AGREEMENT is made and entered into as of this 18th day of May 2015 (the “Effective Date”),
by and between Drone Aviation Holding Corp., a Nevada corporation with offices at 11651 Central Parkway #118, Jacksonville,
FL 32224 (the “Corporation”), and Daniyel Erdberg (the “Employee”), under the following
A. The Corporation
desires to secure the services of the Employee upon the terms and conditions hereinafter set forth; and
B. The Employee
desires to render services to the Corporation upon the terms and conditions hereinafter set forth.
the parties mutually agree as follows:
Employment. The Corporation hereby employs the Employee and the Employee hereby accepts employment as an Employee
of the Corporation, subject to the terms and conditions set forth in this Agreement.
Duties. The Employee shall serve as Chief Operating Officer of the Corporation, with such duties, responsibilities
and authority as are commensurate and consistent with his position, as may be, from time to time, assigned to him by the Chief
Executive Officer (the “CEO”) of the Corporation. The Employee shall report directly to the CEO. During the
Term (as defined in Section 3), the Employee shall devote all of his full business time and efforts to the performance of his duties
hereunder unless otherwise authorized by the Board. Notwithstanding the foregoing, the expenditure of reasonable amounts of time
by the Employee for the making of passive personal investments, the conduct of business affairs and charitable and professional
activities shall be allowed, provided such activities do not materially interfere with the services required to be rendered to
the Corporation hereunder and do not violate the restrictive covenants set forth in Section 9 below.
Term of Employment. The term of the Employee’s employment hereunder, unless sooner terminated as provided
herein (the “Initial Term”), shall be for a period of two (2) years commencing on the Effective Date. The term
of this Agreement shall automatically be extended for additional terms of one (1) year each (each a “Renewal Term”)
unless either party gives prior written notice of non-renewal to the other party no later than thirty (30) days prior to the expiration
of the Initial Term (“Non-Renewal Notice”), or the then current Renewal Term, as the case may be. For purposes
of this Agreement, the Initial Term and any Renewal Term are hereinafter collectively referred to as the “Term.”
Compensation of Employee. The Corporation shall pay the Employee as compensation
for his services hereunder, in monthly installments during the Term, the sum of $140,000 (the “Base Salary”),
less such deductions as shall be required to be withheld by applicable law and regulations and monthly advances against the salary.
The Corporation shall review the Base Salary at least annually and has the right but not the obligation to increase it but such
salary shall not be decreased during the Term.
In addition to the Base Salary set forth in Section 4(a), the Employee shall be entitled to receive an annual cash
bonus in an amount equal to up to one hundred percent (100%) of his then-current Base Salary if the Corporation meets or exceeds
criteria adopted by the Compensation Committee of the Board of Directors (the “Compensation Committee”) for
earning bonuses which criteria shall be adopted by the Compensation Committee at least annually. Bonuses shall be paid by the Corporation
to the Employee promptly after determination that the relevant targets have been met, it being understood that the attainment of
any financial targets associated with any bonus shall not be determined until following the completion of the Corporation’s
annual audit and public announcement of such results and bonuses shall be paid promptly following the Corporation’s announcement
Equity Awards. Employee shall be eligible for such grants of awards under stock option or other equity incentive
plans of the Corporation adopted by the Board and approved by the Corporation’s stockholders (or any successor or replacement
plan adopted by the Board and approved by the Corporation’s stockholders) (the “Plan”) as the Compensation
Committee of the Corporation may from time to time determine (the “Share Awards”). Share Awards shall be subject
to the applicable Plan terms and conditions, provided, however, that Share Awards shall be subject to any additional terms and
conditions as are provided herein or in any award certificate(s), which shall supersede any conflicting provisions governing Share
Awards provided under the Plan.
The Corporation shall pay or reimburse the Employee for all reasonable out-of-pocket expenses actually incurred
or paid by the Employee in the course of his employment, including all reasonable expenses for the use of a cell phone in connection
with Employee’s employment with the Corporation, consistent with the Corporation’s policy for reimbursement of expenses
from time to time and home office reimbursement, if applicable.
The Employee shall be entitled to participate in such pension, profit sharing, group insurance, hospitalization,
and group health and benefit plans and all other benefits and plans, including perquisites, if any, as the Corporation provides
to its senior Employees, including group family health insurance coverage which shall be paid by the Corporation (the “Benefit
Plans”). In the event the Corporation does not have a health benefit plan in place, or the health benefit plan is limited
geographically, the Corporation shall reimburse the Employee for expenses incurred in maintaining health and dental insurance for
Employee and his dependents, in an amount not to exceed $1,500 per month.
This Agreement and the Employee’s employment hereunder shall terminate upon the happening of any of the following
upon the Employee’s death;
upon the Employee’s “Total Disability” (as herein defined);
upon the expiration of the Initial Term of this Agreement or any Renewal Term thereof, if either party has provided
a timely notice of non-renewal in accordance with Section 3, above;
at the Employee’s option, upon thirty (30) days prior written notice to the Corporation;
at the Employee’s option, in the event of an act by the Corporation, defined in Section 5(c), below, as constituting
“Good Reason” for termination by the Employee; and
at the Corporation’s option, in the event of an act by the Employee, defined in Section 5(d), below, as constituting
“Cause” for termination by the Corporation.
For purposes of this Agreement, the Employee shall be deemed to be suffering from a “Total Disability”
if the Employee has failed to perform his regular and customary duties to the Corporation for a period of 180 days out of any 360-day
period and if before the Employee has become “Rehabilitated” (as herein defined) a majority of the members of the Board,
exclusive of the Employee, vote to determine that the Employee is mentally or physically incapable or unable to continue to perform
such regular and customary duties of employment. As used herein, the term “Rehabilitated” shall mean such time
as the Employee is willing, able and commences to devote his time and energies to the affairs of the Corporation to the extent
and in the manner that he did so prior to his Total Disability. Nothing in this Section 5(b) shall be construed to waive the Employee’s
rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. s.2601 et
seq. and the Americans with Disabilities Act, 42 U.S.C. s12101 et seq.
For purposes of this Agreement, the term “Good Reason” shall mean that the Employee has resigned
due to (i) any diminution of duties inconsistent with Employee’s title, authority, duties and responsibilities (including,
without limitation, a change in the chain of reporting); (ii) any reduction of or failure to pay Employee compensation provided
for herein, except to the extent Employee consents in writing prior to any reduction, deferral or waiver of compensation, which
non-payment continues for a period of ten (10) days following written notice to the Corporation by Employee of such non-payment;
(iii) any relocation of the principal location of Employee’s employment outside of Jacksonville, FL without the Employee’s
prior written consent; (iv) the consummation of any Change in Control Transaction (as defined below); (vi) any material violation
by the Corporation of its obligations under this Agreement that is not cured within thirty (30) days after receipt of written notice
thereof from the Employee. For purposes of this Agreement, the term “Change in Control Transaction” means the
sale of the Corporation to an un-affiliated person or entity or group of un-affiliated persons or entities pursuant to which such
party or parties acquire (i) shares of capital stock of the Corporation representing at least fifty percent (50%) of outstanding
capital stock or sufficient to elect a majority of the Board of the Corporation (whether by merger, consolidation, sale or transfer
of shares (other than a merger where the Corporation is the surviving corporation and the shareholders and directors of the Corporation
prior to the merger constitute a majority of the shareholders and directors, respectively, of the surviving corporation (or its
parent)) or (ii) all or substantially all of the Corporation’s assets determined on a consolidated basis.
For purposes of this Agreement, the term “Cause” shall mean:
of a felony or a crime involving fraud or moral turpitude; or
material act of dishonesty or fraud, intentional falsification of any employment or Corporation records, or commission of any criminal
act which impairs Employee’s ability to perform appropriate employment duties for the Corporation;
or reckless conduct or gross negligence materially harmful to the Corporation or the successor to the Corporation after a Change
in Control Transaction, including violation of a non-competition or confidentiality agreement; or
failure to follow lawful and reasonable instructions of the person or body to which Employee reports, which failure, if curable,
is not cured within thirty (30) days after written notice to the Employee thereof; or
negligence or willful misconduct in the performance of Employee’s assigned duties; or
(vi) any material
breach of this Agreement by Employee, which breach, if curable, is not cured within fifteen (15) days after written notice to the
Employee of such breach.
Effects of Termination.
Upon termination of the Employee’s employment pursuant to Section 5(a)(i) or (ii), in addition to the accrued
but unpaid compensation through the date of death or Total Disability and any other benefits accrued to him under any Benefit Plans
outstanding at such time and the reimbursement of documented, unreimbursed expenses incurred prior to such date, the Employee or
his estate or beneficiaries, as applicable, shall be entitled to the following severance benefits: (i) continued provision for
a period of twelve (12) months following the Employee’s death or Total Disability of benefits under Benefit Plans extended
from time to time by the Corporation to its senior Employees; and (ii) payment on a pro-rated basis of any bonus or other payments
earned in connection with any bonus plan to which the Employee was a participant as of the date of death or Total Disability.
Upon termination of the Employee’s employment pursuant to Section 5(a)(iii), where the Corporation has offered
to renew the term of the Employee’s employment for an additional one (1) year period and the Employee chooses not to continue
in the employ of the Corporation, the Employee shall be entitled to receive only the accrued but unpaid compensation through the
date of termination and any other benefits accrued to him under any Benefit Plans outstanding at such time and the reimbursement
of documented, unreimbursed expenses incurred prior to such date. In the event the Corporation tenders a Non-Renewal Notice to
the Employee, then the Employee shall be entitled to the same severance benefits as if the Employee’s employment were terminated
pursuant to Section 5(a)(v); provided, however, if such Non-Renewal Notice was triggered due to the Corporation’s
statement that the Employee’s employment was terminated due to Section 5(a)(vi) (for “Cause”), then payment of
severance benefits will be contingent upon a determination as to whether termination was properly for “Cause.”
Upon termination of the Employee’s employment pursuant to Section 5(a)(v) or other than pursuant to Section
5(a)(i), 5(a)(ii), 5(a)(iii), 5(a)(iv), or 5(a)(vi) (i.e., without “Cause”), in addition to the accrued but unpaid
compensation through the end of the Term or any then applicable extension of the Term and any other benefits accrued to him under
any Benefit Plans outstanding at such time and the reimbursement of documented, unreimbursed expenses incurred prior to such date,
the Employee shall be entitled to the following severance benefits: (i) a cash payment, based on the current scale of Employee’s
Base Salary, equal to six months of Base Salary, to be paid in a single lump sum payment not later than sixty (60) days following
such termination, less withholding of all applicable taxes; (ii) continued provision for a period of twelve (12) months after the
date of termination of the benefits under Benefit Plans extended from time to time by the Corporation to its senior Employees;
and (iii) payment on a pro-rated basis of any bonus or other payments earned in connection with any bonus plan to which the Employee
was a participant as of the date of the Employee’s termination of employment. In addition, any options or restricted stock
shall be immediately vested upon termination of Employee’s employment pursuant to Section 5(a)(v) or by the Corporation without
Upon termination of the Employee’s employment pursuant to Section 5(a)(iv) or (vi), in addition to the reimbursement
of documented, unreimbursed expenses incurred prior to such date, the Employee shall be entitled to the following severance benefits:
(i) accrued and unpaid Base Salary through the date of termination, less withholding of applicable taxes and any other benefits
accrued to him under any Benefit Plans outstanding at such time; and (ii) continued provision, for a period of one (1) month after
the date of the Employee’s termination of employment, of benefits under Benefit Plans extended to the Employee at the time
of termination. Employee shall have any conversion rights available under the Corporation’s Benefit Plans and as otherwise
provided by law, including the Comprehensive Omnibus Budget Reconciliation Act.
Any payments required to be made hereunder by the Corporation to the Employee shall continue to the Employee’s
beneficiaries in the event of his death until paid in full.
Time Off. In additional to standard holidays, the Employee shall be entitled to take reasonable amounts of
time off for vacation, illness, and personal matters during which period his salary shall be paid in full. Discretionary absences
of longer than one week should be scheduled at such time or times as the Employee and the Corporation shall determine is mutually
of Confidential Information.
(a) The Employee recognizes,
acknowledges and agrees that he has had and will continue to have access to secret and confidential information regarding the Corporation,
its subsidiaries and their respective businesses (“Confidential Information”), including but not limited to,
its products, methods, formulas, software code, patents, sources of supply, customer dealings, data, know-how, trade secrets and
business plans, provided such information (i) is not in or does not hereafter become part of the public domain, or (ii) became
known to others through no fault of the Employee. The Employee acknowledges that such information is of great value to the Corporation,
is the sole property of the Corporation, and has been and will be acquired by him in confidence. In consideration of the obligations
undertaken by the Corporation herein, the Employee will not, at any time, during or after his employment hereunder, reveal, divulge
or make known to any person, any Confidential Information acquired by the Employee during the course of his employment, which is
treated as confidential by the Corporation, and not otherwise in the public domain, except as required by law (but only after Employee
has provided the Corporation with reasonable notice and opportunity to take action against any legally required disclosure. The
provisions of this Section 8 shall survive the termination of the Employee’s employment hereunder.
(b) The Employee
affirms that he does not possess and will not rely upon the protected trade secrets or confidential or proprietary information
of any prior employer(s) in providing services to the Corporation or its subsidiaries, except his prior knowledge of Lighter Than
Air Systems Corp. which was acquired by the Corporation.
(c) In the event
that the Employee’s employment with the Corporation terminates for any reason, the Employee shall deliver forthwith to the
Corporation any and all originals and copies, including those in electronic or digital formats, of Confidential Information; provided,
however, Employee shall be entitled to retain (i) papers and other materials of a personal nature, including, but not limited to,
photographs, correspondence, personal diaries, calendars and rolodexes, personal files and phone books, (ii) information showing
his compensation or relating to reimbursement of expenses, (iii) information that he reasonably believes may be needed for tax
purposes and (iv) copies of plans, programs and agreements relating to his employment, or termination thereof, with the Corporation.
Non-Competition and Non-Solicitation.
(a) The Employee
agrees and acknowledges that the Confidential Information that the Employee has already received and will receive is valuable to
the Corporation and that its protection and maintenance constitutes a legitimate business interest of the Corporation, to be protected
by the non-competition restrictions set forth herein. The Employee agrees and acknowledges that the non-competition restrictions
set forth herein are reasonable and necessary and do not impose undue hardship or burdens on the Employee. The Employee also acknowledges
that the Corporation’s business is conducted worldwide (the “Territory”), and that the Territory, scope
of prohibited competition, and time duration set forth in the non-competition restrictions set forth below are reasonable and necessary
to maintain the value of the Confidential Information of, and to protect the goodwill and other legitimate business interests of,
the Corporation, its affiliates and/or its clients or customers. The provisions of this Section 9 shall survive the termination
of the Employee’s employment hereunder for the time periods specified below.
(b) The Employee
hereby agrees and covenants that he shall not without the prior written consent of the Corporation, directly or indirectly, in
any capacity whatsoever, including, without limitation, as an employee, employer, consultant, principal, partner, shareholder,
officer, director or any other individual or representative capacity (other than (i) as a holder of less than two (2%) percent
of the outstanding securities of a company whose shares are traded on any national securities exchange or (ii) as a limited partner,
passive minority interest holder in a venture capital fund, private equity fund or similar investment entity which holds or may
hold an equity or debt position in portfolio companies that are competitive with the Corporation; provided however, that the Employee
shall be precluded from serving as an operating partner, general partner, manager or governing board designee with respect to such
portfolio companies), whether on the Employee's own behalf or on behalf of any other person or entity or otherwise howsoever, during
the Term and thereafter to the extent described below, within the Territory.
(1) Engage, own,
manage, operate, control, be employed by, consult for, participate in, or be connected in any manner with the ownership, management,
operation or control of any business in competition with the Business of the Corporation, as defined in the next sentence. “Business”
shall mean the development and sale of lighter than air and heavier than air tethered aerostats or drones.
(2) Recruit, solicit
or hire, or attempt to recruit, solicit or hire, any employee, or independent contractor of the Corporation to leave the employment
(or independent contractor relationship) thereof, whether or not any such employee or independent contractor is party to an employment
agreement, for the purpose of competing with the Business of the Corporation;
(3) Attempt in
any manner to solicit or accept from any customer of the Corporation, with whom Employee had significant contact during Employee’s
employment by the Corporation (whether under this Agreement or otherwise), business competitive with the Business done by the Corporation
with such customer or to persuade or attempt to persuade any such customer to cease to do business or to reduce the amount of business
which such customer has customarily done with the Corporation, or if any such customer elects to move its business to a person
other than the Corporation, provide any services of the kind or competitive with the Business of the Corporation for such customer,
or have any discussions regarding any such service with such customer, on behalf of such other person for the purpose of competing
with the Business of the Corporation; or
(4) Interfere with
any relationship, contractual or otherwise, between the Corporation and any other party, including, without limitation, any supplier,
distributor, co-venturer or joint venturer of the Corporation, for the purpose of soliciting such other party to discontinue or
reduce its business with the Corporation for the purpose of competing with the Business of the Corporation.
to the activities described in Paragraphs (1), (2), (3) and (4) above, the restrictions of this Section 9 shall continue during
the Employment Period and, upon termination of the Employee’s employment for a period of one (1) year thereafter.
The provisions of
this Agreement are intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
and any final regulations and guidance promulgated thereunder (“Section 409A”) and shall be construed in a manner
consistent with the requirements for avoiding taxes or penalties under Section 409A. The Corporation and Employee agree to work
together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section
To the extent that
Employee will be reimbursed for costs and expenses or in-kind benefits, except as otherwise permitted by Section 409A, (a) the
right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit, (b) the amount of expenses
eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement,
or in-kind benefits to be provided, in any other taxable year; provided that the foregoing clause (b) shall not be violated with
regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject
to a limit related to the period the arrangement is in effect and (c) such payments shall be made on or before the last day of
the taxable year following the taxable year in which you incurred the expense.
A termination of employment
shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination constitutes a “Separation from Service”
within the meaning of Section 409A and, for purposes of any such provision of this Agreement references to a “termination,”
“termination of employment” or like terms shall mean Separation from Service.
Each installment payable
hereunder shall constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b), including Treasury Regulation
Section 1.409A-2(b)(2)(iii). Each payment that is made within the terms of the “short-term deferral” rule set forth
in Treasury Regulation Section 1.409A-1(b)(4) is intended to meet the “short-term deferral” rule. Each other payment
is intended to be a payment upon an involuntary termination from service and payable pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii),
et. seq., to the maximum extent permitted by that regulation, with any amount that is not exempt from Code Section 409A being subject
to Code Section 409A.
to the contrary in this Agreement, if Employee is a “specified employee” within the meaning of Section 409A at the
time of Employee’s termination, then only that portion of the severance and benefits payable to Employee pursuant to this
Agreement, if any, and any other severance payments or separation benefits which may be considered deferred compensation under
Section 409A (together, the “Deferred Compensation Separation Benefits”), which (when considered together) do not exceed
the Section 409A Limit (as defined herein) may be made within the first six (6) months following Employee’s termination of
employment in accordance with the payment schedule applicable to each payment or benefit. Any portion of the Deferred Compensation
Separation Benefits in excess of the Section 409A Limit otherwise due to Employee on or within the six (6) month period following
Employee’s termination will accrue during such six (6) month period and will become payable in one lump sum cash payment
on the date six (6) months and one (1) day following the date of Employee’s termination of employment. All subsequent Deferred
Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, if Employee dies following termination but prior to the six (6) month
anniversary of Employee’s termination date, then any payments delayed in accordance with this paragraph will be payable in
a lump sum as soon as administratively practicable after the date of Employee’s death and all other Deferred Compensation
Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.
For purposes of this
Agreement, “Section 409A Limit” will mean a sum equal (x) to the amounts payable prior to March 15 following the year
in which Employee terminations plus (y) the lesser of two (2) times: (i) Employee’s annualized compensation based upon the
annual rate of pay paid to Employee during the Corporation’s taxable year preceding the Corporation’s taxable year
of Employee’s termination of employment as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any IRS guidance
issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section
401(a)(17) of the Code for the year in which Employee’s employment is terminated.
The Employee acknowledges that the services to be rendered by him under the provisions of this Agreement are of a special,
unique and extraordinary character and that it would be difficult or impossible to replace such services. Accordingly, the Employee
agrees that any breach or threatened breach by him of Sections 8 or 9 of this Agreement shall entitle the Corporation, in addition
to all other legal remedies available to it, to apply to any court of competent jurisdiction to seek to enjoin such breach or threatened
breach. The parties understand and intend that each restriction agreed to by the Employee hereinabove shall be construed as separable
and divisible from every other restriction, that the unenforceability of any restriction shall not limit the enforceability, in
whole or in part, of any other restriction, and that one or more or all of such restrictions may be enforced in whole or in part
as the circumstances warrant. In the event that any restriction in this Agreement is more restrictive than permitted by law in
the jurisdiction in which the Corporation seeks enforcement thereof, such restriction shall be limited to the extent permitted
by law. The remedy of injunctive relief herein set forth shall be in addition to, and not in lieu of, any other rights or remedies
that the Corporation may have at law or in equity.
Neither the Employee nor the Corporation may assign or delegate any of their rights or duties under this Agreement without
the express written consent of the other; provided however that the Corporation shall have the right to delegate its obligation
of payment of all sums due to the Employee hereunder, provided that such delegation shall not relieve the Corporation of any of
its obligations hereunder.
This Agreement constitutes and embodies the full and complete understanding and agreement of the parties with respect to
the Employee’s employment by the Corporation, supersedes all prior understandings and agreements, whether oral or written,
between the Employee and the Corporation, and shall not be amended, modified or changed except by an instrument in writing executed
by the party to be charged. The invalidity or partial invalidity of one or more provisions of this Agreement shall not invalidate
any other provision of this Agreement. No waiver by either party of any provision or condition to be performed shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
This Agreement shall inure to the benefit of, be binding upon and enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted assigns.
The headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement.
All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered, sent by registered or certified mail, return receipt requested,
postage prepaid, or by private overnight mail service (e.g. Federal Express) to the party at the address set forth above or to
such other address as either party may hereafter give notice of in accordance with the provisions hereof. Notices shall be deemed
given on the sooner of the date actually received or the third business day after sending.
This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without
reference to principles of conflicts of laws and each of the parties hereto irrevocably consents to the jurisdiction and venue
of the federal and state courts located in the State of New York.
This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one of the same instrument. The parties hereto have executed this Agreement as of the date
set forth above.
DRONE AVIATION HOLDING CORP.
By: Kendall W. Carpenter
Title: Chief Financial Officer
By: Daniyel Erdberg