Exhibit 10.2

 

NOTICE OF GRANT OF NON-QUALIFIED STOCK OPTION

 

ENER-CORE, INC.
2015 OMNIBUS INCENTIVE PLAN

 

FOR GOOD AND VALUABLE CONSIDERATION, Ener-Core, Inc. (the “Company”) hereby
grants, pursuant to the provisions of the Ener-Core, Inc. 2015 Omnibus Incentive
Plan (the “Plan”), to the Grantee designated in this Notice of Grant of
Non-qualified Stock Option (the “Notice of Grant”) a Non-qualified Stock Option
to purchase the number of Shares set forth in the Notice of Grant (the
“Option”), subject to certain terms and conditions as outlined below in the
Notice of Grant and the additional terms and conditions set forth in the
attached Terms and Conditions of Stock Option (together with the Notice of
Grant, the “Award Agreement”).

 

Grantee: James Reiman Type of Option: Non-qualified Stock Option Grant Date: May
3, 2017 Number of Shares Purchasable: 25,000 Option Price per Share: $2.50,
which is above the Fair Market Value as of the Grant Date Expiration Date: May
3, 2027, which is 10 years from the Grant Date Exercisability Schedule:

25% Vested on the one year anniversary of date of grant. Remainder vests ratably
over 36 months (1/48th of number of shares purchasable per month).

 

Notwithstanding the foregoing Exercisability Schedule, exercisability of all or
some portion of the Option may be accelerated in accordance with the terms and
conditions of Section 2(c) of the attached Terms and Conditions.

Exercise after Separation from Service:

Separation from Service for any reason other than death, Disability or Cause:
any non-exercisable portion of the Option expires immediately and any
exercisable portion of the Option remains exercisable for 90 days following
Separation from Service for any reason other than death, Disability or Cause;

 

Separation from Service due to death or Disability: any non-exercisable portion
of the Option expires immediately and any exercisable portion of the Option
remains exercisable for 12 months following Separation from Service due to death
or Disability; and

 

Separation from Service for Cause: the entire Option, including any exercisable
and non-exercisable portion, expires immediately upon Separation from Service
for Cause.

 

In no event may THE Option be exercised after the Expiration Date as provided
above.

 

Notice of Grant - Page 1 

 

 

By signing below, the Grantee agrees that the Option is granted under and
governed by the terms and conditions of the Plan and the Award Agreement, as of
the Grant Date.

 

GRANTEE   ENER-CORE, INC.       Sign Name: /s/ James Reiman   Sign Name: /s/
Alain Castro Print Name: James Reiman   Print Name: Alain Castro       Title:
Chief Executive Officer

 

Notice of Grant - Page 2 

 

 

TERMS AND CONDITIONS OF STOCK OPTION

 

1.       Grant of Option. The Option granted to the Grantee and described in the
Notice of Grant is subject to the terms and conditions of the Plan. The terms
and conditions of the Plan are hereby incorporated herein by reference. Except
as otherwise expressly set forth herein, the Award Agreement shall be construed
in accordance with the terms and conditions of the Plan. Any capitalized term
not otherwise defined in the Award Agreement shall have the definition set forth
in the Plan.

 

The Board and the stockholders of the Company have approved the Plan. The
Committee has approved the grant to the Grantee of the Option, conditioned upon
the Grantee’s acceptance of the terms and conditions of the Award Agreement
within 60 days after the Award Agreement is presented to the Grantee for review.

 

If designated in the Notice of Grant as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option. To the extent that the Option
fails to meet the requirements of an Incentive Stock Option or is not designated
as an Incentive Stock Option, the Option shall be treated as a Non-qualified
Stock Option.

 

2.       Exercise of Option.

 

(a)       Right to Exercise. The Option shall be exercisable, in whole or in
part, during its term in accordance with the Exercisability Schedule set forth
in the Notice of Grant and with the applicable provisions of the Plan and the
Award Agreement. No Shares shall be issued pursuant to the exercise of the
Option unless the issuance and exercise comply with applicable laws. Assuming
such compliance, for income tax purposes the Shares shall be considered
transferred to the Grantee on the date on which the Option is exercised with
respect to such Shares. Until such time as the Option has been duly exercised
and Shares have been delivered, the Grantee shall not be entitled to exercise
any voting rights with respect to such Shares, shall not be entitled to receive
dividends or other distributions with respect thereto and shall not have any
other rights of a stockholder with respect thereto.

 

(b)       Method of Exercise. The Grantee may exercise the Option by delivering
an exercise notice in a form approved by the Company (the “Exercise Notice”),
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Option Price as to all Shares exercised.
The Option shall be deemed to be exercised upon receipt by the Company of such
fully executed Exercise Notice accompanied by the aggregate Option Price (as
well as any applicable withholding or other taxes).

 

(c)       Acceleration of Exercisability under Certain Circumstances. The
exercisability of the Option shall not be accelerated under any circumstances,
except as otherwise provided in the Plan; provided, however, that the Option
shall become fully exercisable immediately prior to, and contingent upon, a
Change in Control.

 

3.       Method of Payment. If the Grantee elects to exercise the Option by
submitting an Exercise Notice in accordance with Section 2(b) above, the
aggregate Option Price (as well as any applicable withholding or other taxes)
shall be paid by cash or check; provided, however, that the Committee may
consent to payment in any of the following forms, or a combination of them:

 

(a)       cash or check;

 

Terms and Conditions - Page 1

 

 

(b)       a “net exercise” under which the Company reduces the number of Shares
issued upon exercise by the largest whole number of Shares with a Fair Market
Value that does not exceed the aggregate Option Price and any applicable
withholding, or such other consideration received by the Company under a
cashless exercise program approved by the Company in connection with the Plan;

 

(c)       surrender of other Shares owned by the Grantee that have a Fair Market
Value on the date of surrender equal to the aggregate Option Price of the
exercised Shares and any applicable withholding; or

 

(d)       any other consideration that the Committee deems appropriate and in
compliance with applicable law.

 

4.       Restrictions on Exercise. The Option may not be exercised until such
time as the Plan has been approved by the stockholders of the Company, or if the
issuance of the Shares upon exercise or the method of payment of consideration
for those Shares would constitute a violation of any applicable law, regulation
or Company policy.

 

5.       Non-Transferability of Option. The Option may not be transferred in any
manner other than by will or by the laws of descent or distribution and may be
exercised during the lifetime of the Grantee only by the Grantee; provided,
however, that the Grantee may transfer the Option (a) pursuant to a domestic
relations order by a court of competent jurisdiction or (b) to any Family Member
of the Grantee in accordance with Section 17.9.2 of the Plan by delivering to
the Company a notice of assignment in a form acceptable to the Company. No
transfer or assignment of the Option to or on behalf of a Family Member under
this Section 5 shall be effective until the Company has acknowledged such
transfer or assignment in writing.

 

6.       Term of Option. The Option may be exercised only within the term set
forth in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of the Award Agreement.

 

7.       Withholding.

 

(a)       The Committee shall determine the amount of any withholding or other
tax required by law to be withheld or paid by the Company with respect to any
income recognized by the Grantee with respect to the Option.

 

(b)       The Grantee shall be required to meet any applicable tax withholding
obligation in accordance with the provisions of Section 17.3 of the Plan.

 

(c)       Subject to any rules prescribed by the Committee, the Grantee shall
have the right to elect to meet any withholding requirement (i) by having
withheld from the Option at the appropriate time that number of whole Shares
whose Fair Market Value is equal to the amount of any taxes required to be
withheld with respect to the Option, (ii) by direct payment to the Company in
cash of the amount of any taxes required to be withheld with respect to the
Option or (iii) by a combination of Shares and cash.

 

(d)       If the Grantee makes any disposition of Shares delivered pursuant to
the exercise of an Incentive Stock Option under the circumstances described in
Code Section 421(b) (relating to certain disqualifying dispositions), the
Grantee shall notify the Company of such disposition within 10 days of such
disposition.

 

8.       Adjustment. Upon any event described in Section 15.1 of the Plan
occurring after the Grant Date, the adjustment provisions as provided for under
Section 15.1 of the Plan shall apply to the Option.

 

Terms and Conditions - Page 2

 

 

9.       Bound by Plan and Committee Decisions. By accepting the Option, the
Grantee acknowledges that the Grantee has received a copy of the Plan, has had
an opportunity to review the Plan, and agrees to be bound by all of the terms
and conditions of the Plan. In the event of any conflict between the provisions
of the Award Agreement and the Plan, the provisions of the Plan shall control.
The authority to manage and control the operation and administration of the
Award Agreement and the Plan shall be vested in the Committee, and the Committee
shall have all powers with respect to the Award Agreement as it has with respect
to the Plan. Any interpretation of the Award Agreement or the Plan by the
Committee and any decision made by the Committee with respect to the Award
Agreement or the Plan shall be final and binding on all persons.

 

10.     Grantee Representations. The Grantee hereby represents to the Company
that the Grantee has read and fully understands the provisions of the Award
Agreement and the Plan and that the Grantee’s decision to participate in the
Plan is completely voluntary. Further, the Grantee acknowledges that the Grantee
is relying solely on his or her own advisors with respect to the tax
consequences of the Option.

 

11.     Regulatory Limitations on Exercises. Notwithstanding the other
provisions of the Award Agreement, the Committee may impose such conditions,
restrictions and limitations (including suspending the exercise of the Option
and the tolling of any applicable exercise period during such suspension) on the
issuance of Common Stock with respect to the Option unless and until the
Committee determines that such issuance complies with (a) any applicable
registration requirements under the Securities Act or the Committee has
determined that an exemption therefrom is available, (b) any applicable listing
requirement of any stock exchange on which the Common Stock is listed, (c) any
applicable Company policy or administrative rules and (d) any other applicable
provision of state, federal or foreign law, including foreign securities laws
where applicable.

 

12.     Miscellaneous.

 

(a)       Notices. Any notice that either party hereto may be required or
permitted to give to the other shall be in writing and may be delivered
personally, by intraoffice mail, by fax, by electronic mail or other electronic
means, or via a postal service, postage prepaid, to such electronic mail or
postal address and directed to such person as the Company may notify the Grantee
from time to time; and to the Grantee at the Grantee’s electronic mail or postal
address as shown on the records of the Company from time to time, or at such
other electronic mail or postal address as the Grantee, by notice to the
Company, may designate in writing from time to time.

 

(b)       Waiver. The waiver by any party hereto of a breach of any provision of
the Award Agreement shall not operate or be construed as a waiver of any other
or subsequent breach.

 

(c)       Entire Agreement. The Award Agreement and the Plan constitute the
entire agreement between the parties with respect to the Option. Any prior
agreements, commitments or negotiations concerning the Option are superseded.

 

(d)       Binding Effect; Successors. The obligations and rights of the Company
under the Award Agreement shall be binding upon and inure to the benefit of the
Company and any successor corporation or organization resulting from the merger,
consolidation, sale, or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Company. The obligations and rights of the Grantee
under the Award Agreement shall be binding upon and inure to the benefit of the
Grantee and the beneficiaries, executors, administrators, heirs and successors
of the Grantee.

 

(e)       Governing Law; Consent to Jurisdiction; Consent to Venue. The Award
Agreement shall be construed and interpreted in accordance with the internal
laws of the State of Delaware without regard to principles of conflicts of law
thereof, or principles of conflicts of laws of any other jurisdiction that could
cause the application of the laws of any jurisdiction other than the State of
Delaware. For purposes of resolving any dispute that arises directly or
indirectly from the relationship of the parties evidenced by the Option or the
Award Agreement, the parties hereto hereby submit to and consent to the
exclusive jurisdiction of the State of California and agree that any related
litigation shall be conducted solely in the courts of Orange County, California
or the federal courts for the United States for the Central District of
California, where the Award Agreement is made and/or to be performed, and no
other courts.

 

Terms and Conditions - Page 3

 

 

(f)       Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of the Award Agreement.

 

(g)       Amendment. The Award Agreement may be amended at any time by the
Committee, provided that no amendment may, without the consent of the Grantee,
materially impair the Grantee’s rights with respect to the Option.

 

(h)       Severability. The invalidity or unenforceability of any provision of
this Award Agreement shall not affect the validity or enforceability of any
other provision of this Award Agreement, and each other provision of this Award
Agreement shall be severable and enforceable to the extent permitted by law.

 

(i)       No Rights to Service. Nothing contained in the Award Agreement shall
be construed as giving the Grantee any right to be retained, in any position, as
a director, officer, employee, or consultant of the Company or its Affiliates,
or shall interfere with or restrict in any way the rights of the Company or its
Affiliates, which are hereby expressly reserved, to remove, terminate or
discharge the Grantee at any time for any reason whatsoever or for no reason,
subject to the Company’s articles of incorporation, bylaws and other similar
governing documents and applicable law.

 

(j)       Section 409A. It is intended that the Award Agreement and the Option
will be exempt from (or in the alternative will comply with) Code Section 409A,
and the Award Agreement shall be administered accordingly and interpreted and
construed on a basis consistent with such intent. This Section 12(j) shall not
be construed as a guarantee of any particular tax effect for the Grantee’s
benefits under the Award Agreement and the Company does not guarantee that any
such benefits will satisfy the provisions of Code Section 409A or any other
provision of the Code.

 

(j)       Further Assurances. The Grantee agrees, upon demand of the Company or
the Committee, to do all acts and execute, deliver and perform all additional
documents, instruments and agreements that may be reasonably required by the
Company or the Committee, as the case may be, to implement the provisions and
purposes of the Award Agreement and the Plan.

 

(k)       Confidentiality. The Grantee agrees that the terms and conditions of
the Option award reflected in the Award Agreement are strictly confidential and,
with the exception of the Grantee’s counsel, tax advisor, immediate family, or
as required by applicable law, have not and shall not be disclosed, discussed or
revealed to any other persons, entities or organizations, whether within or
outside Company, without prior written approval of Company. The Grantee shall
take all reasonable steps necessary to ensure that confidentiality is maintained
by any of the individuals or entities referenced above to whom disclosure is
authorized.

 

 

Terms and Conditions - Page 4