EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement ("
Agreement ")
is entered into effective this _____ day of January,
2007
by
and between Hydrogen Engine Center ,
Inc., an Iowa corporation, ("
Company ")
and Donald C. Vanderbrook ("
Executive ").
WHEREAS, the
Executive has been employed by the Company as its
Vice
President and General Manager and
possesses certain, skills, knowledge and abilities;
and
WHEREAS, the
Company
has
determined that it is to the advantage and interest of the Company
to employ
the Executive as the Vice
President and General Manager of
the Company; and
WHEREAS, the
Executive desires to accept
employment with the
Company in the capacity of Vice
President and General Manager .
NOW THEREFORE, in
consideration thereof the parties hereby agree as
follows:
1.
EMPLOYMENT AND TERM. The
Company will employ the Executive to serve as the
Vice
President and General Manager of
the Company and the Executive agrees to perform such services under
the terms and conditions of this Agreement. The initial term
of Executive’s
employment under this
Agreement shall begin on the date first written above (the "
Effective Date ")
and shall continue for a period of three (3) years
(the
“
Term ”)
.
Notwithstanding the foregoing, Executive’s
employment under this
Agreement may be terminated prior to the expiration of the Term as
provided in this Agreement.
2.
DUTIES. Executive
shall be responsible for and perform those duties outlined in
Exhibit A, incorporated by reference herein. The Executive will
also render such appropriate and reasonable services as are
directed by the President or the Board. Executive’s duties as
the Company’s Vice President and General Manager shall
require Executive’s full productive time and effort and as
such, Executive shall perform his duties on a full-time
basis. Without
the prior written consent of the Company, Executive shall undertake
no activities for compensation from any entity other than the
Company.
3.
COMPENSATION.
(a)
Salary. Executive’s
annualized base salary shall be $105,000.00, subject to withholding
for federal and state income and other applicable taxes or
deductions. Executive
shall be entitled to receive the following bonus payments, subject
to withholding for federal and state income and other applicable
taxes or deductions:
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$5,000
upon the later of (i) the date when the Company shall have sold and
shipped a total of 100 open power units or the date when the
Company shall have sold and shipped a total of 50 gensets (ii) the
date when the Executive has finalized his move to Algona, Iowa
and
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he
Company agrees to adopt on or before January 1, 2008, a bonus
plan which will include Executive as a participant. The
Company has
the discretion to increase Executive’s base salary based
on performance goals and expectations as may
be adopted
by the Company and revised
from time to time typically on an annual basis based on
performance and company profitability.
(b)
Benefits. Executive
will receive all medical, dental, pension, life, disability and any
other employee benefits offered by Company subject to the
eligibility terms of each individual plan.
(c)
Expenses .
The Company will reimburse the Executive for all reasonable direct
out-of-pocket expenses incurred in connection with the performance
of his duties and responsibilities. Such requests for reimbursement
will be made by the Executive in a timely manner and in conformance
with all policies of the Company. Executive will receive
up
to $15,000 as
reimbursement
for relocation expenses ,
$5,000 of which may be paid in advance upon the request of
Executive. Payment of relocation expenses is subject to
presentation of receipts evidencing expenses that constitute
qualified moving expenses under the US Internal Revenue Code or
expenses otherwise approved by the Company .
(d)
Vacation .
During the term of his employment, the Executive will receive
fifteen days vacation in the first year of this agreement and
fifteen days plus one additional day of vacation every year
thereafter. The Executive may carryover to the next year no more
than one-half of the vacation available in any given year. One-half
of any vacation not used in excess of this amount will be
forfeited. Vacation maybe taken at anytime during the vacation year
so long as it, as determined by the Company
acting
reasonably, does not materially interfere with the
Executive’s duties. The Executive may not use vacation in
lieu of any notice required by this agreement. In the event this
agreement lapses or is terminated, the Executive will be paid all
vacation available to him at the time of the lapse or termination
except as otherwise provided for herein.
(e)
Stock Options .
The Executive will receive options to purchase 85,000
shares of
common stock of the Company at under the Company’s 2005
Incentive Compensation Plan, subject to the milestones and
benchmarks identified on Exhibit B. The vesting date, exercise
price and other terms will be determined in accordance with the
terms of a separate Stock Option Agreement to be executed by the
Company and Executive.
4.
TERMINATION.
(a)
Termination Without Cause. This
Executive’s
employment under this Agreement
may be terminated, without cause, by either party by giving written
notice to the other party ninety (90) days prior to the effective
date of termination.
(i)
Termination by Executive. The
Executive may not use vacation in lieu of the notice period. If
Executive fails to provide appropriate notice and fully cooperate
in any transitional arrangements, he will forfeit all vacation or
PTO benefits available to him under the terms of the Contract.
Executive shall receive no severance pay or benefit continuation if
he terminates the agreement.
(ii)
Termination by Company. The
Executive shall receive the prorated portion of any incentive
compensation which would otherwise have been payable to him under
the existing plan in the year of the termination of
employment.
(b)
Termination for Cause .
Executive’s
employment under this Agreement shall
terminate immediately for cause under the following
circumstances:
(i)
In
the event of the death or permanent disability of the
Executive. For the purposes of this agreement, permanent
disability means any physical, mental or emotional illness,
disease or condition which in the opinion of a physician
chosen by the Company renders the Executive incapable of
adequately performing his usual duties for a period exceeding
ninety (90) days.
(ii)
The
Executive commits embezzlement, fraud, dishonesty or other
acts of misconduct, or is guilty of conduct in material
violation of established ethics, regulations, law or
policy.
(iii)
The
Executive is charged with any crime.
(iv)
The
Executive is adjudicated as incompetent.
(v)
Company
determines, based on action or threatened action, of any
federal or state government agency or in the opinion of
Company’s legal counsel that continuance of the
agreement would violate the provisions of any federal or state
law or regulation.
(vi)
There
is a material breach by Executive of this agreement or of one
or more obligations imposed upon him under the
agreement.
(vii)
Executive
shall have committed any act of gross negligence in the
performance of his duties or obligations hereunder or, without
proper cause, shall have willfully refused or habitually
neglected to perform his employment duties or obligations
under this Agreement;
(viii)
Executive
shall have committed any act that constitutes a willful breach
of the Company’s employment policies;
(ix)
Executive
shall have committed any material act of willful misconduct,
dishonesty, or breach of trust against Company;
(c)
Mutual Agreement. This
Agreement may be terminated by the mutual written agreement of the
parties.
5.
SEVERANCE PAYMENTS .
In the event Company terminates Executive’s
employment under this
Agreement prior to the expiration of the Term, Executive shall
receive his then current salary (not including any bonus earned
after the date of termination of Executive's employment, or
calculated for any period of time after such date of termination)
for a period of time following the effective date of termination
equal to: (i) six months if such termination occurs on or before
January 1, 2008, or (ii) one year if such termination occurs at any
time subsequent to January 1, 2008; provided, however, that
eligibility for any such severance payments shall not be paid if
Executive is terminated for cause in accordance with this
Agreement. Severance payments shall be made in accordance with the
Company’s regular payroll intervals, and such payments shall
be due Executive regardless of whether he secures other employment
during the severance period, except in the event Executive competes
with Company or breaches any other contract, duty or agreement with
Company. Company shall make all required withholdings from
Executive’s pay. If
Executive’s employment is terminated as a result of a
“Change in Control” while Executive is employed under
this Agreement, Executive shall be entitled to severance payments
in accordance with this Section unless such termination was for
cause as defined in Section 4(b). Change of Control shall mean the
sale or disposition of all or substantially all the Company's
assets; the merger, consolidation, or reorganization of the Company
with or involving any other entity; or the liquidation of the
Company. In no event shall a Change-in-Control be deemed to have
occurred if Mr. Hollinger is part of a purchasing group which
consummates the Change-in-Control transaction.
6.
SEVERANCE BENEFITS. Executive
shall continue to participate during the applicable severance
period, at the Company’s expense, in any group health,
dental, life or disability insurance plan that he was otherwise
entitled to on the date of his termination. However, such insurance
benefits may be waived by Executive prior to the end of the
severance period if he becomes eligible to receive comparable
benefits through subsequent employment. No vacation or paid leave
or any other benefits not specified herein shall accrue following
the last day of Executive’s active employment. The parties
agree that termination of Executive’s employment shall be the
“qualifying event” which commences Executive’s
right to continuation of applicable group health insurance under
the provisions of the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”) and that once the severance
period is over, Executive will be responsible for paying
th
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