Material Agreement Form 8 K

Item 1.01. Entry into a Material Definitive Agreement.

Securities Purchase Agreement

As previously disclosed, on March 15, 2024, Workhorse Group Inc. (the "Company") entered into a securities purchase agreement (the "Securities Purchase Agreement") with an institutional investor (the "Investor") under which the Company agreed to issue and sell, in one or more registered public offerings by the Company directly to the Investor, (i) senior secured convertible notes for up to an aggregate principal amount of $139,000,000 (the "Notes") that will be convertible into shares of the Company's common stock, par value of $0.001 per share (the "Common Stock") and (ii) warrants (the "Warrants") to purchase shares of Common Stock in multiple tranches over a period beginning on March 15, 2024. Pursuant to the Securities Purchase Agreement, on October 16, 2024 (the "Closing Date"), the Company issued and sold to the Investor a Note in the original principal amount of $1,200,000 (the "Sixth Additional Note"). The Investor has waived its right to receive Warrants in connection with the issuance of the Sixth Additional Note. Refer to the Company's Current Report on Form 8-K filed on March 15, 2024 for additional information related to the Securities Purchase Agreement, the Notes, and the Warrants. The Sixth Additional Note was issued pursuant to the Company's Indenture between the Company and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), dated December 27, 2023 (the "Base Indenture"), and a Eighth Supplemental Indenture, dated October 16, 2024, entered into between the Company and the Trustee (together with the Base Indenture, the "Indenture").

As previously disclosed, the Company has issued and sold to the Investor (i) Notes in aggregate original principal amount of $32,285,714 (the "Prior Notes") and (ii) Warrants to purchase up to 15,640,900 shares of Common Stock (the "Prior Warrants") pursuant to the Securities Purchase Agreement (following adjustment in connection with the Company's 1-for-20 reverse stock split, which became effective on June 17, 2024). As of October 15, 2024, $8,950,000 aggregate principal amount remained outstanding under the Notes, and no shares had been issued pursuant to the Warrants. Upon our filing of one or more additional prospectus supplements, and our satisfaction of certain other conditions, the Securities Purchase Agreement contemplates additional closings of up to $105,514,286 in aggregate principal amount of additional Notes and a corresponding Warrant pursuant to the Securities Purchase Agreement as further described in our Current Report on Form 8-K filed on March 15, 2024. The description of the Securities Purchase Agreement, form of Note, form of Warrant, Indenture, Security Agreement and Subsidiary Guarantee contained therein is hereby incorporated by reference herein in its entirety.

No Note may be converted and no Warrant may be exercised to the extent that such conversion or exercise would cause the then holder of such Note or Warrant to become the beneficial owner of more than 4.99%, or, at the option of such holder, 9.99% of the Company's then outstanding Common Stock, after giving effect to such conversion or exercise (the "Beneficial Ownership Cap"). On September 4, 2024, the Investor exercised its option to increase the Beneficial Ownership Cap to 9.99%, which will become effective on November 4, 2024.

The issuance and sale of the Sixth Additional Note was made in connection with, and were conditioned upon, the Company's and the Investor's entry into a Limited Waiver (the "Waiver") of certain provisions of the Securities Purchase Agreement affecting the Notes and the Warrants and a related amendment to the asset purchase agreement pursuant to which the Company made its previously disclosed divestiture of its aero business (the "Aero APA"). Pursuant to the Waiver and related amendment: (i) the Investor has waived its right to receive Warrants in connection with the issuance and sale of the Sixth Additional Note, (ii) the Investor has waived its right to receive Warrants in connection with the issuance and sale, if any, of additional Notes in the aggregate principal amount of up to $14.8 million, (iii) for the period commencing on the Closing Date and ending on and including October 16, 2025, the Investor has waived certain provisions of the Securities Purchase Agreement to permit the Company to sell up to $5 million in shares of Common Stock pursuant to an at-the-market offering program without a price floor and without application of certain anti-dilution and participation provisions in the Notes and the Warrants, and (iv) the Company has waived the obligation of an affiliate of the Investor to make certain ongoing lease payments under the Aero APA.

Notes

Like the Prior Notes, the Sixth Additional Note was issued with original issue discount of 12.5%, resulting in $1,050,000 of proceeds to the Company before fees and expenses.The Sixth Additional Note is a senior, secured obligation of the Company, ranking senior to all other unsecured indebtedness, subject to certain limitations and is unconditionally guaranteed by each of the Company's subsidiaries, pursuant to the terms of a certain security agreement and subsidiary guarantee.