Document:

EX-10.75

 Exhibit 10.75 

Compensation Arrangements with Named Executive Officers 
 Base Salaries 
 Effective October 1, 2015, Frederick W. Smith’s annual
base salary will be increased by 1.5%, and each other named executive officer’s annual base salary will be increased by 3%. As a result, effective October 1, 2015, the new annual base salaries of FedEx’s named executive officers will be as
follows: 
  

					
	 Name and Current Position
	  	Base Salary	 
	 Frederick W. Smith

Chairman, President and

Chief Executive Officer
	  	 	$1,285,968	  
	 Alan B. Graf, Jr.

Executive Vice President and

Chief Financial Officer
	  	 	$929,868	  
	 David J. Bronczek

President and Chief Executive Officer – FedEx Express
	  	 	$970,356	  
	 T. Michael Glenn

Executive Vice President,

Market Development and

Corporate Communications
	  	 	$858,360	  
	 Robert B. Carter

Executive Vice President,

FedEx Information Services and

Chief Information Officer
	  	 	$785,844	  

 Fiscal 2016 Annual Incentive Compensation Program 

Chairman, President and Chief Executive Officer 
 Mr. Smith’s fiscal 2016 annual incentive compensation (“AIC”) payout opportunity will be based on the achievement of corporate objectives for company financial performance for the
fiscal year, subject to adjustment by the independent members of the Board of Directors as described below. 
 The independent
members of the Board of Directors, upon the recommendation of the Compensation Committee, may adjust Mr. Smith’s bonus amount upward or downward based on their annual evaluation of Mr. Smith’s performance, including the quality
and effectiveness of his leadership, the execution of key strategic initiatives and the following corporate performance measures: 
  

	 	•	 	 FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Transportation Average, the Dow
Jones Industrial Average and competitors; 

	 	•	 	 FedEx’s stock price to earnings (P/E) ratio relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Industrial Average
and competitors; 

  

	 	•	 	 FedEx’s market capitalization; 

  

	 	•	 	 FedEx’s revenue and operating income growth (excluding certain unusual items and the year-end mark-to-market accounting adjustment for defined
benefit pension and other postretirement plans (the “MTM Adjustment”)) relative to competitors; 

  

	 	•	 	 FedEx’s free cash flow (excluding business acquisitions), return on invested capital (excluding certain unusual items and the MTM Adjustment), and
weighted average cost of capital; 

  

	 	•	 	 Analyst coverage and ratings for FedEx’s stock; 

  

	 	•	 	 FedEx’s U.S. and international revenue market share; 

 

	 	•	 	 FedEx’s reputation rankings by various publications and surveys; and 

 

	 	•	 	 Each FedEx business segment’s achievement of corporate objectives for financial performance under the fiscal 2016 AIC program.

 None of these factors will be given any particular weight in determining whether to adjust Mr. Smith’s bonus
amount. 
 Mr. Smith’s fiscal 2016 AIC payout will be based on the following company financial performance measures
(subject to adjustment as described above): 
  

	 	•	 	 FedEx Express Segment Operating Income: Mr. Smith’s fiscal 2016 AIC payout is conditioned upon the achievement of the FedEx Express
segment operating income threshold objective for Mr. Smith under the fiscal 2016 AIC program. 

  

	 	•	 	 Consolidated Operating Income: If the FedEx Express segment operating income threshold objective for Mr. Smith under the fiscal 2016 AIC
program is achieved, Mr. Smith’s AIC payout opportunity will be tied to the achievement of corporate objectives for consolidated operating income (excluding the MTM Adjustment), subject to the maximum payout opportunity. The consolidated
operating income target objective under the fiscal 2016 AIC program is the same as the fiscal 2016 business plan objective for consolidated operating income (excluding, in each case, the MTM Adjustment). Subject to achievement of the FedEx Express
segment operating income threshold objective for Mr. Smith and any adjustment by the independent directors as described above, Mr. Smith’s minimum fiscal 2016 AIC payout will be 50% of his target payout. 

  
 2 

 Mr. Smith’s AIC bonus target for fiscal 2016 is 130% of his base salary actually
paid during fiscal 2016, with a maximum payout of 200% of his target bonus. 
 Other Named Executive Officers 

Mr. Bronczek’s fiscal 2016 AIC target payout opportunity will be based on the achievement of corporate objectives for FedEx
Express segment operating income for fiscal 2016. The FedEx Express segment operating income target objective under the fiscal 2016 AIC program is the same as the fiscal 2016 business plan objective for FedEx Express segment operating income.
Above-target payouts for Mr. Bronczek will be tied to the achievement of corporate objectives for consolidated operating income (excluding the MTM Adjustment), subject to the maximum payout opportunity. Mr. Bronczek’s fiscal 2016 AIC
payout opportunity is not subject to a floor. 
 The fiscal 2016 AIC payout opportunity for each of Messrs. Graf, Glenn and
Carter will be based on the achievement of corporate objectives for consolidated operating income (excluding the MTM Adjustment), subject to a minimum payout of 50% of his target payout (as it may be adjusted as described below) and the maximum
payout opportunity. 
 Mr. Smith may adjust each officer’s bonus amount based on the achievement of individual
performance objectives established at the beginning of the fiscal year. Mr. Smith will determine the achievement level of each officer’s individual objectives at the conclusion of fiscal 2016. 

Mr. Bronczek’s AIC bonus target for fiscal 2016 is 100% of his base salary actually paid during fiscal 2016, with a maximum
payout of 200% of his target bonus. The fiscal 2016 AIC bonus target for each of Messrs. Graf, Glenn and Carter is 90% of their respective base salary actually paid during fiscal 2016, with a maximum payout of 200% of the target bonus. 

Long-Term Incentive Program 
 LTI Payout Opportunities 
 FedEx’s long-term incentive
(“LTI”) plans for the three-fiscal-year periods 2014 through 2016, 2015 through 2017 and 2016 through 2018 provide long-term cash bonus opportunities to members of upper management, including the named executive officers, upon the
conclusion of fiscal 2016, 2017 and 2018, respectively, if certain aggregate fully diluted earnings per share (“EPS”) goals established by the Board of Directors are achieved with respect to those periods. No amounts can be earned for the
fiscal 2014 through 2016, 2015 through 2017 and 2016 through 2018 plans until 2016, 2017 and 2018, respectively, because achievement of the EPS goals can only be determined following the conclusion of the applicable three-fiscal-year period.

  
 3 

 The following table sets forth the potential future payouts to each of FedEx’s named
executive officers under FedEx’s LTI plans: 
  

															
	 	  	 	  	Potential Future Payouts	 
	 Name
	  	Performance
Period	  	Threshold
($)	 	  	Target
($)	 	  	Maximum
($)	 
	 Frederick W. Smith
	  	FY2014–FY2016	  	 	1,000,000	  	  	 	4,000,000	  	  	 	6,000,000	  
		  	FY2015–FY2017	  	 	1,000,000	  	  	 	4,000,000	  	  	 	6,000,000	  
		  	FY2016–FY2018	  	 	1,000,000	  	  	 	4,000,000	  	  	 	6,000,000	  
	 Alan B. Graf, Jr.
	  	FY2014–FY2016	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  
		  	FY2015–FY2017	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  
		  	FY2016–FY2018	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  
	 David J. Bronczek
	  	FY2014–FY2016	  	 	375,000	  	  	 	1,500,000	  	  	 	2,250,000	  
		  	FY2015–FY2017	  	 	375,000	  	  	 	1,500,000	  	  	 	2,250,000	  
		  	FY2016–FY2018	  	 	375,000	  	  	 	1,500,000	  	  	 	2,250,000	  
	 T. Michael Glenn
	  	FY2014–FY2016	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  
		  	FY2015–FY2017	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  
		  	FY2016–FY2018	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  
	 Robert B. Carter
	  	FY2014–FY2016	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  
		  	FY2015–FY2017	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  
		  	FY2016–FY2018	  	 	300,000	  	  	 	1,200,000	  	  	 	1,800,000	  

 The potential individual future payouts set forth in the table above are set dollar amounts ranging from
threshold (minimum) amounts, if the EPS goal achieved is less than target, up to maximum amounts, if the plan goal is substantially exceeded. There can be no assurance that the potential future payouts shown in this table will be achieved.

 Stock Repurchase Program-Related Adjustments to EPS for LTI Plan Purposes 

During fiscal 2014 and the first quarter of fiscal 2015, FedEx repurchased 42.2 million shares as part of its stock repurchase
program. Because the positive impact on EPS resulting from this stock repurchase program did not reflect core business performance, the Board of Directors, upon the recommendation of the Compensation Committee, approved the exclusion of the impact
of the stock repurchase program (net of interest expense on debt issued to fund a portion of the program) on fiscal 2014 and fiscal 2015 EPS for purposes of the FY2014-FY2016 LTI plan. As a result, (i) adjusted fiscal 2014 EPS of $6.68, rather
than fiscal 2014 EPS of $6.75 (as originally reported before FedEx’s adoption of mark-to-market (“MTM”) accounting for its defined benefit pension and other postretirement plans), and (ii) adjusted fiscal 2015 EPS of $8.24,
rather than adjusted fiscal 2015 EPS of $8.87 (as discussed in more detail below), are being used for purposes of the FY2014-FY2016 LTI plan. Fiscal 2016 EPS will be adjusted following the end of that fiscal year using a similar methodology to
exclude the impact of the stock repurchase program for purposes of the FY2014-FY2016 LTI plan. 

  
 4 

 Typically, the base-year number over which the three-year average annual EPS growth rate
goals are measured for an LTI plan is the final full-year EPS of the preceding fiscal year. For the FY2015-FY2017 LTI plan, however, the base-year year number is $7.12, not fiscal 2014 EPS of $6.75 (as originally reported before FedEx’s
adoption of MTM accounting for its defined benefit pension and other postretirement plans). The Board of Directors, upon the recommendation of the Compensation Committee, approved this increase in the base-year EPS in order to exclude the impact of
FedEx’s stock repurchase program on a prospective basis, thereby making subsequent adjustments of EPS with respect to the stock repurchase program in future years unnecessary for purposes of the FY2015-FY2017 LTI plan. 

Mark-to-Market Accounting and Other Adjustments to EPS for LTI Plan Purposes 

The Board of Directors, upon the recommendation of the Compensation Committee, approved the exclusion of certain items from fiscal 2015
EPS for purposes of FedEx’s FY2014-FY2016 and FY2015-FY2017 LTI plans and for establishing the base-year EPS for the FY2016-FY2018 LTI plan. For purposes of these plans, fiscal 2015 EPS was adjusted to exclude: (i) the net impact of
FedEx’s adoption of MTM accounting for its defined benefit pension and other postretirement plans, including the impact of lowering the expected return on plan assets assumption from 7.75% to 6.5% in the presentation of segment results for all
prior periods; (ii) aircraft impairment and related charges recorded in the fourth quarter; and (iii) a charge in the fourth quarter to increase the legal reserve associated with the settlement of a legal matter at FedEx Ground to the
amount of the settlement. 
 As a result, adjusted fiscal 2015 EPS of $8.87, rather than reported fiscal 2015 EPS of $3.65, is
being used for purposes of the FY2014-FY2016 LTI plan (before the adjustment relating to the stock repurchase program described above) and the FY2015-FY2017 LTI plan. The Board of Directors determined that, by excluding these items, payouts, if any,
under these plans will more accurately reflect FedEx’s core financial performance in fiscal 2015. In addition, $8.87 will be the base-year EPS for the FY2016-FY2018 LTI plan. 

Because the MTM Adjustment is not reflective of core business performance, the Board of Directors, upon the recommendation of the
Compensation Committee, also determined that the MTM Adjustment will be excluded from fiscal 2016 and fiscal 2017 EPS for purposes of the FY2014-FY2016 and FY2015-2017 LTI plans and from EPS calculations under future LTI plans, beginning with the
FY2016-FY2018 LTI plan. 

  
 5Exhibit
4.1

 

NEITHER THIS NOTE NOR THE
SECURITIES INTO WHICH THIS NOTE
IS CONVERTIBLE
HAVE BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY
STATE. THESE SECURITIES
HAVE BEEN
SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE
SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND
IN ACCORDANCE
WITH APPLICABLE
STATE SECURITIES
LAWS.

 

 

WORKHORSE
GROUP,
INC.

 

 

CONVERTIBLE
NOTE

 

 

Issuance
Date:  July
7, 2015Original
Principal
Amount:$250,000

Note
No. WKHS-1Consideration
Paid at
Close:
 $100,000

 

 

 

FOR
VALUE
RECEIVED,
Workhorse Group,
Inc.,
a Nevada
corporation
with a
par value
of $0.001 per
common
share (“Par
Value”)
(the "Company"),
hereby promises
to pay to the
order of
Vista
Capital
Investments,
LLC or
registered
assigns
(the "Holder")
the amount
set out
above as
the Original
Principal
Amount
(as reduced pursuant
to the terms
hereof pursuant
to redemption, conversion
or otherwise,
the "Principal")
when due, whether
upon the Maturity
Date (as defined
below), acceleration,
redemption or otherwise
(in each case
in accordance with
the terms
hereof) and to
pay interest
("Interest")
on any outstanding Principal
at the applicable
Interest Rate
from the date set out
above as the Issuance
Date (the "Issuance
Date")
until the same becomes
due and payable, upon the
Maturity
Date or acceleration,
conversion,
redemption
or otherwise
(in each case
in accordance
with the terms
hereof).

 

The
Original
Principal
Amount is
$250,000 (two
hundred
fifty thousand)
plus accrued
and unpaid interest
and any other
fees. The
Consideration
is $225,000
(two
hundred
twenty
five
thousand)
payable
by wire
transfer
(there
exists
a $25,000 prorated
original issue
discount
(the “OID”)).
The
Holder shall
pay $100,000 of
Consideration
upon closing
of this
Note. The
Holder
may pay
additional Consideration
to the Company
in such amounts and
at such dates as Holder
may choose in its sole
discretion.
For purposes
hereof,
the term “Outstanding
Balance”
means the Original
Principal
Amount, as
reduced or increased,
as the
case may
be, pursuant to the terms
hereof
for conversion,
breach
hereof
or otherwise,
plus any accrued
but unpaid interest,
collection
and enforcements
costs, and any
other fees,
penalties, damages
or charges
incurred
under this
Note. The
Original
Principal
Amount due
to Holder
shall be prorated
based on the
Consideration
paid by
Holder (plus
an approximate
10% Original
Issue Discount
that is prorated
based on the
Consideration
paid by the
Holder as
well as
any other interest
or fees)
such that
the Company
is only required
to repay
the amount funded
and the Company
is not
required to
repay any unfunded
portion of
this Note.

 

(1)              
GENERAL
TERMS

 

(a)               
Payment
of Principal.
The "Maturity
Date"
shall
be two
years from
the date
of each payment
of Consideration,
as may be extended
at the option
of the Holder
in the
event that,
and for so long as,
an Event
of Default
(as defined
below)
shall
not have
occurred and
be continuing
on the Maturity
Date (as
may be extended
pursuant
to this Section
1) or any event
shall not
have occurred and
be continuing on
the Maturity
Date
(as may
be extended
pursuant to
this Section
1) that
with the
passage
of time and the
failure
to cure
would result
in an Event
of Default.

 

    	1

    	 

    

 

(b)              
Interest.
A one-time
interest charge
of twelve
percent
(12%)
(“Interest
Rate”)
shall
be applied
on the
Issuance Date
to the
Original
Principal
Amount.
Interest
hereunder
shall
be paid
on the
Maturity
Date
(or sooner
as provided
herein)
to the Holder
or its
assignee in
whose name
this Note is
registered
on the records
of the Company
regarding
registration
and transfers
of Notes in cash
or converted
into Common
Stock at
the Conversion
Price
provided
the Equity
Conditions
are satisfied.

  

(c)
              Security.
This Note
shall not be
secured by
any collateral
or any assets
pledged to the
Holder

 

		(2)	EVENTS
                                         OF DEFAULT.

 

(a)               
An
“Event of
Default”,
wherever
used herein,
means any
one of
the following
events
(whatever
the reason
and whether
it shall
be voluntary
or involuntary
or effected
by operation
of law or pursuant
to any judgment,
decree or order
of any court,
or any
order, rule or
regulation
of any administrative
or governmental
body):

 

(i)                
The
Company's
failure
to pay to
the Holder
any amount
of Principal,
Interest,
or other
amounts when
and as due
under this
Note
(including,
without
limitation,
the Company's
failure
to pay any
redemption payments
or amounts hereunder);

 

		(ii)	A
                                         Conversion
                                         Failure
                                         as defined
                                         in section
                                         3(b)(ii)

 

(iii)            
The
Company
or any subsidiary
of the
Company
shall commence,
or there
shall be
commenced against
the Company
or any subsidiary
of the Company
under any applicable
bankruptcy or
insolvency
laws as
now or
hereafter
in effect
or any successor
thereto,
or the Company
or any subsidiary
of the Company
commences any
other proceeding
under any reorganization,
arrangement,
adjustment
of debt,
relief
of debtors,
dissolution,
insolvency
or liquidation
or similar
law of any jurisdiction
whether
now or
hereafter
in effect
relating to
the Company
or any subsidiary
of the
Company
or there
is commenced
against
the Company
or any subsidiary
of the Company
any such bankruptcy,
insolvency
or other proceeding
which
remains
undismissed
for a period
of 61 days;
or the Company
or any subsidiary
of the Company
is adjudicated
insolvent
or bankrupt;
or any
order of
relief or
other order
approving
any such case or
proceeding
is entered; or the
Company or any subsidiary
of the Company suffers
any appointment
of any custodian,
private
or court
appointed receiver
or the like
for it
or any substantial
part of
its property
which continues
undischarged
or unstayed for
a period of sixty
one (61) days; or the Company
or any subsidiary
of the Company
makes
a general
assignment
for the benefit
of creditors;
or the Company
or any subsidiary
of the Company shall fail
to pay, or shall
state that
it is
unable to pay,
or shall be unable
to pay, its debts
generally
as they become due; or
the Company
or any subsidiary
of the Company
shall call a meeting
of its creditors
with a view to arranging
a composition, adjustment
or restructuring
of its debts;
or the Company
or any subsidiary
of the Company
shall by any act or failure
to act expressly
indicate its
consent to,
approval
of or acquiescence
in any of the
foregoing;
or any corporate
or other
action is
taken by the Company or any
subsidiary
of the Company for
the purpose of
effecting
any of the foregoing;

 

(iv)            
The
Company
or any subsidiary
of the
Company
shall default
in any of its
obligations
under any
other Note
or any
mortgage,
credit
agreement
or other
facility,
indenture
agreement,
factoring
agreement
or other
instrument
under which
there may
be issued, or
by which
there may
be secured or evidenced
any indebtedness
for borrowed
money or money
due under any
long term leasing
or factoring
arrangement
of the Company or any
subsidiary of the
Company in an amount
exceeding

$100,000, whether
such indebtedness
now exists or
shall hereafter
be created;
and

    	2

    	 

    

 

(v)              
The Common
Stock is suspended
or delisted
for trading
on the Over
the Counter
OTCQB
Venture
Marketplace
or OTCPink
Open Marketplace
(the “Primary
Market”).

 

(vi)            
The Company
loses its ability
to deliver
shares via
“DWAC/FAST”
electronic
transfer.

 

		(vii)	The
                                         Company
                                         loses its
                                         status
                                         as “DTC
                                         Eligible.”

 

(viii)        
The Company
shall become
late or
delinquent
in its filing
requirements
as a fully-reporting
issuer registered
with the Securities
& Exchange
Commission.

 

(ix)            
The
Company
shall fail
to reserve
and keep available
out of
its authorized
Common Stock
a number of
shares equal
to at least
5 (five)
times the
full number
of shares of
Common
Stock issuable upon
conversion
of all
outstanding
amounts under this
Note.

 

(b)              
Upon
the occurrence
of any
Event
of Default,
the Outstanding
Balance
shall immediately
increase
to 120% of
the Outstanding
Balance
immediately
prior to the
occurrence
of the Event
of Default
(the “Default
Effect”).
The Default
Effect
shall automatically
apply upon
the occurrence
of an Event of Default
without
the need
for any party
to give
any notice or
take any
other action.

 

(3)              
CONVERSION
OF NOTE.This
Note shall
be convertible
into shares
of the Company's
Common
Stock, on the
terms
and conditions
set forth
in this Section
3.

 

(a)               
Conversion
Right.
Subject
to the provisions
of Section
3(c), at
any time or
times on
or after
the Issuance
Date,
the Holder
shall be
entitled
to convert
any portion
of the outstanding
and unpaid Conversion
Amount (as
defined
below)
into fully
paid and nonassessable
shares
of Common
Stock in accordance
with Section
3(b), at the Conversion
Price (as defined
below).
The number of
shares of Common
Stock issuable
upon conversion
of any Conversion
Amount
pursuant
to this Section
3(a) shall
be equal to the quotient
of dividing the Conversion
Amount by the Conversion
Price.
The Company shall not
issue any
fraction of
a share
of Common
Stock upon any
conversion.
If the
issuance
would
result
in the issuance
of a
fraction
of a
share of
Common
Stock, the Company
shall round such
fraction
of a share of
Common
Stock up to
the
nearest
whole share.
The Company
shall pay any and
all transfer
agent fees, legal
fees, costs
and any other
fees or
costs that
may be
incurred
or charged
in connection
with the
issuance
of shares
of the
Company’s
Common
Stock to the
Holder
arising
out of or
relating
to the
conversion
of this Note.

 

(i)                
"Conversion
Amount"
means
the portion
of the
Original
Principal
Amount
and Interest
to be converted,
plus any penalties,
redeemed
or otherwise
with respect
to which
this determination
is being
made.

 

(ii)              
"Conversion
Price"
shall
equal the
lesser of
(a)
$0.25 or
(b) 60%
of the lowest
trade occurring
during the twenty
five (25)
consecutive
Trading Days
immediately
preceding the
applicable
Conversion
Date
on which
the Holder
elects
to convert
all or
part of
this Note,
subject
to adjustment
as provided
in this Note.

 

		(b)	Mechanics
                                         of Conversion.

 

(i)                 Optional Conversion.
To convert
any Conversion Amount into
shares of Common
Stock on any date (a "Conversion Date"), the Holder
shall (A) transmit
by email,
facsimile (or otherwise deliver),
for receipt
on or prior
to 11:59 p.m., New York, NY Time,
on such date, a
copy of an executed notice
of conversion
in the form attached hereto as Exhibit
A (the "Conversion Notice")
to the Company. On
or before the
third Business
Day following
the date of receipt of
a Conversion Notice
(the "Share
Delivery Date"),
the Company shall (A)
if legends are
not required to be
placed on certificates
of Common
Stock pursuant to the then
existing provisions of Rule 144 of
the Securities Act of
1933 (“Rule 144”) and provided
that the Transfer Agent
is participating
in the Depository
Trust Company's
("DTC")
Fast Automated
Securities Transfer
Program, credit
such aggregate
number of shares of Common
Stock to which the Holder
shall be entitled
to the Holder's
or its designee's
balance account with DTC
through its Deposit
Withdrawal Agent Commission
system or (B)
if the Transfer Agent is
not participating
in the DTC
Fast Automated
Securities Transfer
Program, issue and
deliver to the
address as specified
in the Conversion Notice,
a certificate, registered
in the name of the Holder
or its designee,
for the number of shares of Common
Stock to which the Holder shall be
entitled which
certificates shall
not bear any restrictive
legends unless
required pursuant the Rule 144. If
this Note is physically
surrendered
for conversion and
the outstanding Principal of
this Note
is greater than
the Principal
portion of
the Conversion Amount
being converted, then
the Company shall, upon request of the
Holder, as soon as practicable
and in no event
later than three
(3) Business Days
after receipt
of this Note and
at its own expense,
issue and deliver
to the holder a new Note representing
the outstanding Principal
not converted. The Person
or Persons entitled
to receive
the shares
of Common
Stock issuable upon a conversion
of this
Note shall be treated
for all purposes as
the record holder
or holders
of such shares of Common
Stock upon the transmission
of a Conversion Notice.

 

    	3

    	 

    

 

(ii)              
Company's
Failure to
Timely
Convert.
If within
two (2)
Trading
Days
after
the Company's
receipt of
the facsimile
or email
copy of a
Conversion
Notice
the Company
shall fail
to issue
and deliver
to Holder
via “DWAC/FAST”
electronic
transfer
the number
of shares
of Common
Stock to which the
Holder is entitled
upon such holder's
conversion
of any Conversion
Amount (a
"Conversion
Failure"),
the Original
Principal
Amount
of the Note
shall
increase
by $2,000
per day
until
the Company issues and delivers
a certificate
to the Holder
or credit
the Holder's
balance account
with DTC for
the number
of shares
of Common
Stock to which
the Holder
is entitled
upon such holder's
conversion
of any Conversion
Amount (under
Holder’s
and Company’s
expectation
that any damages
will tack back to the
Issuance Date).
Company
will
not be subject
to any penalties
once its
transfer
agent processes
the shares
to the DWAC
system.
If the
Company
fails to
deliver
shares in
accordance
with the
timeframe
stated in
this Section,
resulting
in a Conversion
Failure,
the Holder,
at any time
prior to selling
all of
those shares,
may
rescind any portion, in
whole or
in part, of
that particular
conversion
attributable
to the
unsold shares and have
the rescinded
conversion
amount returned
to the Outstanding
Balance
with the rescinded
conversion
shares returned
to the
Company
(under Holder’s
and Company’s
expectations
that any
returned conversion
amounts will
tack back
to the original
date of the
Note).

 

(iii)            
DWAC/FAST
Eligibility.If
the Company
fails
for any reason
to deliver
to the
Holder
the Shares
by DWAC/FAST
electronic
transfer
(such as
by delivering
a physical
stock certificate),
or if there
is a Conversion
Failure
as defined
in Section
3(b)(ii),
and if the
Holder
incurs a Market
Price Loss,
then at any time
subsequent to
incurring
the loss the Holder may
provide the Company
written notice
indicating
the amounts payable
to the Holder
in respect of the
Market Price
Loss and the
Company must
make
the Holder
whole by
either
of the following
options at
Holder’s
election:

 

Market
Price Loss
= [(High
trade price
for the
period between
the day of
conversion
and the day the
shares
clear
in the
Holder’s
brokerage
account)
x (Number
of shares
receivable
from the conversion)]
– [(Net
Sales
price realized
by Holder) x (Number
of shares receivable
from the conversion)].

 

Option
A – Pay
Market Price
Loss in
Cash.
The Company
must pay
the Market
Price Loss
by cash payment,
and any such cash
payment
must be
made by
the third
business
day from
the time
of the Holder’s
written
notice to
the Company.

Option
B – Add
Market
Price
Loss to
Outstanding
Balance.
The Company
must pay
the Market
Price
Loss by
adding the
Market Price
Loss to
the Outstanding
Balance
(under Holder’s
and the Company’s
expectation that
any Market
Price Loss
amounts will
tack back to
the Issuance
Date).

 

    	4

    	 

    

 

In
the case that
conversion
shares are
not deliverable
by DWAC/FAST
electronic
transfer
an additional
10% discount
to the Conversion
Price will
apply.

 

(iv)            
DTC
Eligibility
& Sub-Penny.
If the Company
fails to
maintain
its status
as “DTC
Eligible”
for any reason,
or, if the
effective
Conversion
Price
as calculated
in Section 3(a)(ii)
is less
than $0.01 at
any time (regardless
of whether
or not a Conversion
Notice has
been submitted
to the Company),
the Principal
Amount
of the Note
shall increase
by ten thousand
dollars
($10,000) (under
Holder’s
and Company’s expectation
that any
Principal
Amount
increase will
tack back to the Issuance
Date). In
addition,
the Conversion
Price shall
be redefined
to equal
the lesser
of (a)
$0.20 or (b) 50%
of the lowest
trade occurring
during the
twenty five
(25) consecutive
Trading
Days immediately
preceding the
applicable Conversion
Date
on which the
Holder elects
to convert
all or part
of this Note, subject
to adjustment
as provided in
this Note.

 

(v)              
Par Value
True-Up.
 In the event
that the Conversion
Price is
less than Par
Value
on the Conversion
Date,
the Holder may
elect to
submit a
Conversion
Notice
(attached hereto
as Exhibit
A) with a conversion
price equal
to the Company’s
Par Value.
In addition,
upon written notice
from the Holder
in the form
attached
hereto as
Exhibit B
(the “True-Up
Notice”),
the Holder may
require the Company,
at the Holder’s
election,
to either (A)
issue and
deliver
to the Holder
a number of shares
of Common
Stock as equals
(X)
the Conversion
Amount
divided
by 60% of the
lowest trade occurring
during the
twenty five
(25) consecutive
Trading Days
immediately
preceding
the applicable Conversion
Date, less
(Y)
the Conversion
Amount divided
by the Par
Value (Any
additional shares
of Common
Stock issuable
pursuant
to this Section
3(b)(v)
shall be
referred
to herein as
“True-Up
Shares”), or
(B) add to
the Outstanding
Balance
a dollar
amount equal
to the number
of True-Up
Shares (as calculated
above) multiplied
by the high
trade price
on the Conversion
Date (Any
dollar amount
added to the Outstanding
Balance
pursuant to
this Section
3(b)(v)
shall be
referred
to herein as
the “True-Up
Balance”)
(under Holder’s
and the Company’s
expectation
that
any True-Up
Balance amounts
will
tack back to the
Issuance Date).

 

(vi)            
Book-Entry.
Notwithstanding
anything to
the contrary
set forth
herein,
upon conversion
of any
portion of
this Note
in accordance
with the
terms
hereof,
the Holder
shall not
be required
to physically
surrender
this Note
to the Company
unless (A)
the full
Conversion
Amount represented
by this Note
is being
converted or
(B) the Holder
has provided
the Company
with prior
written
notice (which
notice may
be included
in a Conversion
Notice) requesting
reissuance
of this Note
upon physical
surrender of
this Note. The
Holder and
the Company
shall maintain
records
showing the Principal
and Interest
converted and the dates
of such conversions
or shall
use such other
method, reasonably
satisfactory
to the
Holder
and the Company,
so as not to
require
physical
surrender of this
Note
upon conversion.

 

		(c)	Limitations
                                         on Conversions
                                         or Trading.

 

(i)                
Beneficial
 Ownership.The
Company
shall not
effect
any conversions
of this
Note
and the
Holder
shall not
have
the right
to convert
any portion
of this
Note or
receive
shares of
Common
Stock as payment of
interest hereunder
to the
extent that
after giving
effect to such conversion
or receipt of such
interest payment,
the Holder,
together
with any affiliate
thereof,
would beneficially
own (as determined
in accordance
with Section 13(d)
of the Exchange
Act and the rules
promulgated
thereunder)
in excess of 4.99%
of the number of shares
of Common
Stock outstanding immediately
after giving
effect to such conversion
or receipt of shares
as payment of interest.
Since the Holder
will not
be obligated
to report
to the Company
the number
of shares
of Common
Stock it may
hold at the time of a conversion
hereunder,
unless the
conversion
at issue
would result
in the issuance
of shares of Common
Stock in excess of
4.99% of the then outstanding
shares of Common
Stock without regard
to any other shares which
may be beneficially
owned by the Holder
or an affiliate
thereof,
the Holder
shall have the authority
and obligation
to determine
whether
the restriction
contained
in this Section
will limit
any particular
conversion
hereunder
and to the extent
that the Holder
determines
that the limitation
contained
in this
Section
applies,
the determination
of which portion
of the
principal amount
of this Note
is convertible
shall be the responsibility
and obligation
of the Holder.
If the Holder
has delivered
a Conversion
Notice for
a principal
amount of this Note
that, without
regard to any
other shares that
the Holder or its
affiliates
may beneficially
own, would result
in the issuance in excess
of the permitted
amount hereunder,
the Company shall notify
the Holder
of this fact
and shall honor the
conversion
for the maximum
principal
amount permitted
to be converted on such Conversion
Date in accordance
with Section
3(a) and, any principal
amount tendered for
conversion
in excess of the
permitted
amount hereunder
shall remain
outstanding under this
Note. In
the event that the
Market Capitalization
of the Company
falls below $2,500,000,
the term “4.99%” above
shall be
permanently
replaced with
“9.99%”. “Market
Capitalization”
shall be defined
as the product
of (a) the closing
price of
the Common
Stock of the Common
stock multiplied
by (b) the number of shares
of Common Stock outstanding
as reported
on the Company’s
most recently
filed Form 10-K or Form 10-Q.
The provisions
of this Section
may be waived
at any time by Holder
upon written
notification
to the Company.

 

    	5

    	 

    

 

(ii)              
Capitalization.
So long
as this
as this
Note is
outstanding,
upon written
request
of the
Holder,
the Company
shall furnish
to the Holder
the then-current
number of
common shares
issued and
outstanding,
the then-current
number of
common
shares authorized,
and the then-current
number of shares
reserved
for third
parties.

 

		(d)	Other
                                         Provisions.

 

(i)                
Share Reservation.The
Company
shall at
all times
reserve and
keep available
out of
its authorized
Common
Stock a
number of
shares equal
to at
least 5
(five) times
the full
number of
shares of Common
Stock
issuable upon
conversion
of all
outstanding
amounts
under this
Note;
and within
3 (three)
Business
Days following
the receipt
by the Company
of a Holder's
notice
that such
minimum
number of
shares of
Common Stock
is not so
reserved,
the Company shall
promptly reserve
a sufficient
number of
shares of Common
Stock to comply with
such requirement.
The Company
will
at all
times reserve
at least
7,500,000 shares
of Common
Stock for conversion.

 

(ii)              
Prepayment.During
the first
120 days
this Note
is in effect,
upon 10 business
days’
notice to Holder
(“Notice Period”),
the Company may
redeem this Note by
paying to the
Holder
an amount
as follows
(“Redemption
Amount”):
(i) if
the redemption
is within
the first
90 days
this Note
is in effect,
then for an
amount equal
to 120% of the
Outstanding
Balance
of this Note
along with
any interest that
has accrued
during that period,
(ii) if the
redemption
is after
the 90th day this Note is
in effect, but before
the 120th day this Note
is in effect,
then for an amount equal to 140% of
the Outstanding
Balance of
this Note
along with
any accrued interest.
This
Note may not
be redeemed after
120 days
without written
consent of
the Holder.
The redemption
must be closed
and paid
for within
3 business days
following
the Notice Period
or the redemption
will be invalid
and the
Company may
not redeem this
Note. The Holder
may convert
this Note
pursuant to the
terms
hereof
at all
times, including
during the
Notice Period,
until
the Redemption
Amount has
been received
in full.

 

(iii)             Terms
of Future Financings. So long as this Note is outstanding,
upon any issuance
by the Company
or any of its subsidiaries
of any security with any term more favorable
to the holder of such security or with a term
in favor of the holder of such security
that was not similarly
provided to
the Holder
in this Note, then the Company shall notify
the Holder of such additional
or more favorable
term and such term,
at Holder’s
option, shall become
a part of the Note.
The types of terms
contained
in another
security
that may
be more favorable
to the holder
of such security include, but are not
limited to, terms
addressing
conversion discounts,
conversion
lookback periods,
interest
rates, original
issue discounts, stock sale price, private
placement price
per share, and warrant
coverage.

 

    	6

    	 

    

 

(iv)            
All calculations
under this
Section 3
shall
be rounded
up to the nearest
$0.00001 or whole
share.

 

(v)              
Nothing
herein
shall limit
a Holder's
right to
pursue
actual damages
or declare
an Event
of Default
pursuant
to Section
2 herein
for the
Company's
failure
to deliver
certificates
representing
shares
of Common
Stock upon
conversion
within
the period
specified
herein
and such Holder
shall
have the
right to pursue
all remedies
available
to it
at law or
in equity
including,
without limitation,
a decree
of specific
performance and/or
injunctive
relief,
in each
case without
the need to
post a bond
or provide
other
security.
The
exercise
of any
such rights
shall not
prohibit
the Holder
from seeking
to enforce damages
pursuant to
any other Section
hereof
or under
applicable
law.

 

(4)              
SECTION
3(A)(9) OR
3(A)(10)
TRANSACTION.So
long as
this Note
is outstanding,
the Company
shall not
enter into
any transaction
or arrangement
structured
in accordance
with, based
upon, or related
or pursuant
to, in
whole or
in part,
either
Section
3(a)(9) of
the Securities
Act (a
“3(a)(9)
Transaction”)
or Section 3(a)(10)
of the Securities
Act (a “3(a)(10)
Transaction”).
In the event that the
Company does enter
into,
or makes any issuance
of Common
Stock related
to a 3(a)(9)
Transaction
or a 3(a)(10)
Transaction
while
this note
is outstanding,
a liquidated
damages
charge of
25% of the outstanding
principal
balance of
this Note,
but not less
than $25,000, will
be assessed
and will become
immediately
due and payable to the Holder
at its
election in the form
of cash payment
or addition to the balance
of this Note.

 

(5)              
PIGGYBACK
REGISTRATION
RIGHTS.
The Company
shall include
on the next
registration
statement
the Company
files with
SEC (or
on the subsequent
registration
statement
if such registration
statement
is withdrawn)
all shares
issuable
upon conversion
of this Note.
Failure
to do so will
result in liquidated
damages
of 25% of the outstanding
principal balance
of this Note, but not
less than

$25,000,
being immediately
due and
payable
to the
Holder
at its
election
in the
form of
cash payment
or addition
to the balance
of this Note.

 

		(6)	REISSUANCE
                                         OF THIS
                                         NOTE.

 

(a)               
Assignability.
The Company
may not assign
this Note.
This
Note will
be binding
upon the Company and its
successors
and will inure
to the
benefit
of the Holder
and its successors
and assigns
and may
be assigned by the Holder
to anyone of
its choosing
without
Company’s
approval.

 

(b)              
Lost, Stolen
or Mutilated
Note. Upon
receipt
by the Company
of evidence reasonably
satisfactory
to the Company
of the loss,
theft, destruction
or mutilation
of this
Note, and,
in the case
of loss,
theft or
destruction,
of any indemnification
undertaking
by the Holder
to the
Company
in customary
form and, in the case
of mutilation,
upon surrender
and cancellation
of this Note,
the Company
shall execute
and deliver
to the Holder
a new Note
representing
the outstanding
Principal.

 

(7)               NOTICES.Any
notices, consents,
waivers
or other
communications required
or permitted to be given under the terms
hereof must be in writing
and will be deemed
to have been
delivered:
(i) upon receipt, when
delivered personally;
(ii) upon receipt, when sent
by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file
by the sending
party) (iii) upon receipt, when sent
by email; or (iv)
one (1) Trading Day
after deposit with a nationally
recognized overnight
delivery
service, in each case properly
addressed to the party
to receive
the same. The
addresses
and facsimile
numbers
for such communications
shall be those
set forth in the communications
and documents
that each party has
provided the other
immediately
preceding the issuance of
this Note or
at such other
address and/or facsimile
number and/or to the attention
of such other
person as the recipient
party has specified
by written notice given
to each other party
three (3) Business Days
prior to the effectiveness
of such change. Written
confirmation
of receipt (i) given
by the recipient of such notice,
consent, waiver
or other communication, (ii) mechanically or electronically generated
by the sender's
facsimile machine
containing
the time, date, recipient
facsimile number
and an image
of the first
page of such transmission or (iii) provided
by a nationally
recognized overnight
delivery
service, shall
be rebuttable
evidence of personal service,
receipt by facsimile or
receipt from
a nationally recognized
overnight
delivery
service in accordance with
clause (i), (ii)
or (iii) above, respectively.

 

    	7

    	 

    

 

The
addresses
for such communications
shall
be:

 

	If to the Company, to:	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	Attn:	 
	 	Email:	 
	 	 	 
	 	 	 
	 	 	 
	If to the Holder:	 
	 		 
	 	VISTA
    CAPITAL
    INVESTMENTS,
    LLC	 
	 	406 9th
    Avenue, Suite
    201	 
	 	San Diego,
    CA 92101	 
		Attn:David
    Clark,
    Principal	 
	 	Email:
         dclark@vci.us.com 

	 

 

 

(8)              
APPLICABLE
LAW AND
VENUE.
This
Note
shall
be governed
by and construed
in accordance
with the
laws of
the State
of Nevada,
without
giving
effect
to conflicts
of laws thereof.
Any action
brought
by either
party
against
the other concerning
the transactions
contemplated
by this Agreement
shall be
brought
only in the state
courts
of California
or in the federal
courts located
in the city
and county of San Diego,
in the State of California.
Both parties
and the individuals
signing this
Agreement
agree to submit
to the jurisdiction
of such courts.

 

(9)               WAIVER. Any waiver
by the Holder
of a breach of
any provision of this Note
shall not operate
as or be construed
to be a waiver
of any other breach
of such provision
or of any breach
of any other provision of
this Note. The failure of the
Holder to insist
upon strict
adherence to
any term of
this Note on
one or more occasions shall not be
considered
a waiver or
deprive that party
of the right
thereafter to
insist upon strict
adherence to that term or any other term of this Note. Any waiver must be
in writing.

 

(10)          
LIQUIDATED
DAMAGES.
Holder and Company
agree that
in the event
Company
fails to comply
with any
of the terms
or provisions
of this Note,
Holder's
damages would
be uncertain and
difficult
(if not
impossible)
to accurately
estimate
because of
the parties'
inability
to predict future
interest
rates, future
share prices,
future
trading volumes
and other relevant
factors. Accordingly,
Holder and Company
agree that
any fees, balance
adjustments,
default
interest
or other charges
assessed under
this Note are
not penalties
but instead
are intended
by the parties
to be, and
shall be
deemed, liquidated
damages (under
Holder's
and Company's
expectations
that any
such liquidated
damages
will tack back
to the Closing
Date for
purposes
of determining
the holding period
under
Rule 144).

 

[Signature
Page Follows]

    	8

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date
set forth above.

 

 

 

 

[Signature
Page to Convertible
Note No. WKHS-1]

    	9

    	 

    

 

 EXHIBIT
A CONVERSION
NOTICE

 

[Company
Contact, Position]
Workhorse
Group, Inc. [Company
Address] [Contact
Email
Address}

 

 

The
undersigned
hereby elects
to convert
a portion of
the $Convertible
Note   issued to
Vista Capital
Investments,
LLC oninto Shares
of Common
Stock of according
to the conditions
set forth
in such Note
as of
the date written
below.

 

By
accepting this
notice of
conversion,
you are acknowledging
that the number
of shares
to be delivered
represents
less than
10% (ten percent)
of the
common stock
outstanding.
If the number
of shares to be delivered
represents
more than
9.99% of the
common stock
outstanding,
this conversion
notice shall
immediately
automatically
extinguish
and debenture
Holder must
be immediately
notified.

 

	Date of Conversion: 	 	 
	 	 	 
	Conversion Amount:	 	 
	 	 	 
	Conversion
        Price: 

	 	 
	 	 	 
	Shares to be Delivered:	 	 
	 	 	 
	 	 	 
	 	 	 
	Shares
                    delivered in name of: 

	 
	 	 
	VISTA CAPITAL INVESTMENTS, LLC 	 
	 	 
	 	 
	 	 	 	 	 
	Signature:	 	By:	 
	 	 	Title:	 
	 	 	Vista
    Capital
    Investments,
    LLC
	 	 

 

    	 

    	 

    

 

EXHIBIT
B TRUE-UP
NOTICE

 

[Company
Contact, Position]
Workhorse
Group, Inc. [Company
Address] [Contact
Email
Address}

 

 

The
undersigned
hereby
gives
notice to
Workhorse Group, Inc.,
acorporation
(the “Company”),

pursuant
to that
certain
Note
dated   “Note”),
that the
Holder elects
to:

,
20__ by
and between
the Company
and the
Holder
(the

 

 __Receive
fully
paid and
non-assessable
True-Up
Shares pursuant
to Section
3(b)(v)
of the
Note
(such Additional
Origination
Shares
shall be
calculated
as set forth
below), or

 

   __Add
to the Outstanding Balance
a dollar
amount equal
to the True-Up Amount (such True-Up Amount shall be calculated
as set forth
below).

 

 

 

The
number of
True-Up
Shares Holder
is entitled
to receive is
calculated
as follows:

 

Conversion
Amount
($) /%
of the
lowest
trade occurring
during
the( )
consecutive
Trading
Days
immediately
preceding
the
applicable
Conversion
Date ($_. 
) - Conversion
Amount
($) divided
by the
Par Value
($_.  )
=

 

True-Up
Shares

 

The
amount of
True-Up
Balance
to be added
to the Outstanding
Balance
is calculated
as follows:

 

Number
of True-Up
Shares
() *
high trade
price on
the Conversion
Date ($_. 
)=

 

True-Up
Balance

 

 

Shares
delivered in
name
of:

 

 

VISTA
CAPITAL INVESTMENTS,
LLC

 

		 
	 	 	 	 	 
	Signature:	 	By:	 
	 	 	Title:	 
	 	 	Vista
    Capital
    Investments,
    LLC

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00247-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00247-of-00352.parquet"}]]