This Executive Employment Agreement involves
Title: ENER-CORE, INC. EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: California Date: 7/6/2016
Industry: Software and Programming Sector: Technology
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this “ Agreement ”) is entered into as of June 29, 2016 (the “ Effective Date ”), by and between Ener-Core, Inc., a Delaware corporation (the “ Company ”), and Douglas Hamrin (“ Executive ”).
In consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:
1. Duties and Scope of Employment .
(a) Title and Duties . As of the Effective Date, Executive will be employed as the Company’s Vice President of Engineering reporting to the President of the Company. During the Employment Term (as defined in Section 2 below), Executive will have authority and render such business and professional services in the performance of Executive’s duties as are customarily associated with Executive’s position within the Company and Executive agrees to perform such other duties and functions as may from time to time be reasonably assigned or delegated to Executive by the Company’s President.
(b) Obligations . During the Employment Term, and excluding any periods of vacation and sick leave to which the Executive is entitled, Executive will perform Executive’s duties faithfully and to the best of Executive’s ability and will devote such time as reasonably necessary to fulfill Executive’s responsibilities in the position. It will be at the Executive’s discretion to determine the time that is reasonable to fulfill this obligations. Executive and the Company agree that the Company represents Executive’s principal business focus. Executive agrees to travel as reasonably necessary to fulfill Executive’s responsibilities in the position. During the Employment Term, Executive agrees that Executive shall maintain loyalty to the Company, shall take no action that would be injurious to the Company interests, and shall comply with all rules, regulations and policies of the Company. During the Employment Term, it shall not be a violation of this Agreement for Executive to (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, (iii) manage personal investments and business endeavors, including but not limited to advisory services, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.
(c) Executive’s Employability . Executive represents and warrants that: (i) Executive has the right to execute, deliver and perform Executive’s duties under this Agreement, and (ii) Executive is not a party to any other agreements, arrangements or obligations (e.g. confidentiality agreements, noncompetition agreements), whether written, oral or implied, which include terms that would limit Executive’s ability to execute, deliver and perform Executive’s duties under this Agreement or which are otherwise inconsistent with this Agreement. This warranty will remain in full force and effect throughout the Employment Term (as defined in Section 2 below).
2. Employment Term . The “ Employment Term ” under this Agreement will commence on the Effective Date and will continue, unless sooner terminated as provided by this Agreement, for one (1) year thereafter (the “ Initial Term ”); provided , however , that the Initial Term will automatically be extended for successive one (1) year terms, unless either party gives the other party written notice no less than 30 days prior to the end of the Initial Term or any extension thereof stating that this Agreement will terminate at the expiration of the Initial Term or any extension thereof. Notwithstanding anything in this Agreement to the contrary, this Agreement and Executive’s employment will terminate automatically at the conclusion of an unrenewed Initial Term or extension thereof and, in such event, the Company will have no obligation or liability to Executive thereafter except for the obligations of the Company specifically set forth in Sections 7, 8 and 15(a).
3. Compensation .
(a) Base Salary . During the Employment Term, the Company will pay Executive as compensation for Executive’s services a base salary at rate of $180,000 per year (which salary may be increased but not decreased by the Board in its sole discretion) (the “ Base Salary ”). The Base Salary will be paid in regular installments in accordance with the Company’s normal payroll practices, subject to applicable deductions and withholdings. The first and last payment will be adjusted, if necessary, to reflect a commencement or termination date other than the first or last working day of a pay period.
(b) Annual Bonus. Executive shall be eligible for an annual bonus and/or other annual incentive compensation (collectively the “ Annual Bonus ”) during the Employment Term, in accordance with any applicable executive bonus plan applicable to Executive as may be adopted by the Board in its sole discretion. Any such Annual Bonus earned by Executive shall be paid no later than seventy-five (75) days following the end of the year during which the Annual Bonus is earned, unless Executive shall elect to defer the receipt of such Annual Bonus pursuant to a Company-sponsored deferred compensation plan then in effect to the extent the Company’s bonus and deferred compensation plans allow for such a deferral.
(c) Equity Incentive/Option Plan Eligibility . Executive shall be eligible to participate in the Company’s equity incentive plan or incentive option plan, as applicable, with grants and vesting schedules as determined by the Board (at their sole discretion) from time to time. Any such grant shall be conditioned upon Executive’s execution of such documentation (such as, but not limited to, a grant notice) as the Board deems reasonably necessary in connection with such grant.
4. Employee Benefits . During the Employment Term, Executive will be considered a full-time employee and be entitled to participate in the employee benefit plans and programs currently and hereafter maintained by the Company of general applicability to other Employees of Executive’s classification at the Company (the “ Benefits ”). The Company reserves the right to cancel or change the Benefit plans and programs it offers to its employees at any time.
5. Vacation . Executive shall be entitled to fifteen (15) days of Paid Time Off per year, which shall be adjusted annually based on years of service with the Company, in accordance with Company’s standard policy, as may be amended from time to time, with the timing and duration of specific vacations mutually and reasonably agreed to by Executive and the Company. For the purposes of this section, years of service with the Company shall be calculated starting with the effective employment date of May 1, 2008.
6. Business Expenses . During the Employment Term, the Company will reimburse Executive for reasonable, customary and documented business, travel and related expenses, incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time (the “ Expense Reimbursement ”). Reimbursement of expenses under this Section 6 shall be made within 30 days following submission of a completed expense reimbursement form and Executive shall submit such completed expense reimbursement form no later than six (6) months after such expense was incurred by Executive.
7. Termination; Severance .
(a) Termination by the Company for Cause. The Company may terminate Executive’s employment for “Cause” (defined below). If the Company terminates Executive’s employment or gives written notice of a non-renewal of this Agreement for Cause, then this Agreement shall terminate without further obligations to Executive, other than for payment of the sum of: (i) Executive’s Base Salary and bonuses, if any, through the date of termination to the extent not therefore paid; (ii) any earned but unused vacation and PTO time; and (iii) Expense Reimbursement, to the extent not theretofore paid (the sum of the amounts described in clauses (i), (ii) and (iii) shall be hereinafter referred to as “ Accrued Obligations ”).
(b) Termination by the Company other than for Cause, Death or Disability .
(i) In General . Except as otherwise provided in Section 7(b)(ii) below, if the Company terminates Executive’s employment or gives written notice of a non-renewal of this Agreement without Cause, then Executive will be entitled to receive (i) Accrued Obligations, (ii) monthly cash severance payments at the Base Salary rate, less standard withholdings and deductions, paid during the six (6) month period immediately following the termination date of Executive’s employment and (iii) continuation of Company provided health insurance coverage to Executive and his dependents covered as of the termination date, or reimbursement to Executive for equivalent COBRA coverage, paid during the six (6) month period immediately following the termination date of Executive’s employment ; provided , however , that Executive’s right to receive any of the payments set forth in clause (ii) or (iii) above will be conditioned upon Executive and Executive’s spouse, if Executive has one at the time, executing, and not revoking, a general release of claims and affirmation of Executive’s other continuing obligations under this Agreement in a form acceptable to and provided by the Company (including without limitation an unconditional release, representations that no claims have been filed, confidentiality, nondisparagement, transition, no admission, etc.). All such payments will cease as of the earlier of the date on which Executive obtains new employment or the date on which Executive engages (or assist any other person or entity to engage) in any activity competitive with the business of the Company. If Executive obtains new full-time employment during the severance period or engages in a competitive activitiy, Executive is responsible for notifying the Company immediately.
(ii) During Change of Control Period . If, during the six (6)-month period immediately preceding or following a Change of Control, the Company terminates Executive’s employment or gives written notice of a non-renewal of this Agreement without Cause, then Executive will be entitled to receive (i) Accrued Obligations, (ii) monthly cash severance payments at the Base Salary rate, less standard withholdings and deductions, paid during the six (6) month period immediately following the termination date of Executive’s employment, and (iii) immediate vesting of all unvested outstanding options issued in the Executive’s name; provided , however , that Executive’s right to receive any the payments set forth in clause (ii) above will be conditioned upon Executive and Executive’s spouse, if Executive has one at the time, executing, and not revoking, a general release of claims and affirmation of Executive’s other continuing obligations under this Agreement in a form acceptable to and provided by the Company (including without limitation unconditional release, representations that no claims have been filed, confidentiality, nondisparagement, transition, no admission, etc.). All such payments will cease as of the earlier of the date on which Executive obtains new employment or the date on which Executive engages (or assist any other person or entity to engage) in any activity competitive with the business of the Company. If Executive obtains new full-time employment during the severance period or engages in a competitive activitiy, Executive is responsible for notifying the Company immediately.
(c) Termination by Executive Generally . Executive may terminate this Agreement at any time by written notice of resignation (a “ Resignation Notice ”) to the Board; provided that:
(i) Executive’s resignation will not become effective until the earlier of (A) 90 days after the date the Resignation Notice is given to the Board, or (B) the date on which the Company specifies that such resignation will become effective; and
(ii) For a period of 30 days following the effective date of Executive’s resignation, Executive shall make himself or herself available to the Company and/or its agents (A) for the purpose of facilitating an efficient transition of Executive’s job related responsibilities and duties to other designated individuals, and (B) to respond to questions from the Company and/or its agents regarding information and/or activities in which Executive was engaged while employed by the Company. The parties acknowledge and agree that (I) this Section 7(c)(ii) is premised on Executive’s reasonable efforts to cooperate, and the Company’s reasonable use of Executive’s time, and (II) Executive will not be compensated for Executive’s time under this Section 7(c)(ii) except that if Executive is required for more than 40 hours of service under this Section 7(c)(ii).
(i) Cause . For purposes of this Agreement, “ Cause ” means (A) Executive’s willful dishonesty or fraud with respect to the business affairs of the Company; (B) Executive’s willful falsification of any employment or Company records; (C) Executive’s misappropriation of or intentional damage to the business or property of the Company, including the improper use or disclosure of the confidential or proprietary information of the Company (excluding damage of little or no consequence to the business or property of the Company); (D) Executive’s conviction (including any plea of guilty or nolo contendere) of a felony or crime that involves moral turpitude; (E) Executive’s willful and continued failure to comply with reasonable written directives of the company after Executive’s receipt of written notice by the Company of the refusal and a reasonable opportunity to cure (as described below); or (F) the misappropriation of any corporate opportunity, or otherwise obtaining personal profit from any transaction which is adverse to the interests of the Company or to the benefits of which the Company is entitled. The Company must give Executive written notice of its intention to terminate Executive for Cause, which notice must (I) state the grounds on which the proposed termination for Cause is based, and (II) be given no later than 90 days after the later of occurrence of the event giving rise to these grounds or the discovery thereof by the Board. Executive must have 30 days after receiving this notice to cure these grounds (if cure is possible). If Executive fails to cure these grounds within 30 days, “Cause” will exist for the Company’s termination of Executive’s employment. For purposes of this definition, no act, or failure to act, by Executive will be considered “willful” if done, or omitted to be done, by Executive in good faith and in the reasonable belief that the act or omission was in the best interest of the Company or required by applicable law.
(ii) Change of Control . For purposes of this Agreement, a “ Change of Control ” occurs when:
(1) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended from time to time (“ Exchange Act ”)), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (“ Voting Power ”), unless such “person” was the “beneficial owner” of at least 20% of the Voting Power as of the Effective Date and does not become the “beneficial owner” of 80% or more of the Voting Power; or
(2) The Company consummates the sale, exchange, lease or other disposition of all or substantially all of its assets to a person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act; or
(3) The Company consummates a merger, reorganization, recapitalization, consolidation, or similar transaction with any other corporation or other business entity, in one transaction or a series of related transactions (except one in which (A) the holders of the Company’s voting securities outstanding immediately before such merger or consolidation continue to hold at least 50% of the voting power in the surviving entity, or (B) a transaction in which a single party (or a group of affiliated parties) acquires voting securities of the Company and the holders of voting securities of the Company immediately before the transaction do not dispose of a majority of their interests in the Company in connection with that transaction); or
(4) The Company dissolves or liquidates; or
For purposes of this Section 7(e)(ii), “Company” includes Company’s affiliates and successors.
(e) Limited Rights to Severance Payments. For clarity, Executive shall only be entitled to any severance payments of any kind pursuant to this Agreement as provided under Section 7(b) hereof. No Severance Payment obligations shall arise out of (i) a termination or nonrenewal of this Agreement by the Company with Cause, or (ii) a termination of this Agreement by the Executive except as otherwise provided under Section 7(b)(ii)(B).
8. Death or Disability . The Employment Term and Executive’s employment will terminate upon Executive’s death or Disability. Upon termination of Executive’s employment for either death or Disability, Executive or Executive’s estate, as the case may be, will be entitled to receive any Accrued Obligations and health benefits as described in section 7(b). In addition, Executive or Executive’s estate, as the case may be, may be granted (i) additional vesting of then-unvested stock or stock options, as applicable, (ii) a proportional amount of any earned and unpaid Annual Bonus based on Executive’s performance through the date of termination, (iii) severance payments as described in section 7(b); provided, however, that any payments of items (i), (ii), and (iii) will be conditioned upon Executive (or Executive’s estate) and Executive’s spouse (if Executive has one at the time), executing, and not revoking, a general release of claims and affirmation of Executive’s other continuing obligations under this Agreement in a form acceptable to and provided by the Company (including without limitation unconditional release, representations that no claims have been filed, confidentiality, nondisparagement, transition, no admission, etc.). Upon termination of Executive’s employment due to death or Disability pursuant to this Section, Executive or Executive’s estate, as the case may be, will have no further rights to any compensation or any other benefits under this Agreement except as noted in this section. All other benefits, if any, due Executive following Executive’s termination for death or Disability will be determined in accordance with the Company’s plans and practices. For purposes of this Agreement, “ Disability ” means Executive’s inability to perform one or more of the essential functions of Executive’s job due to Executive’s physical or mental impairment, with or without reasonable accommodation as required by law, for any period aggregating more than 120 days in any 365 consecutive day period. If the Company determines that Executive has become Disabled, the Company shall notify Executive of its determination. Executive may then request an accommodation from the Company to assist in his return to work. The Company will determine whether Executive’s request can be accommodated without undue hardship no later than 30 days after Executive requests an accommodation. In the event Executive’s request cannot be accommodated, the Company may, by notice given in the manner provided in this Agreement, terminate the status of Executive as an executive and employee of the Company. Any such termination shall become effective 30 days after such notice of termination is given, unless within such 30 day period, Executive becomes capable of rendering services of the character contemplated hereby (and a physician chosen by the Company so certifies in writing) and Executive in fact resumes such services.
9. Confidential Information .