Document:

Exhibit 10.2

 

AMENDED AND RESTATED EXECUTIVE RETENTION
AGREEMENT

 

This Amended and Restated
Executive Retention Agreement (the “Agreement”) is made and entered into as of February 4, 2019 (the
“Effective Date”) by and between WORKHORSE GROUP INC., a Nevada corporation (the “Company”),
and Duane Hughes (the “Executive”).

 

Recitals:

 

WHEREAS, the Executive
is a key employee of the Company who possesses valuable proprietary knowledge of the Company, its business and operations and the
markets in which the Company competes; and

 

WHEREAS, the Company
and the Executive desire to enter into this Agreement to encourage the Executive to continue to devote the Executive’s full
attention and dedication to the success of the Company, and to provide specified compensation and benefits to the Executive in
the event of a Termination Upon Change of Control or certain other terminations pursuant to the terms of this Agreement.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE
AS FOLLOWS:

  

1.
PURPOSE AND TERM; DUTIES

 

1.1 The purpose of
this Agreement is to provide specified compensation and benefits to the Executive in the event of (i) a Termination Upon Change
of Control or (ii) an Involuntary Termination. Subject to the terms of any applicable written employment agreement between Company
and the Executive (as to which Executive acknowledges no other such agreement exists as of the date hereof), either the Executive
or Company may terminate the Executive’s employment at any time for any reason, with or without notice. The term of this
Agreement shall be the period from the date set forth above until Executive’s employment is terminated for any reason or
this Agreement is terminated by mutual agreement of the parties.

 

1.2 The Executive’s
job responsibilities will comprise of serving as the Chief Executive Officer of the Company managing and overseeing all
operations and matters of the Company in order to establish a successful business and manage growth. In addition, Executive will
undertake such functions as are customarily applicable to Executive’s position, as well as those that are reasonably assigned
to you by the Board.

 

1.3 As
part of Executive’s duties Executive will be required to work at the Company’s executive offices. The Executive
is entitled to four (4) weeks of vacation which will accrue on a pro-rata basis during the year, in addition to all public holidays
when the office is closed.   Executive will be eligible to participate in all employee benefit plans established by the Company
for its employees from time to time. In accordance with Company policies from time to time, the Company will reimburse you for
all reasonable and proper travel and business expenses incurred by you in the performance of your duties.

 

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2.
COMPENSATION AND TERMINATION GENERALLY

 

2.1 Compensation.

 

2.1.1 Annual Salary.
The Executive’s current base salary of $350,000 per annum, subject to periodic review and modification which may not be adjusted
downward by the Company’s Board of Directors (the “Board”) as may be delegated to the Compensation
Committee of the Board (references herein to the Compensation Committee shall include reference to the Board if no such Committee
exists at any time) at such time or times as it shall determine. The Company’s Compensation Committee shall also from time
to time, in its discretion, determine the type and amount of other forms of compensation for Executive’s service with the
Company (including, without limitation, stock options or other forms of equity awards).

 

2.1.2
Bonuses. Upon signing this Agreement, Executive shall receive a bonus of $25,000. In addition, Executive shall receive a
bonus of $25,000 upon the Company closing a financing in excess of $10,000,000. Executive Each calendar year during the
term of the Executive’s employment with the Company (including the calendar year ending December 31, 2019), Executive will
be eligible to receive a cash bonus (“Cash Bonus”) as determined by the Board based upon the achievement of performance
goals established by the Board and provided to Executive in writing within thirty (30) days after the beginning of the calendar
years subject to the Company establishing an approved budget (for calendar year 2019 the performance goals shall be established
by the Board and provided to Executive in writing within thirty (30) days after establishing an approved budget). The Executive's
target Cash Bonus will be 50% of the Base Salary with the potential to receive 100% of the Base Salary or up to 150% of the Base
Salary if the highest performance goals as established by the Board are achieved. With respect to each calendar year during the
term of the Executive’s employment with the Company, the Company will determine the amount of the Cash Bonus to be awarded
within sixty (60) days after the end of the calendar year to which the Cash Bonus relates and will pay the awarded Cash Bonus at
the next payroll to occur following such determination. To be eligible to
receive an Cash Bonus for a particular year, the Executive must be employed by the Company through the end of such calendar year.

 

2.1.3 Options.
The Executive will be provided with an initial grant of options to purchase 1,000,000 shares of common
stock, which shall vest over three (3) years in equal quarterly installments of 83,333 shares per quarter commencing March 31,
2019.  The exercise price of the options shall be $0.97 per share and the term shall be ten years. The Executive may be eligible
for additional equity incentive grants, subject to Executive’s continued employment and satisfactory job performance, which
may be made from time to time, by the Board, on the same terms as other executive employees of the Company. Terms and conditions
of all the equity incentive grants, will be in accordance with the terms of the Company’s Equity Incentive Plan in effect
at the time of each such grant.

 

2.2 Termination
of Employment Generally. In the event the Executive’s employment with the Company terminates, for any reason whatsoever
including death or disability the Executive shall be entitled to the benefits described in this Section 2.2.

 

2.2.1 Accrued Salary
and Vacation. All salary and accrued vacation earned through the Termination Date shall be paid to Executive on such date.

 

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2.2.2 Accrued Bonus
Payment. The Executive shall receive a lump sum payment of any actual bonus amount to the extent that all the conditions for
payment of such bonus have been satisfied and any such bonus was earned and is unpaid on the Termination Date.

 

2.2.3 Expense Reimbursement.
Within ten (10) days following submission to the Company of proper expense reports by the Executive, the Company shall reimburse
the Executive for all expenses incurred by the Executive, consistent with the Company’s expense reimbursement policy in effect
prior to the incurring of each such expense, in connection with the business of the Company prior to the Termination Date.

 

2.2.4 Equity Compensation.
The period during which the Executive may exercise any rights (“Exercise Period”) under any outstanding
stock options (or any other equity award, including, without limitation, stock appreciation rights and restricted stock units)
granted to the Executive under any equity incentive plan or agreement adopted by the Board of Directors (the “Company
Plans”) shall continue as set forth in such security; provide, however, such Exercise Period shall terminate immediately
in the event Executive is terminated for Cause. Further, in the event the Executive is terminated for Cause or leaves for any reason
except as set forth in Section 4, then the vesting of all outstanding stock options (or any other equity award, including, without
limitation, stock appreciation rights and restricted stock units) shall cease.

 

3.
TERMINATION UPON CHANGE OF CONTROL

 

3.1 Severance Payment.
In the event of the Executive’s Termination Upon Change of Control, the Executive shall be entitled to receive an amount
equal to twelve (12) months of Executive’s Base Salary which shall be paid according to the following schedule: (i) a lump
sum payment equal to one-half of such amount shall be payable within ten (10) days following the Termination Date, and (ii) one-third
of the balance of such amount shall be payable within ten (10) days of each of the three-month, six-month and nine-month anniversaries
of the Termination Date (and in each case no interest shall accrue on such amount); provided, however, that if Section 409A of
the Code would otherwise apply to such cash severance payment, it instead shall be paid at such time as permitted by Section 409A
of the Code. In addition to the foregoing severance payment, in the event of the Executive’s Termination Upon Change of Control,
the Executive shall be entitled to receive, within ten (10) days following the Termination Upon Change of Control, a lump sum payment
equal to one hundred percent (100%) of (a) any actual bonus amount earned with respect to a previous year to the extent that all
the conditions for payment of such bonus have been satisfied (excluding any requirement to be in employment with the Company as
of a given date which is after the Termination Date) and any such bonus was earned but is unpaid on the Termination Date; and (b)
the target bonus then in effect for the Executive for the year in which such termination occurs, such payment to be prorated to
reflect the full number of months the Executive remained in the employ of the Company; provided, however, that if Section 409A
of the Code would otherwise apply to such cash payment, it instead shall be paid at such time as permitted by Section 409A of the
Code. To illustrate, if the Executive’s target bonus at 100% equals $120,000 for the calendar year and the Executive is terminated
on October 15th, then the foregoing payment shall equal $100,000 (i.e., ten (10) months’ prorated bonus at one
hundred percent (100%) with October counting as a full month worked).

 

3.2 Equity Compensation
Acceleration. Upon the Executive’s Termination Upon Change of Control, the vesting and exercisability of all then outstanding
stock options (or any other equity award, including, without limitation, stock appreciation rights and restricted stock units)
granted to the Executive under any Company Plans shall be accelerated as to 100% of the shares subject to any such
equity awards granted to the Executive.

 

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3.3 COBRA. If
the Executive timely elects coverage under the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Company shall continue to provide to the Executive, at the Company’s expense, the Company’s health-related employee
insurance coverage for the employee only as in effect immediately prior to the Executive’s Termination Upon Change of Control
for a period of twelve (12) months following such Termination Upon Change of Control. The date of the “qualifying event”
for the Executive and any dependents shall be the Termination Date.

 

3.4 Indemnification.
In the event of the Executive’s Termination Upon Change of Control, (a) the Company shall continue to indemnify the Executive
against all claims related to actions arising prior to the termination of the Executive’s employment to the fullest extent
permitted by law, and (b) if the Executive was covered by the Company’s directors’ and officers’ insurance policy,
or an equivalent thereto, (the “D&O Insurance Policy”) immediately prior to the Change of Control,
the Company or its Successor shall continue to provide coverage under a D&O Insurance Policy for not less than twenty-four
(24) months following the Executive’s Termination Upon Change of Control on substantially the same terms of the D&O Insurance
Policy in effect immediately prior to the Change of Control.

 

4.
INVOLUNTARY TERMINATION

 

4.1 Severance Payment.
In the event of the Executive’s Involuntary Termination, the Executive shall be entitled to receive an amount equal to twelve
(12) months of the Executive’s Base Salary which shall be paid according to the following schedule: (i) a lump sum payment
equal to one-fourth of such amount shall be payable within ten (10) days following the Termination Date, and (ii) one-fourth of
such amount shall be payable within ten (10) days of each of the three-month, six-month and nine-month anniversaries of the Termination
Date (and in each case no interest shall accrue on such amount); provided, however, that if Section 409A of the Code would otherwise
apply to such cash severance payment, it instead shall be paid at such time as permitted by Section 409A of the Code. In addition
to the foregoing severance payment, in the event of the Executive’s Involuntary Termination, the Executive shall be entitled
to receive, within ten (10) days following the Executive’s Involuntary Termination, a lump sum payment equal to one hundred
percent (100%) of (a) any actual bonus amount earned with respect to a previous year to the extent that all the conditions for
payment of such bonus have been satisfied (excluding any requirement to be in employment with the Company as of a given date which
is after the Termination Date) and any such bonus was earned but is unpaid on the Termination Date; and (b) the target bonus then
in effect for the Executive for the year in which such termination occurs, such payment to be prorated to reflect the full number
of months the Executive remained in the employ of the Company; provided, however, that if Section 409A of the Code would otherwise
apply to such cash payment, it instead shall be paid at such time as permitted by Section 409A of the Code. To illustrate, if the
Executive’s target bonus at 100% equals $120,000 for the calendar year and the Executive is terminated on October 15th,
then the foregoing payment shall equal $100,000 (i.e., ten (10) months’ prorated bonus at one hundred percent (100%) with
October counting as a full month worked).

 

4.2 Equity Compensation
Acceleration. Upon the Executive’s Involuntary Termination, the vesting and exercisability of all then outstanding stock
options (or any other equity award, including, without limitation, stock appreciation rights and restricted stock units) granted
to the Executive under any Company Plans shall be accelerated as to 100% of the shares subject to any such equity awards granted
to the Executive.

 

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4.3 COBRA. In
the event of the Executive’s Involuntary Termination, at any time after the expiration of twelve months after the Effective
Date, if the Executive timely elects coverage under the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Company shall continue to provide to the Executive, at the Company’s expense, the Company’s health-related employee
insurance coverage for the employee only as in effect immediately prior to the Executive’s Involuntary Termination for a
period of twelve (12) months following such Involuntary Termination. The date of the “qualifying event” for the Executive
and any dependents shall be the Termination Date.

 

4.4 Indemnification.
In the event of the Executive’s Involuntary Termination, (a) the Company shall continue to indemnify the Executive against
all claims related to actions arising prior to the Termination Date to the fullest extent permitted by law, and (b) if the Executive
was covered by the D&O Insurance Policy immediately prior to the Termination Date, the Company shall continue to provide coverage
under a D&O Insurance Policy for not less than twenty-four (24) months following the Executive’s Involuntary Termination
on substantially the same terms of the D&O Insurance Policy in effect immediately prior to the Termination Date.

 

5.
FEDERAL EXCISE TAX UNDER SECTION 280G

 

5.1 Excise Tax.
If (a) any amounts payable to the Executive under this Agreement or otherwise are characterized as excess parachute payments pursuant
to Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), and (b) the Executive
thereby would be subject to any United States federal excise tax due to that characterization, then if Executive would thereby
be in a better after-tax position, the Company may elect, in the Company’s sole discretion, to reduce the amounts payable
under this Agreement or otherwise, or to have any portion of applicable options or restricted stock not vest or become exercisable,
in order to avoid any “excess parachute payment” under Section 280G(b)(1) of the Code.

 

5.2 Calculation
by Independent Public Accountants. Unless the Company and the Executive otherwise agree in writing, any calculation of the
amount of any excess parachute payments payable by the Executive shall be made in writing by the Company’s independent public
accountants (the “Accountants”) whose conclusion shall be final and binding on the parties. For purposes
of making such calculations, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make the required calculations. The Company shall bear all fees and expenses the
Accountants may charge in connection with these services, but the engagement of the Accountants for this purpose shall be pursuant
to an agreement between the Executive and the Accountants.

 

6.
DEFINITIONS

 

6.1 Capitalized
Terms Defined. Capitalized terms used in this Agreement shall have the meanings set forth in this Section 4, unless the context
clearly requires a different meaning.

 

6.2 “Base
Salary” means the greater of (a) if applicable, the monthly salary of the Executive in effect immediately prior to the
Change of Control, or (b) the monthly salary of the Executive in effect immediately prior to the Termination Date.

 

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6.3 “Cause”
means:

 

		(a)	the Executive willfully
failed to follow the lawful written directions of the Board of Directors of the Company or Executive’s immediate superior;
provided that no termination for such Cause shall occur unless the Executive: (i) has been provided with notice, specifying such
willful failure in reasonable detail, of the Company’s intention to terminate the Executive for Cause; and (ii) has failed
to cure or correct such willful failure within thirty (30) days of receiving such notice;

 

		(b)	the Executive engaged in
gross misconduct, or gross incompetence which is materially detrimental to the Company; provided that no termination for such
Cause shall occur unless the Executive: (i) has been provided with notice, specifying such gross misconduct or gross incompetence
in reasonable detail, of the Company’s intention to terminate the Executive for Cause; and (ii) has failed to cure or correct
such gross misconduct within thirty (30) days of receiving such notice;

 

		(c)	the Executive willfully failed
to comply in any material respect with the Employee Invention Assignment & Confidentiality Agreement, the Company’s
share dealing code, the Employee’s non-competition agreement or any other reasonable policies of the Company where non-compliance
would be materially detrimental to the Company; provided that no termination for such Cause shall occur unless the Executive:
(i) has been provided with notice of the Company’s intention to terminate the Executive for such Cause, and (ii) has failed
to cure or correct such willful failure within thirty (30) days of receiving such notice, provided that such notice and cure period
requirements shall not apply in the event that such non-compliance is of a nature that it is unable to be remedied; or

 

		(d)	is convicted of a felony
or crime involving moral turpitude (excluding drunk driving unless combined with other aggravating circumstances or offenses)
or commission of a fraud which the Company reasonably believes would reflect adversely on the Company.

 

6.4 “Change
of Control” means:

 

		(a)	any “person”
(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty (50%) percent or more of (i) the outstanding shares of
common stock of the Company, or (ii) the combined voting power of the Company’s outstanding securities;

 

		(b)	the Company is party
to a merger or consolidation, or series of related transactions, which results in the voting securities of the Company outstanding
immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity), directly or indirectly, at least fifty (50%) percent of the combined voting power of the
voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;

 

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		(c)	the sale or disposition
of all or substantially all of the Company’s assets, or consummation of any transaction, or series of related transactions,
having similar effect (other than to a subsidiary of the Company);

 

6.5 “Company”
shall mean Workhorse Group Inc. and, following a Change of Control, any Successor.

 

6.6 “Involuntary
Termination” means:

 

		(a)	any termination without
Cause of the employment of the Executive by the Company; or

 

		(b)	any resignation by Executive
for Good Reason where such resignation occurs within sixty (60) days following the occurrence of such Good Reason.

 

Notwithstanding the foregoing, the term
“Involuntary Termination” shall not include any termination of the employment of the Executive: (1) by the Company
for Cause; (2) by the Company as a result of the Permanent Disability of the Executive; (3) as a result of the death of the
Executive; (4) that occurs within the period of time to qualify as a “Termination Upon Change of Control”; or (5) as
a result of the voluntary termination of employment by the Executive for any reason other than Good Reason.

 

6.7 “Good
Reason” means the occurrence of any of the following conditions, without the Executive’s written consent:

 

		(a)	Any act, set of facts
or omissions with respect to the Executive that would, as a matter of applicable law, constitute a constructive termination of
the Executive.

 

		(b)	A reduction in the Executive’s
Base Salary or, if applicable, target bonus opportunity (subject to applicable performance requirements with respect to the actual
amount of bonus compensation earned similar to the applicable performance requirements currently in effect), and in the event
of a Change of Control, as compared to Executive’s Base Salary and target bonus opportunity in effect immediately prior
to the public announcement of the Change of Control; provided, however, that this clause (c) shall not apply in the event of a
reduction in the Executive’s Base Salary or, if applicable, target bonus opportunity as part of a Company-wide or executive
team-wide cost-cutting measure or Company-wide or executive team-wide cutback as a result of overall Company performance.

 

		(c)	The failure of the Company
(i) to continue to provide the Executive an opportunity to participate in any benefit or compensation plans provided to employees
who hold positions with the Company comparable to the Executive’s position, (ii) to provide the Executive all other fringe
benefits (or the equivalent) in effect for the benefit of any employee group which includes any employee who hold a position with
the Company comparable to the Executive’s position, where in the event of a Change of Control, such comparison shall be
made relative to the time immediately prior to the public announcement of such Change of Control); or (iii) continue to provide
director’s and officers’ insurance.

 

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		(d)	A material breach of
this Agreement by the Company, including, in the event of a Change of Control, failure of the Company to obtain the consent of
a Successor to perform all of the obligations of the Company under this Agreement.

 

The Executive must first give the Company
an opportunity to cure any of the foregoing within thirty (30) days following delivery to the Company of a written explanation
specifying the specific basis for Executive’s belief that Executive is entitled to terminate employment for Good Reason,
and Executive terminates employment with the Company not later than (30) days following the Company’s failure to cure.

 

6.8 “Permanent
Disability” means that:

 

		(a)	the Executive has been
incapacitated by bodily injury, illness or disease so as to be prevented thereby from engaging in the performance of the Executive’s
duties;

 

		(b)	such total incapacity
shall have continued for a period of six consecutive months; and

 

		(c)	such incapacity will,
in the opinion of a qualified physician, be permanent and continuous during the remainder of the Executive’s life.

 

6.9 “Substantive
Functional Equivalent” means that the Executive’s position must:

 

		(a)	be in a substantive area
of the Executive’s competence (e.g., finance or executive management) and not materially different from the position occupied
immediately prior;

 

		(b)	allow the Executive
to serve in a role and perform duties functionally equivalent to those performed immediately prior; and

 

		(c)	not otherwise constitute
a material, adverse change in authority, title, status, responsibilities or duties from those of the Executive immediately prior,
causing the Executive to be of materially lesser rank or responsibility, including requiring the Executive to report to a person
other than the Board.

 

6.10 “Successor”
means any successor in interest to, or assignee of, substantially all of the business and assets of the Company.

 

6.11 “Termination
Date” means the date of the termination of the Executive’s employment with the Company.

 

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6.12 “Termination
Upon Change of Control” means:

 

		(a)	any termination of the
employment of the Executive by the Company without Cause during the period commencing on or after the date that the Company first
publicly announces a definitive agreement that results in a Change of Control (even though still subject to approval by the Company’s
stockholders and other conditions and contingencies, but provided that the Change of Control actually occurs) and ending on the
date which is twelve (12) months following the Change of Control; or

 

		(b)	any resignation by Executive
for Good Reason where (i) such Good Reason occurs during the period commencing on or after the date that the Company first publicly
announces a definitive agreement that results in a Change of Control (even though still subject to approval by the Company’s
stockholders and other conditions and contingencies, but provided that the Change of Control actually occurs) and ending on the
date which is twelve (12) months following the Change of Control, and (ii) such resignation occurs at or after such Change of
Control and in any event within six (6) months following the occurrence of such Good Reason.

 

Notwithstanding the foregoing, the term
“Termination Upon Change of Control” shall not include any termination of the employment of the Executive: (1) by the
Company for Cause; (2) by the Company as a result of the Permanent Disability of the Executive; (3) as a result of the death
of the Executive; or (4) as a result of the voluntary termination of employment by the Executive for any reason other than Good
Reason.

 

7.
EXCLUSIVE REMEDY

 

7.1 No Other Benefits
Payable. The Executive shall be entitled to no other termination, severance or change of control compensation, benefits, or
other payments from the Company as a result of any termination with respect to which the payments and benefits described in Section
2 have been provided to the Executive, except as expressly set forth in this Agreement.

 

7.2 No Limitation
of Regular Benefit Plans. Except as may be provided elsewhere in this Agreement, this Agreement is not intended to and shall
not affect, limit or terminate any plans, programs or arrangements of the Company that are regularly made available to a significant
number of employees or officers of the Company, including, without limitation, the Company’s stock option plans.

 

7.3 Release of Claims.
The payment of the benefits described in Sections 3 and 4 of this Agreement is conditioned upon the delivery by the Executive to
the Company of a signed and effective general release of claims as provided by the Company; provided, however, that the Executive
shall not be required to release any rights the Executive may have to be indemnified by the Company or as otherwise provided under
this Agreement.

 

7.4 Noncumulation
of Benefits. The Executive may not cumulate cash severance payments, stock option vesting and exercisability and restricted
stock vesting under this Agreement, any other written agreement with the Company and/or another plan or policy of the Company.
If the Executive has any other binding written agreement with the Company which provides that, upon a Change of Control or Termination
Upon a Change of Control or Involuntary Termination, the Executive shall receive termination, severance or similar benefits, then
no benefits shall be received by Executive under this Agreement unless, prior to payment or receipt of benefits under this Agreement,
the Executive waives Executive’s rights to all such other benefits, in which case this Agreement shall supersede any such
written agreement with respect to such other benefits.

 

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8.
NON-COMPETE; PROPRIETARY AND CONFIDENTIAL INFORMATION

 

During the term of this Agreement and following
any termination of employment, Executive agrees to continue to abide by the terms and conditions of each of the non-competition
agreement (during the term of such Agreement) and the Employee Invention Assignment & Confidentiality Agreement between the
Executive and the Company.

 

9.
ARBITRATION

 

9.1 Disputes Subject
to Arbitration. Any claim, dispute or controversy arising out of this Agreement (other than claims relating to misuse or misappropriation
of the intellectual property of the Company), the interpretation, validity or enforceability of this Agreement or the alleged breach
thereof shall be submitted by the parties to binding arbitration by a sole arbitrator under the rules of the American Arbitration
Association; provided, however, that (a) the arbitrator shall have no authority to make any ruling or judgment that would confer
any rights with respect to the trade secrets, confidential and proprietary information or other intellectual property of the Company
upon the Executive or any third party; and (b) this arbitration provision shall not preclude the Company from seeking legal and
equitable relief from any court having jurisdiction with respect to any disputes or claims relating to or arising out of the misuse
or misappropriation of the Company’s intellectual property. Judgment may be entered on the award of the arbitrator in any
court having jurisdiction.

 

9.2 Costs of Arbitration.
All costs of arbitration, including reasonable attorney’s fees of the Executive, will be borne by the Company, except that
if the Executive initiates arbitration and the arbitrator finds the Executive’s claims to be frivolous the Executive shall
be responsible for his own costs and attorneys fees.

 

9.3 Site of Arbitration.
The site of the arbitration proceeding shall be in Cincinnati, Ohio.

 

10.
NOTICES

 

For purposes of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or five (5) business days after being mailed, return receipt requested, as follows: (a) if to the Company, attention:
Chief Executive Officer, at the Company’s offices at 100 Commerce Blvd., Loveland, OH 45140 and, (b) if to the Executive,
at the address indicated below or such other address specified by the Executive in writing to the Company. Either party may provide
the other with notices of change of address, which shall be effective upon receipt.

 

11. MISCELLANEOUS PROVISIONS

 

11.1 Heirs and Representatives
of the Executive; Successors and Assigns of the Company. This Agreement shall be binding upon and shall inure to the benefit
of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs,
distributees, devises and legatees. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
successors and assigns of the Company.

 

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11.2 Amendment and
Waiver. No provision of this Agreement shall be modified, amended, waived or discharged unless the modification, amendment,
waiver or discharge is agreed to in writing, specifying such modification, amendment, waiver or discharge, and signed by the Executive
and by an authorized officer of the Company (other than the Executive). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision
or of the same condition or provision at another time.

 

11.3 Withholding
Taxes. All payments made under this Agreement shall be subject to deduction of all federal, state, local and other taxes required
to be withheld by applicable law.

 

11.4 Severability.
The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.

 

11.5 Choice of Law.
The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio,
without regard to where the Executive has his residence or principal office or where he performs his duties hereunder.

 

11.6 No Duty to
Mitigate. The Executive is not required to seek alternative employment following termination, and payments called for under
this Agreement will not be reduced by earnings from any other source.

 

11.7. Section 409A
of the Code. To the extent (a) any payments or benefits to which Employee becomes entitled under this Agreement, or under any
agreement or plan referenced herein, in connection with Employee’s termination of employment with the Company constitute
deferred compensation subject to Section 409A of the Code and (b) Employee is deemed at the time of such termination of employment
to be a “specified employee” under Section 409A of the Code, then such payments shall not be made or commence until
the earliest of (i) the expiration of the six (6)-month period measured from the date of Employee’s “separation from
service” (as such term is at the time defined in Treasury Regulations under Section 409A of the Code) from the Company; or
(ii) the date of Employee’s death following such separation from service; provided, however, that such deferral shall only
be effected to the extent required to avoid adverse tax treatment to Employee, including (without limitation) the additional twenty
percent (20%) tax for which Employee would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral.
Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether
in a single sum or in installments) in the absence of this paragraph shall be paid to Employee or Employee’s beneficiary
in one lump sum (without interest). Any termination of Employee’s employment is intended to constitute a “separation
from service” as such term is defined in Treasury Regulation Section 1.409A-1. It is intended that each installment of the
payments provided hereunder constitute separate “payments” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).
It is further intended that payments hereunder satisfy, to the greatest extent possible, the exemption from the application of
Code Section 409A (and any state law of similar effect) provided under Treasury Regulation Section 1.409A-1(b)(4) (as a “short-term
deferral”).

 

11.8 Entire Agreement.
This Agreement represents the entire agreement and understanding between the parties as to the subject matter herein (whether oral
or written and whether express or implied).

 

 

[SIGNATURE PAGE TO EXECUTIVE RETENTION
AGREEMENT FOLLOWS]

 

    -11-

     

    

 

In
Witness Whereof, each of the parties has executed this Agreement, in the case of the Company, by its duly authorized officer,
as of the day and year first above written.

 

	 	Executive
	 	 	 
	 	/s/
    Duane Hughes
	 	Duane Hughes 
		 	 
	 	Workhorse
    Group Inc.
	 	 	 
	 	By:	/s/
    Paul Gaitan
	 	Name:	Paul Gaitan
	 	Title:	Chief Financial OfficerExhibit
10.3 

 

Workhorse
Group Inc.

100
Commerce Drive

Loveland,
Ohio 45140

 

February
4, 2019

Duane
Hughes

______________

______________

 

Letter
of Appointment – Board of Directors

 

Dear
Mr. Hughes:

 

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, prorated for any partial year of service.

 

	 	ii)	The
    Company shall pay the annual fee in equal monthly instalments in arrears on the last day of each month. Your first and last
    instalments 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 $0.97 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 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 Company 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 material, software, computers, credit cards, keys and vehicles; and

    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
    this 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.

 

	 	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.

 

    3

     

    

 

“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, overnight courier, facsimile or electronic mail to the recipient. 

 

	 	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.

 

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

 

    4

     

    

 

	 	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.

 

	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.

 

    5

     

    

 

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/
    Ray Chess	 
	Name:
    	Ray
    Chess	 
	Title:
    	Director	 

 

Agreed
to and accepted by as of the date first set forth above:

 

/s/ Duane Hughes

 

Duane
Hughes

 

    6

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