Exhibit 10.35

 

FIRST AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT

 

This FIRST AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT (this “Amendment”)
is made and entered into as of March [ ], 2019 by and among Workhorse Group
Inc., a Nevada corporation (the “Borrower”), Wilmington Trust, National
Association, in its capacity as agent (the “Agent”), and the Lenders (as defined
below) party hereto.

 

WHEREAS, the Borrower, the financial institutions from time to time party
thereto as lenders (collectively, with their permitted successors and assignees,
the “Lenders”), and the Agent are party to that certain Credit Agreement, dated
as of December 31, 2018 (the “Credit Agreement”), pursuant to which the Lenders
have extended credit to the Borrower on the terms set forth therein;

 

WHEREAS, pursuant to Section 10.1 of the Credit Agreement, the Credit Agreement
may be amended by an instrument in writing signed by the Borrower and the
Lenders; and

 

WHEREAS, the Borrower and the Lenders desire to (i) amend certain provisions of
the Credit Agreement and (ii) confirm the Lenders’ consent to the replacement of
the Borrower’s chief executive officer and chief operating officer, in each case
as provided in this Amendment.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

 

1.                  Definitions; Loan Document. Capitalized terms used herein
without definition shall have the meanings assigned to such terms in the Credit
Agreement. This Amendment shall constitute a Loan Document for all purposes of
the Credit Agreement and the other Loan Documents.

 

2.                  Amendments to Section 1.1. The following definitions in
Section 1.1 of the Credit Agreement are hereby amended and restated as follows:

 

“Interest Payment Date” means the fifth calendar day of January, April, July and
October; provided that, for the avoidance of doubt, the Lenders shall not have
waived or be deemed to have waived the first payment of interest due under this
Agreement, which payment of interest shall be due and payable on April 5, 2019.

 

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“LIBOR” means, with respect to any Loan for any Interest Period, the London
interbank offered rate as administered by the ICE Benchmark Administration (or
any other Person that takes over the administration of such rate) for Dollars
for a period equal in length to such Interest Period as displayed on page
LIBOR01 or LIBOR02 of the Reuters Screen that displays such rate (or, in the
event such rate does not appear on a Reuters page or screen, on any successor or
substitute page on such screen that displays such rate, or on the appropriate
page of such other information service that publishes such rate from time to
time as selected by the Agent (at the direction of the Required Lenders) in its
reasonable discretion; in each case, the “Screen Rate”) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such Interest
Period; provided that, notwithstanding anything to the contrary in the
foregoing, LIBOR with respect to the initial Interest Period of any Tranche Two
Loan (other than any Tranche Two Loan which has the same Interest Period as the
Tranche One Loans) shall be deemed to be LIBOR as in effect for the other Loans
outstanding hereunder immediately prior to the borrowing of such Tranche Two
Loan; provided further that, if the Screen Rate shall not be available at such
time for such Interest Period (an “Impacted Interest Period”) with respect to
Dollars, then the LIBOR Rate shall be the Interpolated Rate at such time.  For
purposes hereof, “Interpolated Rate” means, at any time, the rate per annum
determined by the Agent (at the direction of the Required Lenders) (which
determination shall be conclusive and binding absent manifest error) to be equal
to the rate that results from interpolating on a linear basis between: (a) the
Screen Rate for the longest period (for which that Screen Rate is available in
Dollars) that is shorter than the Impacted Interest Period and (b) the Screen
Rate for the shortest period (for which that Screen Rate is available for
Dollars) that exceeds the Impacted Interest Period, in each case, at such time.

 

3.                  Amendment to Section 2.3.1. Section 2.3.1(b) of the Credit
Agreement is hereby amended and restated as follows:

 

“(b) The Borrower promises to pay interest on the full amount of the Unused
Tranche Two Commitment and the unpaid principal amount of the outstanding
Tranche Two Loans for the period commencing on the Closing Date and ending on
(and including) the date on which the Tranche Two Loans are Paid in Full and the
Tranche Two Commitment is terminated, at the Applicable Contract Rate. For the
avoidance of doubt, (i) interest paid on the Unused Tranche Two Commitment shall
be the same amount of interest that would be paid on a Tranche Two Loan in the
same principal amount as the amount of such Unused Tranche Two Commitment and
(ii) the interest rate applicable to the Unused Tranche Two Commitment will
adjust concurrently with any adjustment of the interest rate applicable to the
Tranche Two Loans.”

 

4.                  Amendment to Section 6.1.1. Section 6.1.1 of the Credit
Agreement is hereby amended by replacing “which opinion shall not be qualified”
therein with “which opinion, beginning with the financial statements for the
Fiscal Year ending December 31, 2019, shall not be qualified”.

 

5.                  Amendment to Section 6.15. Sections 6.15(a)(ii)-(iii) and
6.15(a)(v) of the Credit Agreement are each hereby amended by deleting each
reference to “30 days” and replacing each such reference with “90 days”.

 

6.                  Waiver. The Lenders hereby waive any Defaults or Events of
Default due to any non-compliance or breach by the Borrower of Section 6.15 or
Section 7.17 of the Credit Agreement, each such section as in effect immediately
prior to the effectiveness of this Amendment.

 

7.                  Confirmation of Consent. The Lenders hereby confirm their
consent to (i) the replacement, by Duane Hughes, of Stephen Burns as chief
executive officer of the Borrower and (ii) the replacement, by Robert H.
Willison, of Duane Hughes as chief operating officer and president of the
Borrower.

 

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8.                  Conditions to Effectiveness of Amendment. This Amendment
shall become effective upon receipt by the Agent and the Lenders of counterpart
signatures to this Amendment duly executed and delivered by the Agent, the
Lenders and the Borrower.

 

9.                  Expenses. The Borrower agrees to pay on demand all expenses
of the Lender (including, without limitation, the fees and out-of-pocket
expenses of Covington & Burling LLP, counsel to the Lenders, and Duane Morris
LLP, counsel to the Agent) incurred in connection with the negotiation,
preparation, execution and delivery of this Amendment.

 

10.              Representations and Warranties. The Borrower represents and
warrants to the Lenders and the Agent as follows:

 

(a)               After giving effect to this Amendment, the representations and
warranties of the Loan Parties contained in the Credit Agreement or any other
Loan Document shall be true and correct in all material respects (without
duplication of any materiality qualifier contained therein) as of the date
hereof (or as of a specific earlier date if such representation or warranty
expressly relates to an earlier date).

 

(b)               After giving effect to this Amendment, no Default or Event of
Default under the Credit Agreement is continuing.

 

11.              No Implied Amendment or Waiver. Except as expressly set forth
in this Amendment, this Amendment shall not, by implication or otherwise, limit,
impair, constitute a waiver of or otherwise affect any rights or remedies of the
Agent or the Lenders under the Credit Agreement or the other Loan Documents, or
alter, modify, amend or in any way affect any of the terms, obligations or
covenants contained in the Credit Agreement or the other Loan Documents, all of
which shall continue in full force and effect. Nothing in this Amendment shall
be construed to imply any willingness on the part of the Agent or the Lenders to
agree to or grant any similar or future amendment, consent or waiver of any of
the terms and conditions of the Credit Agreement or the other Loan Documents.

 

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12.              Release. The Borrower hereby acknowledges and agrees that: (a)
to its knowledge neither it nor any of its Affiliates have any claim or cause of
action against any Lender or the Agent (or any of their respective Affiliates,
officers, directors, employees, attorneys, consultants or agents) under the
Credit Agreement as of the date hereof and (b) to its knowledge, as of the date
hereof, the Lenders and the Agent have heretofore properly performed and
satisfied in a timely manner all of their respective obligations to the Borrower
under the Credit Agreement. Notwithstanding the foregoing, the Agent and the
Lenders wish to eliminate any possibility that any past conditions, acts,
omissions, events or circumstances would impair or otherwise adversely affect
any of the Agent’s or the Lenders’ rights, interests and/or remedies under the
Credit Agreement. Accordingly, for and in consideration of the agreements
contained in this Amendment and other good and valuable consideration, the
Borrower (for itself and its Affiliates and the successors and assigns of each
of the foregoing) (each a “Releasor” and collectively, the “Releasors”) does
hereby fully, finally, unconditionally and irrevocably release and forever
discharge the Agent and the Lenders and each of their respective Affiliates,
officers, directors, employees, attorneys, consultants and agents (each a
“Released Party” and collectively, the “Released Parties”) from any and all
debts, claims, obligations, damages, costs, attorneys’ fees, suits, demands,
liabilities, actions, proceedings and causes of action, in each case, whether
known or unknown, contingent or fixed, direct or indirect, and of whatever
nature or description, and whether in law or in equity, under contract, tort,
statute or otherwise, in each case that exist or have occurred on or prior to
the date of this Amendment which any Releasor has heretofore had or now shall or
may have against any Released Party by reason of any act, omission or thing
whatsoever done or omitted to be done, except for a Released Party’s gross
negligence or willful misconduct as determined by a final, nonappealable
judgment of a court of competent jurisdiction, prior to the date hereof arising
out of, connected with or related in any way to the Credit Agreement, or any
act, event or transaction related or attendant thereto, or the Agent’s or the
Lenders’ agreements contained therein, or the possession, use, operation or
control in connection therewith of any of the assets of the Borrower, or the
making of any advance thereunder, or the management of such advance, in each
case on or prior to the date of this Amendment.

 

13.              Counterparts. This Amendment may be executed by the parties
hereto in several counterparts, each of which shall be an original and all of
which shall constitute together but one and the same agreement. Delivery of an
executed counterpart of a signature page of this Amendment by e-mail (e.g.,
“pdf” or “tiff”) or fax transmission shall be effective as delivery of a
manually executed counterpart of this Amendment.

 

14.              Governing Law. THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PREPARED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

 

[Remainder of Page Intentionally Left Blank.]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.

 

WORKHORSE GROUP INC.

as the Borrower

    By:     Name:     Title:    

 

MARATHON STRUCTURED PRODUCT STRATEGIES FUND, LP

MARATHON BLUE GRASS CREDIT FUND, LP

MARATHON CENTRE STREET PARTNERSHIP, L.P.

TRS CREDIT FUND, LP
as Lenders

 

By: Marathon Asset Management LP, the investment advisor to each of the entities
listed above

    By:     Name: Louis Hanover   Title: CIO, Co-Managing Partner  

 

WILMINGTON TRUST, NATIONAL ASSOCIATION
as the Agent

    By:     Name: Jamie Roseberg   Title: Banking Officer  

 

 

 

Signature Page to First Amendment, Waiver and Consent to Credit Agreement