors’
new aerial delivery model would essentially eliminate traditional package delivery companies. Our model is focused on coupling
our delivery drone with delivery trucks supplementing the existing model and providing shorter term flight patterns. Google and
Amazon have more significant financial resources, established market positions, long-standing relationships with customers, more
significant name recognition and a larger scope of resources including technical, marketing and sales than we do.

 

The market for personal eVTOL aircraft is new,
rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government
regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors. The market is
highly competitive, and the SureFly design is competing with experimental aircraft from large original equipment manufacturers,
or OEMs, small OEMs, other aviation related companies, technology companies and entrepreneurs. Currently, there are several VTOL
aircraft being developed that have some similarity to SureFly, including eHang and Volocopter. Many of our competitors are, in
some ways, more advanced than we are.

 

    16 

     

    

 

The financial, personnel and other resources available
to our competitors to develop new products and introduce them into the marketplace exceed the resources currently available to
us. As a result, our competitors may be able to compete more aggressively and sustain that competition over a longer period than
we can. This intense competitive environment may require us to make changes in our products, pricing, licensing, services, distribution,
or marketing to develop a market position. Each of these competitors has the potential to capture significant market share in our
target markets which could have an adverse effect on our position in our industry and on our business and operating results.

  

Our electric vehicles compete for market share with vehicles powered
by other vehicle technologies that may prove to be more attractive than ours.

 

Our target market currently is serviced by manufacturers
with existing customers and suppliers using proven and widely accepted fuel technologies. Additionally, our competitors are working
on developing technologies that may be introduced in our target market. If any of these alternative technology vehicles can provide
lower fuel costs, greater efficiencies, greater reliability or otherwise benefit from other factors resulting in an overall lower
total cost of ownership, this may negatively affect the commercial success of our vehicles or make our vehicles uncompetitive or
obsolete.

 

We currently have a limited number of customers, with whom we do
not have long-term agreements, and expect that a significant portion of our future sales will be from a limited number of customers.
The loss of any of these customers could materially harm our business.

 

A significant portion of our projected future revenue,
if any, is expected to be generated from a limited number of vehicle customers. Our sales to UPS, our top customer accounted for
approximately 98% and 91% of our net sales for the years ended December 31, 2017 and 2016, respectively. Additionally, much of
our business model is focused on building relationships with a few large customers. Currently we have no contracts with customers
that include long-term commitments or minimum volumes that ensure future sales of vehicles. As a result, our relationship with
our major customers could change at any time. As such, a customer may take actions that negatively affect us for reasons that we
cannot anticipate or control, such as reasons related to the customer’s financial condition, changes in the customer’s
business strategy or operations or as the result of the perceived performance or cost-effectiveness of our vehicles. The loss of
or a reduction in sales or anticipated sales to our most significant customers would have a material adverse effect on our business,
prospects, financial condition and operating results.

 

Changes in the market for electric vehicles could cause our products
to become obsolete or lose popularity.

 

The modern electric vehicle industry is in its
infancy and has experienced substantial change in the last few years. To date, demand for electric vehicles has been slower than
forecasted by industry experts. As a result, growth in the electric vehicle industry depends on many factors outside our control,
including, but not limited to:

 

	 	●	continued development of product technology, especially batteries;
	 	 	 
	 	●	the environmental consciousness of customers;
	 	 	 
	 	●	the ability of electric vehicles to successfully compete with vehicles powered by internal combustion; engines
	 	 	 
	 	●	limitation of widespread electricity shortages; and
	 	 	 
	 	●	whether future regulation and legislation requiring increased use of non-polluting vehicles is enacted.

 

We cannot assume that growth in the electric vehicle
industry will continue. Our business will suffer if the electric vehicle industry does not grow or grows more slowly than it has
in recent years or if we are unable to maintain the pace of industry demands.

 

    17 

     

    

 

President Trump’s administration may create regulatory uncertainty
for the alternative energy sector and may materially harm our business, financial condition and operating results.

 

President Trump’s administration, may create
regulatory uncertainty in the alternative energy sector. During the election campaign, President Trump made comments suggesting
that he was not supportive of various clean energy programs and initiatives designed to curtail global warming. Since taking office,
President Trump has released his America First Energy Plan which relies on fossil fuels, cancelled U.S. participation in the Paris
Climate Agreement and signed several executive orders relating to oil pipelines. It remains unclear what specifically President
Trump would or would not do with respect to these programs and initiatives, and what support he would have for any potential changes
to such legislative programs and initiatives in the Unites States Congress. If President Trump and/or the United States Congress
take action or publicly speak out about the need to eliminate or further reduce legislation, regulations and incentives supporting
alternative energy or take action to further support the use of fossil fuels, such actions may result in a decrease in demand for
alternative energy in the United States and may materially harm our business, financial condition and operating results.

 

If significant tariffs or other restrictions are
placed on Chinese imports or any related countermeasures are taken by China, our revenue and results of operations may be materially
harmed.

 

If significant tariffs or other
restrictions are placed on Chinese imports or any related counter-measures are taken by China, our revenue and results of operations
may be materially harmed. The Trump Administration has signaled that it may alter trade agreements and terms between China and
the United States, including limiting trade with China and/or imposing a tariff on imports from China. In 2018, President Trump
imposed tariffs on various imports and announced additional tariffs on goods imported from China specifically, as well as certain
other countries. The materials subject to these tariffs have impacted our raw material costs. If further tariffs are imposed on
a broader range of imports, or if further retaliatory trade measures are taken by China or other countries in response to additional
tariffs, we may be required to raise our prices, which may result in the loss of customers and harm our reputation and operating
performance.

 

The unavailability, reduction, elimination or adverse application
of government subsidies, incentives and regulations could have an adverse effect on our business, prospects, financial condition
and operating results.

 

We believe that, currently, the availability of
government subsidies and incentives including those available in New York, California and Chicago is an important factor considered
by our customers when purchasing our vehicles, and that our growth depends in part on the availability and amounts of these subsidies
and incentives. Any reduction, elimination or discriminatory application of government subsidies and incentives because of budgetary
challenges, policy changes, the reduced need for such subsidies and incentives due to the perceived success of electric vehicles
or other reasons may result in the diminished price competitiveness of the alternative fuel vehicle industry.

 

Certain regulations and programs that encourage
sales of electric vehicles could be eliminated or applied in a way that adversely impacts sales of our commercial electric vehicles,
either currently or at any time in the future. For example, the U.S. federal government and many state governments are experiencing
political change and facing fiscal crises, which could result in the elimination of programs, subsidies and incentives that encourage
the purchase of electric vehicles. If government subsidies and incentives to produce and purchase electric vehicles were no longer
available to us or to our customers, or the amounts of such subsidies and incentives were reduced, our business and results of
operations would be adversely affected.

 

    18 

     

    

 

We may be unable to keep up with changes in electric vehicle technology
and, as a result, may suffer a decline in our competitive position.

 

There are companies in the electric vehicle industry
that have developed or are developing vehicles and technologies that compete or will compete with our vehicles. Our current products
are designed for use with, and are dependent upon, existing electric vehicle technology. As technologies change, we plan to upgrade
or adapt our products to continue to provide products with the latest technology. We cannot assure that our competitors will not
be able to duplicate our technology or provide products and services similar to ours more efficiently. However, our products may
become obsolete or our research and development efforts may not be sufficient to adapt to changes in or to create the necessary
technology. If for any reason we are unable to keep pace with changes in electric vehicle technology, particularly battery technology,
our competitive position may be adversely affected.

 

Product liability or other claims could have a material adverse effect
on our business.

 

The risk of product liability claims, product recalls,
and associated adverse publicity is inherent in the manufacturing, marketing, and sale of electrical vehicles. Although we have
product liability insurance for our consumer and commercial products, that insurance may be inadequate to cover all potential product
claims. We also carry liability insurance on our products. Any product recall or lawsuit seeking significant monetary damages either
in excess of our coverage, or outside of our coverage, may have a material adverse effect on our business and financial condition.
We may not be able to secure additional product liability insurance coverage on acceptable terms or at reasonable costs when needed.
A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product recall
could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other
future product candidates. We cannot provide assurance that such claims and/or recalls will not be made in the future.

 

We may have to devote substantial resources to implementing a retail
product distribution network.

 

Dealers are often hesitant to provide their own
financing to contribute to our product distribution network. Thus, we anticipate that we may have to provide financing or other
consignment sale arrangements for dealers. A capital investment such as this presents many risks, foremost among them being that
we may not realize a significant return on our investment if the network is not profitable. Our inability to collect receivables
from dealers could cause us to suffer losses. Additionally, the amount of time that our management will need to devote to this
project may divert them from performing other functions necessary to assure the success of our business. We cannot assure you that
we will be able to successfully implement our distribution network or that its efforts will be successful.

 

Regulatory requirements may have a negative impact upon our business.

 

While our vehicles are subject to substantial regulation
under federal, state, and local laws, we believe that our vehicles are or will be materially in compliance with all applicable
laws. However, to the extent the laws change, or if we introduce new vehicles in the future, some or all of our vehicles may not
comply with applicable federal, state, or local laws. Further, certain federal, state, and local laws and industrial standards
currently regulate electrical and electronics equipment. Although standards for electric vehicles are not yet generally available
or accepted as industry standards, our products may become subject to federal, state, and local regulation in the future. Compliance
with these regulations could be burdensome, time consuming, and expensive.

 

Our products are subject to environmental and safety
compliance with various federal and state regulations, including regulations promulgated by the EPA, NHTSA, and various state boards,
and compliance certification is required for each new model year. The cost of these compliance activities and the delays and risks
associated with obtaining approval can be substantial. The risks, delays, and expenses incurred in connection with such compliance
could be substantial.

 

Our success may be dependent on protecting our intellectual property
rights.

 

We rely on trade secret protections to protect
our proprietary technology as well as several registered patents and pending patent applications. Our patents relate to the vehicle
chassis assembly, vehicle header and drive module and manifold for electric motor drive assembly. Our existing patent applications
relates to the onboard generator drive system for electric vehicles, the delivery drone, and the manned multicopter. Our success
will, in part, depend on our ability to obtain additional trademarks and patents. We are working on obtaining additional patents
and trademarks registered with the United States Patent and Trademark Office. Although we have entered into confidentiality agreements
with our employees and consultants, we cannot be certain that others will not gain access to these trade secrets. Others may independently
develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets.

 

    19 

     

    

 

Competitors may infringe our issued patents or
other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which
can be expensive and time consuming.  Any claims we assert against perceived infringers could provoke these parties to assert
counterclaims against us alleging that we infringe their patents. In addition, in a patent infringement proceeding, a court may
decide that a patent of ours is invalid or unenforceable, in whole or in part; construe the patent’s claims narrowly; or
refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in
question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted
narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation,
there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

 

Most of our competitors are larger than we are
and have substantially greater resources than we do. They are, therefore, likely to be able to sustain the costs of complex patent
litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect
on our ability to raise the funds necessary to continue our operations.

 

Our business may be adversely affected by union activities.

 

Although none of our employees are currently represented
by a labor union, it is common throughout the automotive industry for many employees at automotive companies to belong to a union,
which can result in higher employee costs and increased risk of work stoppages. Our employees may join or seek recognition to form
a labor union, or we may be required to become a union signatory. Our production facility in Union City, Indiana was purchased
from Navistar. Prior employees of Navistar were union members and our future work force at this facility may be inclined to vote
in favor of forming a labor union. Furthermore, we are directly or indirectly dependent upon companies with unionized work forces,
such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a
material adverse impact on our business, financial condition or operating results. If a work stoppage occurs, it could delay the
manufacture and sale of our trucks and have a material adverse effect on our business, prospects, operating results or financial
condition. The mere fact that our labor force could be unionized may harm our reputation in the eyes of some investors and thereby
negatively affect our stock price. Consequently, the unionization of our labor force could negatively impact our company’s
health.

 

We may be exposed to liability for infringing upon the intellectual
property rights of other companies.

 

Our success will, in part, depend on our ability
to operate without infringing on the proprietary rights of others. Although we have conducted searches and are not aware of any
patents and trademarks which our products or their use might infringe, we cannot be certain that infringement has not or will not
occur. We could incur substantial costs, in addition to the great amount of time lost, in defending any patent or trademark infringement
suits or in asserting any patent or trademark rights, in a suit with another party.

 

Our electric vehicles make use of lithium-ion battery cells, which,
if not appropriately managed and controlled, have occasionally been observed to catch fire or vent smoke and flames. If such events
occur in our electric vehicles, we could face liability for damage or injury, adverse publicity and a potential safety recall,
any of which would adversely affect our business, prospects, financial condition and operating results.

 

The battery packs in our electric vehicles use
lithium-ion cells, which have been used for years in laptop computers and cell phones. On occasion, if not appropriately managed
and controlled, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can
ignite nearby materials. Highly publicized incidents of laptop computers and cell phones bursting into flames have focused consumer
attention on the safety of these cells. These events also have raised questions about the suitability of these lithium-ion cells
for automotive applications. There can be no assurance that a field failure of our battery packs will not occur, which would damage
the vehicle or lead to personal injury or death and may subject us to lawsuits. Furthermore, there is some risk of electrocution
if individuals who attempt to repair battery packs on our vehicles do not follow applicable maintenance and repair protocols. Any
such damage or injury would likely lead to adverse publicity and potentially a safety recall. Any such adverse publicity could
adversely affect our business, prospects, financial condition and operating results.

  

    20 

     

    

 

Our facilities could be damaged or adversely affected as a result
of disasters or other unpredictable events. Any prolonged disruption in the operations of our facility would adversely affect our
business, prospects, financial condition and operating results.

 

We engineer and assemble our electric vehicles
in a facility in Loveland, Ohio and we intend to locate the assembly function to our facility in Union City. Any prolonged disruption
in the operations of our facility, whether due to technical, information systems, communication networks, accidents, weather conditions
or other natural disaster, or otherwise, whether short or long-term, would adversely affect our business, prospects, financial
condition and operating results.

 

We may be exposed to potential risks relating to our internal controls
over financial reporting and our ability to have those controls attested to by our independent auditors.

 

As a publicly traded company, we are subject to
a significant body of regulation, including the Sarbanes-Oxley Act of 2002. While we have developed and instituted a corporate
compliance program based on what we believe are the current best practices in corporate governance and continue to update this
program in response to newly implemented or changing regulatory requirements, we cannot provide assurance that we are or will be
in compliance with all potentially applicable corporate regulations. In connection with management’s assessment of our internal
control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we identified material weaknesses
pertaining to the lack of established adequate financial reporting activities and the lack of established proper accounting and
financing reporting oversight. While we have taken steps to address these material weaknesses, we cannot assure you that we have
adequately addressed them. We cannot provide assurance that, in the future, our management will not find additional material weakness
in connection with its annual review of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley
Act. We also cannot provide assurance that we will be able to remediate existing weaknesses and any such additional weakness
identified; our failure to do so would prevent our management from concluding that our internal control over financial reporting
as of the end of our fiscal year is effective. If we fail to comply with any of these regulations, we could be subject to a range
of regulatory actions, fines or other sanctions or litigation. If we must disclose any material weakness in our internal control
over financial reporting, our stock price could decline.

 

Risks Related to Owning Our Securities

 

If we fail to continue to meet the listing standards of NASDAQ, our
Common Stock may be delisted, which could have a material adverse effect on the liquidity of our Common Stock.

 

Our Common Stock is currently listed on the Nasdaq
Capital Market. The NASDAQ Stock Market LLC has requirements that a company must meet in order to remain listed on NASDAQ. In particular,
NASDAQ rules require us to maintain a minimum bid price of $1.00 per share of our Common Stock. On December 4, 2018, we received
a notice from the Listing Qualifications Department of the NASDAQ Stock Market indicating that, for the last 30 consecutive business
days, the bid price for our common stock had closed below the minimum $1.00 per share required for continued inclusion on The NASDAQ
Capital Market under NASDAQ Listing Rule 5550(a)(2). The notification letter states that pursuant to NASDAQ Listing Rule 5810(c)(3)(A)
we will be afforded 180 calendar days, or until June 3, 2019, to regain compliance with the minimum bid price requirement. In order
to regain compliance, shares of our common stock must maintain a minimum bid closing price of at least $1.00 per share for a minimum
of ten consecutive business days. If we do not regain compliance by June 3, 2019, NASDAQ may provide written notification that
our common stock will be delisted. At that time, we may appeal NASDAQ’s delisting determination to a NASDAQ Listing Qualifications
Panel. Alternatively, we may be eligible for an additional 180 day grace period if it satisfies all of the requirements, other
than the minimum bid price requirement, for listing on The NASDAQ Capital Market set forth in NASDAQ Listing Rule 5505. In addition,
we may be unable to meet other applicable NASDAQ listing requirements, including maintaining minimum levels of stockholders’
equity or market values of our Common Stock in which case, our Common Stock could be delisted. If our Common Stock were to be delisted,
the liquidity of our Common Stock would be adversely affected and the market price of our Common Stock could decrease.

 

    21 

     

    

 

The trading of our shares of common has been relatively thin and
there is no assurance that a liquid market for our shares of Common Stock will develop.

 

Our Common Stock has traded on the Nasdaq Capital
Market, under the symbol “WKHS”, since January 2016. Since that date, our Common Stock has been relatively thinly traded.
There can be no assurance that we will be able to successfully develop a liquid market for our common shares. The stock market
in general, and early stage public companies in particular, has experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of such companies. These market fluctuations may adversely affect
the price of our Common Stock and other interests in our company when you want to sell you interest in us.

 

We have not paid dividends in the past and have no immediate plans
to pay dividends.

 

We plan to reinvest all of our earnings, to the
extent we have earnings, in order to develop our products, deliver on our orders and cover operating costs and to otherwise become
and remain competitive. We do not plan to pay any cash dividends with respect to our securities in the foreseeable future. We cannot
assure you that we would, at any time, generate sufficient surplus cash that would be available for distribution to the holders
of our Common Stock as a dividend. Therefore, you should not expect to receive cash dividends on our Common Stock.

 

Shares eligible for future sale may adversely affect the market for
our Common Stock.

 

Of the 59,169,661 shares of our Common Stock outstanding
as of February 8, 2019, approximately 48.1 million shares are held by “non-affiliates” and are freely tradable without
restriction pursuant to Rule 144. In addition, our Registration Statement on Form S-3 (File No. 333-213100) for purposes of registering
the resale of 1,033,717 shares of Common Stock and 1,833,193 shares of Common Stock issuable upon exercise of stock purchase warrants
has been declared effective. Any substantial sale of our Common Stock pursuant to Rule 144 or pursuant to any resale prospectus
may have a material adverse effect on the market price of our Common Stock.

 

A significant number of shares of our Common Stock are issuable upon
exercise of outstanding warrants and/or options to purchase shares of Common Stock, and we expect to issue additional shares of
Common Stock in the future. Any exercise or sales of these securities will dilute the interests of other security holders and may
depress the price of our Common Stock.

 

As of February 8, 2019, there were up to 17,818,844
shares of Common Stock issuable upon exercise of outstanding warrants, which includes the warrants held by Arosa and Marathon,
and 5,896,052 shares of Common Stock issuable upon exercise of outstanding options. In accordance with the Credit Agreement, the
Company issued Marathon a Common Stock Purchase Warrant to purchase, in the aggregate, 8,053,390 shares of common stock of the
Company at an exercise price of $1.25 per share exercisable in cash only for a period of three years and then for cash or cashless
thereafter (collectively, the “Initial Warrants”). Until the later of the repayment of all obligations owed to Marathon
or two years from the closing date, the Company will be required to issue additional Common Stock Purchase Warrants (the “Additional
Warrants”) to Marathon equal to 10%, in the aggregate, of any additional issuance, subject to certain exceptions, on substantially
the same terms and conditions of the Initial Warrants, except that (i) the applicable expiration date thereof shall be five years
from the issuance date of the applicable warrant, (ii) the initial exercise price shall be a price equal to the price per share
of common stock used in the relevant issuance multiplied by 110% and (iii) the holder shall be entitled to exercise the warrant
on a cashless exercise at any time the warrant is exercisable. In the future, we may issue additional Common Stock and warrants
from time to time to finance our operations, to fund potential acquisitions or in connection with additional stock options or other
equity awards granted to our employees, officers, directors and consultants under our equity compensation plans. Future anti-dilution
adjustments to such securities may result in substantial additional dilution to existing stockholders. The issuance of additional
shares of Common Stock, convertible securities or warrants to purchase Common Stock, the perception that such issuances may occur,
or exercise of outstanding warrants, convertible securities or options will have a dilutive impact on other shareholders and could
have a material negative effect on the market price of our Common Stock.

 

    22 

     

    

 

You may experience future dilution as a result of future equity offerings.

 

In order to raise additional capital, we may in
the future offer additional shares of our Common Stock or other securities convertible into or exchangeable for our Common Stock
at prices that may not be at prices which are reflected in the trading price of our securities on the NASDAQ Capital Market. We
may sell shares or other securities in any future offering at a price per share that is lower than the market price for our securities,
which would result in those newly issued shares being dilutive. In addition, investors purchasing shares or other securities in
the future could have rights superior to existing stockholders, which could impair the value of your shares. The price per share
at which we sell additional shares of our Common Stock, or securities convertible or exchangeable into Common Stock, in future
transactions may be higher or lower than the price per share paid by investors in the open market.

 

Our charter documents and Nevada law may inhibit a takeover that
stockholders consider favorable.

 

Provisions of our certificate of incorporation
and bylaws and applicable provisions of Nevada law may delay or discourage transactions involving an actual or potential change
in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their
shares, or transactions that our stockholders might otherwise deem to be in their best interests. The provisions in our certificate
of incorporation and bylaws:

 

	 	●	provide our board of directors the authority to issue up to 75,000,000 shares of preferred stock in one or more series and to determine the powers, preferences and rights of each series without shareholder approval;
	 	 	 
	 	●	limit who may call stockholder meetings;
	 	 	 
	 	●	do not provide for cumulative voting rights; and
	 	 	 
	 	●	provide that all vacancies may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum.

 

There are limitations on our directors’ and officers’
liability.

 

As permitted by Nevada law, our certificate of
incorporation limits the liability of our directors for monetary damages for breach of a director’s fiduciary duty except
for liability in certain instances. As a result of our charter provision and Nevada law, shareholders may have limited rights to
recover against directors for breach of fiduciary duty. In addition, our certificate of incorporation provides that we shall indemnify
our directors and officers to the fullest extent permitted by law.

 

Risks Related to this Offering

 

An investment in the Shares is speculative and there can be no assurance
of any return on any such investment.

 

An investment in the shares of Common Stock is speculative and there
is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved
in an investment in the Company, including the risk of losing their entire investment. Further, the shares of Common Stock are
restricted securities issued in accordiance with the exemption provided under Section 4(a)(2) of the Securities Act of 1933, as
amended, and/or Regulation D promulgaged thereunder. Accordingly, the shares of Common Stock must be held until such securities
are available for resale under Rule 144, which is a minimum of six months.

 

We have significant discretion over certain of the net proceeds.

 

The net proceeds of this Offering will be applied to general corporate
purposes within the sole discretion of management. The use of proceeds may change as management deems fit. As is the case with
any business, particularly one without a proven business model, it should be expected that certain expenses unforeseeable to management
at this juncture will arise in the future. There can be no assurance that management’s use of proceeds generated through
this offering will prove optimal or translate into revenue or profitability for the Company. Investors are urged to consult with
their attorneys, accountants and personal investment advisors prior to making any decision to invest in the Company.

 

The maximum Offering will be offered by on a “Best Efforts”
basis, and we may not raise the Maximum offering.

 

We are offering the shares with respect to the
maximum offering. In a best efforts offering, there is no assurance that we will sell the maximum offering. Accordingly, we may
close upon amounts less than the maximum offering which may not provide us with sufficient funds to fully implement our business
plan.

 

    23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00291-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00291-of-00352.parquet"}]]