Document:

EX-10.1

 Exhibit 10.1 

September 14, 2016 

Mr. Will Powell 
 Chief Executive Officer and President 

Sears Hometown and Outlet Stores, Inc. 
 Dear Will: 

Retention Agreement 
 We
consider your continued service and dedication to Sears Hometown and Outlet Stores, Inc. (the “Company” or “we”) as Chief Executive Officer and President to be important to our business. We are pleased
to offer you a salary increase and a cash retention award, as provided in this Retention Agreement, to which we and you agree. 
 1. Your
annual base salary will increase to $750,000 effective September 15, 2016. 
 2. In recognition of your continued, uninterrupted
service with the Company from the date of this Retention Agreement, we offer you, and you accept, a cash retention award in the total amount of $750,000 less all applicable withholdings and deductions required by law (the “Retention
Award”). Subject to the next sentences of this paragraph and to the other paragraphs of this Retention Agreement, the Retention Award will vest in three installments. The first installment of the Retention Award will vest and become
payable to you in cash as soon as administratively possible following April 15, 2018 (the “2018 Installment”), the second installment of the Retention Award will vest and become payable to you in cash as soon as
administratively possible following April 15, 2019 (the “2019 Installment”), and the third installment of the Retention Award will vest and become payable to you as soon as administratively possible following
April 15, 2020 (the “2020 Installment,” and together with the 2018 Installment and the 2019 Installment the “Installments”). If an Event Vesting Date occurs, each of the Installments that is
unpaid as of the Event Vesting Date will become immediately payable to you in cash as soon as administratively possible following the Event Vesting Date. “Event Vesting Date” means the earliest of the following dates:
(a) the date on which the Company terminates your employment without Cause, (b) the date on which you terminate your employment with the Company for Good Reason, or (c) the date on which you notify the Company in writing that a Change
Event has occurred. “Cause” means (i) a material breach by you (other than a breach resulting from your incapacity due to a disability as reasonably determined by the Company) of your duties and responsibilities, which
breach is demonstrably willful and deliberate on your part, is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company, and is not remedied by you in a reasonable period of time after receipt of
written notice from the Company specifying the breach, (ii) the commission by you of a felony involving moral turpitude, or (iii) your dishonesty or willful misconduct in connection with your employment with the Company. “Good
Reason” means that, without your written consent, (y) your annual base salary in effect on the date of, and giving effect to, this Retention Agreement is reduced by ten percent or more, or (z) your place of employment is
relocated by the Company to a business location that is more than fifty miles from the Company’s offices located at 5500 Trillium Boulevard, Hoffman Estates, Illinois. “Change Event” means that (1) without your
consent you no longer report solely to the Company’s Board of Directors or (2) the Company experiences, or without your consent you experience, an action or event (other than termination of your employment by you or the Company in either
circumstance for any reason) that, with or without the passage of time, reasonably would be deemed to be, or reasonably would be deemed to result in, a reduction in your duties, responsibilities, or status as the Company’s Chief Executive
Officer and President. 
 3. Subject to the next sentences of this paragraph, you will receive the Installments in accordance with, and
subject to, paragraph 2 if all of the following eligibility conditions are satisfied as of the payment dates specified in paragraph 2: (a) you have executed this Retention Agreement and delivered it to the Company and (b) until
April 15, 2018 with respect to the 2018 Installment, until April 15, 2019 with respect to the 2019 Installment, and until April 15, 2020 with respect to the 2020 Installment, you have continuously served as a full-time employee of the
Company. If the Company makes any payment to you in accordance with its Annual Incentive Plan (“AIP”) (including without limitation in accordance with Section 1.a.2 or Section 1.a.3 of your Amended and Restated
Executive Severance Agreement dated July 1, 2015 (your “Severance Agreement”)), then (x) for the Company’s 2017 fiscal year, the 2018 Installment will be reduced by the amount of the 2017 AIP payment,
(y) for the 

 Company’s 2018 fiscal year, the 2019 Installment will be reduced by the amount of the 2018 AIP payment, and
(z) for the Company’s 2019 fiscal year, the 2020 Installment will be reduced by the amount of the 2019 AIP payment. If you die or experience a Disability (as defined in your Severance Agreement) before you have received all of the
Installments, your estate or personal representative (if your death occurs) or you (if your Disability occurs) will receive an amount equal to the total dollar amount of the Installments that are unpaid as of the date of your death or Disability
multiplied by a fraction the numerator of which is the number of days after January 29, 2017 that your death or Disability occurs (but not more than 1,095) and the denominator of which is 1,095, and you will cease to be entitled to receive the
unpaid Installments. 
 4. Your employment with the Company and its wholly owned subsidiaries remains at-will, meaning that you and the
Company may terminate your employment at any time with or without Cause and with or without notice to you. Neither this Retention Agreement nor the Retention Award has any effect on the at-will nature of your employment. 

5. This Retention Agreement contains all of the agreements, understandings, and representations between the Company and you relating to the
subject matter of this Retention Agreement. This Retention Agreement supersedes all prior and contemporaneous written and oral understandings, discussions, agreements, representations, and warranties with respect to the subject matter. 

6. This Retention Agreement may not be amended or modified except in writing signed by the Company and you. This Retention Agreement, for all
purposes, will be construed in accordance with the laws of Illinois without regard to conflicts-of-law principles. 
 7. This Retention
Agreement is intended to comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and will be construed and administered in accordance with Section 409A. 

 

			
	 SEARS HOMETOWN AND OUTLET

STORES, INC.

		
	By:	 	/s/ CHARLES J. HANSEN
		 	Charles. J. Hansen
		 	 Vice President, General Counsel, and

Secretary

  

	
	Agreed to and accepted:
	
	 /s/ WILL POWELL

	 Will Powell

  
 2Exhibit 4.1

 

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:	September
    15, 2016
	 	 	(b) Optionee:	Harry
    DeMott
	 	 	(c) Number
    of Shares:	50,000
	 	 	(d) Exercise
    Price:	$8.20

 

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/
    Harry DeMott
	 	 	 	(signature)
	 	 	Name:	Harry
    DeMott

 

    	 	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:

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