Document:

Exhibit 4.2

 

WORKHORSE
GROUP INC.

DIRECTOR
NONSTATUTORY STOCK OPTION AGREEMENT

 

 

 

 

This
DIRECTOR Nonstatutory Stock Option Agreement ("Agreement")
is made and entered into as of the date set forth below, by and between WORKHORSE GROUP INC., a Nevada corporation (the "Company"),
and the following Director of the Company (herein, the "Optionee"):

 

In
consideration of the covenants herein set forth, the parties hereto agree as follows:

 

1.
Option Information.

 

	 	(a)	Date of Option:	December 17, 2015
	 	(b)	Optionee:	Benjamin Samuels
	 	(c)	Number of Shares:	50,000
	 	(d)	Exercise Price:	$7.01

  

2.
Acknowledgements.

 

(a)
Optionee is a Director of the Company, not an employee; and

 

(b)
The Board of Directors (the "Board") has authorized the granting to Optionee of a nonstatutory stock option ("Option")
to purchase shares of common stock of the Company ("Stock") upon the terms and conditions hereinafter stated
and pursuant to an exemption from registration under the Securities Act of 1933, as amended (the "Securities Act").

 

3. Shares; Price. The Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions
herein stated, the number of shares of Stock set forth in Section 1(c) above (the "Shares") for cash at the price
per Share set forth in Section 1(d) above (the "Exercise Price").

 

4.
Term of Option. This Option shall expire, and all rights hereunder to purchase the Shares, shall terminate five (5) years
from the date hereof. Nothing contained herein shall be construed to interfere in any way with the right of the Company to terminate
Optionee as a Director to the Company, or to increase or decrease the compensation paid to Optionee from the rate in effect as
of the date hereof.

 

5.
Vesting of Option. Subject to the provisions of Sections 7 and 8 hereof, this Option shall become exercisable during the
period that Optionee serves as a Director of the Company with respect to 10,000 shares on the date hereof and then in ten equal
installments of 4,000 shares every six months on June 30 and December 31. The installments shall be cumulative (i.e., this option
may be exercised, as to any or all shares covered by an installment, at any time or times after an installment becomes exercisable
and until expiration or termination of this option).

 

     

     

    

 

6.
Exercise. This Option shall be exercised by delivery to the Company of (a) written notice of exercise stating the number
of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached
hereto as Appendix A, (b) a check or cash in the amount of the Exercise Price of the Shares covered by the notice (or such
other consideration as has been approved by the Board of Directors and (c) a written investment representation as provided for
in Section 13 hereof. 

 

7.
Termination of Service. If Optionee's service as a Director to the Company terminates for any reason, no further installments
shall vest pursuant to Section 5.

 

8.
Death of Optionee. If the Optionee shall die while serving as a Director to the Company, Optionee's personal representative
or the person entitled to Optionee's rights hereunder may at any time within ninety (90) days after the date of Optionee's death,
or during the remaining term of this Option, whichever is the lesser, exercise this Option and purchase Shares to the extent,
but only to the extent, that Optionee could have exercised this Option as of the date of Optionee's death; provided, in any case,
that this Option may be so exercised only to the extent that this Option has not previously been exercised by Optionee.

 

9.
No Rights as Shareholder. Optionee shall have no rights as a shareholder with respect to the Shares covered by any installment
of this Option until the effective date of the issuance of shares following exercise of this to Option, and no adjustment will
be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are
issued except as provided in Section 10 hereof.

 

10.
Recapitalization. Subject to any required action by the shareholders of the Company, the number of Shares covered by this
Option, and the Exercise Price thereof, shall be proportionately adjusted for any increase or decrease in the number of issued
shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend.

 

11.
Taxation upon Exercise of Option. Optionee understands that, upon exercise of this Option, Optionee will recognize income,
for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, determined
as of the date of exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee shall constitute an agreement
by Optionee to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount
of such income and corresponding deduction to the Company for its income tax purposes. Withholding for federal or state income
and employment tax purposes will be made, if and as required by law, from Optionee's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company may require Optionee to make a cash payment to
cover such liability as a condition of the exercise of this Option.

 

12.
Modification, Extension and Renewal of Options. The Board or Compensation Committee may modify, extend or renew this Option
or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution
therefore (to the extent not theretofore exercised), subject at all times to the the Code. Notwithstanding the foregoing provisions
of this Section 12, no modification shall, without the consent of the Optionee, alter to the Optionee's detriment or impair any
rights of Optionee hereunder.

 

    	 	2	 

     

    

 

13.
Investment Intent; Restrictions on Transfer.

 

(a)
Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire
the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution
thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise
this Option under the provisions of Sections 7 and 8 hereof) shall furnish to the Company a written statement to such effect,
satisfactory to the Company in form and substance. If the Shares represented by this Option are registered under the Securities
Act, either before or after the exercise of this Option in whole or in part, the Optionee shall be relieved of the foregoing investment
representation and agreement and shall not be required to furnish the Company with the foregoing written statement.

 

(b)
Optionee further represents that Optionee has had access to the financial statements or books and records of the Company, has
had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain
additional information reasonably necessary to verify the accuracy of such information.

 

(c)
Unless and until the Shares represented by this Option are registered under the Securities Act, all certificates representing
the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant
to any stock split, share reclassification, stock dividend or other similar capital event shall bear legends in substantially
the following form:

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE
APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE,
UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

 

THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT BETWEEN THE
COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
CONDITIONS.

 

    	 	3	 

     

    

 

and/or
such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions
with respect to the Shares have been placed with the Company's transfer agent.

 

14.
Stand-off Agreement. Optionee agrees that, in connection with any registration of the Company's securities under the Securities
Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Optionee
shall not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included
in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of
up to one year following the effective date of registration of such offering.

 

15.
Notices. Any notice required to be given pursuant to this Option shall be in writing and shall be deemed to be delivered
upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed
to Optionee at the address last provided by Optionee for use in Company records related to Optionee.

 

16.
Applicable Law. This Option has been granted, executed and delivered in the State of Ohio, and the interpretation and enforcement
shall be governed by the laws thereof and subject to the exclusive jurisdiction of the courts therein.

 

[SIGNATURE
PAGE FOLLOWS]

 

    	 	4	 

     

    

 

In
Witness Whereof, the parties hereto have
executed this Option as of the date first above written.

 

	 	COMPANY:
	WORKHORSE GROUP INC.,
	 	 	a Nevada corporation
	 	 	 
	 	 	By: 	/s/ Stephen S. Burns
	 	 	Name:	Stephen S. Burns
	 	 	Title:	Chief Executive Officer
	 	 	 	 
	 	OPTIONEE:	 	 
	 	 	 	 
	 	 	By:	/s/ Benjamin Samuels
	 	 	 	(signature)
	 	 	Name:	Benjamin Samuels

 

    	 	5	 

     

    

 

Appendix
A

 

NOTICE
OF EXERCISE

 

WORKHORSE
GROUP INC.

_________________

_________________

_________________

 

Re:
Nonstatutory Stock Option

 

Notice
is hereby given pursuant to Section 6 of my Nonstatutory Stock Option Agreement that I elect to purchase the number of shares
set forth below at the exercise price set forth in my option agreement:

 

Nonstatutory
Stock Option Agreement dated: ____________

 

Number
of shares being purchased: ____________

 

Exercise
Price: $____________

 

A
check in the amount of the aggregate price of the shares being purchased is attached.

 

I
hereby confirm that such shares are being acquired by me for my own account for investment purposes, and not with a view to, or
for resale in connection with, any distribution thereof. I will not sell or dispose of my Shares in violation of the Securities
Act of 1933, as amended, or any applicable federal or state securities laws. Further, I understand that the exemption from taxable
income at the time of exercise is dependent upon my holding such stock for a period of at least one year from the date of exercise
and two years from the date of grant of the Option.

 

I
understand that the certificate representing the Option Shares will bear a restrictive legend within the contemplation of the
Securities Act and as required by such other state or federal law or regulation applicable to the issuance or delivery of the
Option Shares.

 

I
agree to provide to the Company such additional documents or information as may be required as deemed necessary.

 

	 	 	By:	 
	 	 	 	(signature)
	 	 	Name:Exhibit 10.1

 

Workhorse Group Inc.

 

100 Commerce Drive

 

Loveland, Ohio 45140

 

December 17, 2015

 

Gerald Budde

 

Letter of Appointment – Board of Directors

 

Dear Mr. Budde:

 

We are pleased to offer you the role
as a director of the Board of Directors (the “Board”) of Workhorse Group Inc. (the “Company”). This letter
contains the terms of your appointment as a director of the Board of Directors of the Company and will be effective from the date
of the signing of this letter.

 

	1.	Your Duties:

 

		a)	You will be expected to attend all meetings (either in
person or by teleconference) of the Board of the Company, of which we expect to hold approximately four per annum as well as sign
all written consents if you deem appropriate. In addition, you will be expected to perform such other duties as are reasonably
contemplated by your holding office as a director of the Company or which may reasonably be assigned to you by the Board from
time to time.

 

		b)	As a director you will:

 

		i)	Perform to the best of your abilities and knowledge the
duties reasonably assigned to you by the Board from time to time, whether during or outside business hours and at such places
as the Board reasonably requires;

 

	 	ii)	Use all reasonable efforts to promote the interests of the Company;

 

	 	iii)	Attend directors’ meetings;

 

		iv)	Act in the best interests of the Company; and

 

		v)	Work closely with the Board of Directors and the Chief
Executive Officer.

 

		c)	As you will appreciate, however, your time commitment
will ultimately be a product of the matters confronting the Company from time to time and matters properly requiring your attention
as a director of the Company.

 

    1

    

    

 

	2.	Remuneration:

 

	 	a)	Fees 

 

		i)	The Company will pay you an annual fee of US$40,000.

 

		ii)	The Company shall pay the annual fee in equal monthly installments
in arrears on the last day of each month. Your first and last installments of the annual fee will be apportioned if necessary.
The fee will be paid by wire to your nominated bank account.

 

	 	iii)	Your fees shall be subject to adjustment periodically as determined by the Board. 

 

	 	b)	Options: The Company shall grant you options to purchase 50,000 shares of the Company’s common stock at US$7.01 (price to be equal to the ten day closing average prior to appointment) per share. The options will expire five years from the vesting period. Options will vest as follows: 10,000 shall vest on the effective date of this agreement and 4,000 on June 30 and December 31 of every year thereafter.

 

	3.	Expenses: Subject to you providing the Company with receipts or other evidence of payment, the Company will pay for or reimburse
you for all travelling, hotel and other expenses reasonably incurred by you in connection with attending and returning from Board,
Committee, Company, meetings or otherwise in connection with the Company's business. Reasonable travel and out of pocket expenses
used in connection with the business of the Group shall include:

 

		a)	Cell phone bills;

 

		b)	Domestic and international travel (economy class under
4 hours and business class over 4 hours); and

 

		c)	Hotel accommodation.

 

	4.	Termination of Appointment:

 

		a)	Your appointment as the Director may be terminated at any
time by the vote of the stockholders of the Company in accordance with the certificate of incorporation and bylaws of the Company.

 

		b)	You acknowledge and agree that if the shareholders of the
Company terminate your appointment, you will have no claim of any kind against the Company by reason of the termination.

 

	 	c)	You are at liberty to terminate the appointment at any time by notice in writing to the Company. 

 

	5.	What happens after termination of appointment? If your appointment is terminated for any reason or you resign for any reason:

 

		a)	The Company may set off any amounts you owe the Company
against any amounts the Company owes to you as a Director at the date of termination except for amounts the Company is not entitled
by law to set off;

 

		b)	You must return all the Company's property (including property
leased by the Company) to the Company on termination including all written or machine readable material, software, computers,
credit cards, keys and vehicles; and

 

	 	c)	You must not record any confidential information in any form after termination. 

 

    2

    

    

 

	6.	Prohibited Activities:

 

		a)	You undertake to the Company that you will not during the
term of your appointment engage in a business or an activity that would place you in a position of conflict in respect of the
performance of your duties.

 

		b)	The terms of your appointment do not restrict you
from accepting appointment as a director of any other company outside of the Company’s industry, providing consulting services
or any other business or other activity whatsoever. The Company acknowledges and accepts your current roles as a director.
You recognize that the services to be performed by you under the Agreement are special, unique and extraordinary. The parties
confirm that it is reasonably necessary for the protection of the Company's goodwill that you agree, and accordingly, you do hereby
agree and covenant, that during your term as director, you will not, directly or indirectly, except for the benefit of the Company:

 

	 	i.	become an officer, director, more than 2% stockholder, partner, associate, employee, owner, proprietor, agent, creditor, independent contractor, co-venturer or otherwise, or be interested in or associated with any other corporation, firm or business engaged in the same or any similar business competitive with that of the Company (including the Company's present and future subsidiaries and affiliates) (the "Business"); or

 

	 	ii.	solicit, cause or authorize, directly or indirectly, to be solicited for or on behalf of himself or third parties from parties who were customers of the Company (including its present and future subsidiaries and affiliates) at any time during your term, any business similar to the business transacted by the Company with such customer; or

 

	 	iii.	accept or cause or authorize, directly or indirectly, to be accepted for or on behalf of your or third parties, business from any such customers of the Company (including its present and future subsidiaries and affiliates); or

 

	 	iv.	solicit, or cause or authorize, directly or indirectly, to be solicited for employment for or on behalf of you or third parties, any persons who were at any time during your term hereunder, employees of the Company (including its present and future subsidiaries and affiliates); or

 

	 	v.	employ or cause or authorize, directly or indirectly, to be employed for or on behalf of yourself or third parties, any such employees of the Company (including its present and future subsidiaries and affiliates); or

 

	 	vi.	use the tradenames, trademarks, or trade dress of any of the products of the Company (including its present and future subsidiaries and affiliates); or any substantially similar tradename, trademark or trade dress likely to cause, or having the effect of causing, confusion in the minds of manufacturers, customers, suppliers and retail outlets and the public generally.

 

You acknowledge the intention that the
Company shall have the broadest possible protection of the value of its business consistent with public policy, and it will not
violate the intent of the parties if any court should determine that, consistent with established precedent of the forum state,
the public policy of such state requires a more limited restriction in geographical area or duration of the aforesaid covenant
not to compete, contained in an appropriate decree.

 

    3

    

    

 

	 	c)	Except as permitted in this Agreement or as approved by the Company, you will not (i) use any Confidential Information (as defined below) or (ii) disseminate or in any way disclose the Confidential Information to any person, firm, business or governmental agency or department. You may use the Confidential Information to perform your Duties for the benefit of Company. You shall treat all Confidential Information with the same degree of care as you accord to your own confidential information, but in no case shall you use less than reasonable care. You shall immediately give notice to Company of any unauthorized use or disclosure of the Confidential Information. You shall assist Company in remedying any the unauthorized use or disclosure of the Confidential Information. You agree not to communicate any information to Company in violation of the proprietary rights of any third party.

 

“Confidential Information”
means (a) any technical and non-technical information related to the Company’s business and current, future and proposed
products and services of Company, including for example and without limitation, Company innovations, intellectual property, and
information concerning research, development, design details and specifications, financial information, procurement requirements,
engineering and manufacturing information, customer lists, business forecasts, sales information, marketing plans and business
plans, and provided, in each case, that each is marked as “confidential” or “proprietary” and (b) any information
that Company has received from others that may be made known to you and that Company is obligated to treat as confidential or proprietary,
and provided, in each case, that each is marked as “confidential” or “proprietary”.

 

	7.	Notices and Other Communications:

 

		a)	Service of Notices: A notice, demand, consent, approval
or communication under this letter (collectively a “Notice”) must be:

 

		i)	In writing and in English directed to the address advised
by the recipient for notices, as varied by any notice; and

 

		ii)	Hand delivered or sent by prepaid post or facsimile to
that address.

 

		b)	Effective on Receipt: A Notice given in accordance with
section 7a takes effect when received (or at a later time specified in the Notice), and is taken to be received:

 

		i)	If hand delivered, on delivery;

 

		ii)	If sent by prepaid post, two Business Days after the date
of posting (or seven Business Days after the date of posting if posted to or from outside The United States of America);

 

	 	iii)	If sent by facsimile, when the sender's facsimile system generates a message confirming successful transmission of the entire Notice unless, within eight Business Hours after the transmission, the recipient informs the sender that it has not received the entire Notice;

 

but if the delivery, receipt or transmission
is not on a Business Day or is after 5.00pm on a Business Day, the Notice is taken to be received at 9.00am on the Business Day
after that delivery, receipt or transmission.

 

	8.	Miscellaneous

 

		a)	Alterations: This letter may be altered only in writing
signed by each party.

 

		b)	Approvals and consents: Except where this letter expressly
states otherwise, a party may, in its discretion, give conditionally or unconditionally or withhold any approval or consent under
this letter.

 

		c)	Assignment: This letter may NOT be assigned by either
party.

 

    4

    

    

 

	 	d)	Costs: Each party must pay its own costs of negotiating, preparing and executing this letter. 

 

		e)	Survival: Any indemnity in this letter is independent
and survives termination of this letter. Any other provision by its nature intended to survive termination of this letter survives
termination of this letter.

 

		f)	Counterparts: This letter may be executed in counterparts.
All executed counterparts constitute one document.

 

		g)	No Merger: The rights and obligations of the parties under
this letter do not merge on completion of any transaction contemplated by this letter.

 

		h)	Entire Agreement: This letter constitutes the entire agreement
between the parties in connection with its subject matter and supersedes all previous agreements or understandings between the
parties in connection with its subject matter.

 

		i)	Further Action: Each party must do, at its own expense,
everything reasonably necessary (including executing documents) to give full effect to this letter and the transactions contemplated
by it.

 

		j)	Waiver: A party does not waive a right, power or remedy
if it fails to exercise or delays in exercising the right, power or remedy. A single or partial exercise of a right, power or
remedy does not prevent another or further exercise of that or another right, power or remedy. A waiver of a right, power or remedy
must be in writing and signed by the party giving the waiver.

 

		k)	Relationship: Except where this letter expressly states
otherwise, it does not create a relationship of employment, agency or partnership between the parties.

 

		l)	Confidentiality: A party may only use the confidential
information of another party for the purposes of this letter, and must keep the existence of this letter and the terms of it and
the confidential information of another party confidential information except where:

 

		i)	The information is public knowledge (but not because of
a breach of this letter) or the party has independently created the information;or

 

	 	ii)	Disclosure is required by law or a regulatory body (including a relevant stock exchange). 

 

		m)	Announcements: A public announcement in connection with
this letter or a transaction contemplated by it must be agreed by the parties before it is made, except if required by law or
a regulatory body (including a relevant stock exchange).

 

	9.	Insurance: The Company has directors' and officers' liability insurance under which you are covered in the US and elsewhere for
all usual risks during the term of your appointment as the Director. The Company will maintain that cover for the full term of
your appointment.

 

	10.	Contract for Services: This is a contract for services and is not a contract of employment.

 

    5

    

    

 

	11.	Governing Law: This Agreement shall be governed by the laws of the State of Ohio (without giving effect to choice of law principles
or rules thereof that would cause the application of the laws of any jurisdiction other than the State of Ohio) and the invalidity
or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. Any
provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

 

Please sign the attached copy of this
letter to indicate that you have read, understood and accept the terms of your appointment.

 

Yours Sincerely,

 

Workhorse Group Inc.

  

By: /s/ Stephen S. Burns

Name: Stephen S. Burns

Title: CEO and Director

  

Agreed to and accepted by: 

 

/s/ Gerald Budde

Gerald Budde

 

 

6

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