EMPLOYMENT AGREEMENT
Exhibit
10.2
This
Employment Agreement (the “Agreement”), is dated
as of August 13, 2010, and effective as of the date hereinafter provided, by and
between WidePoint
Corporation, a corporation organized under the laws of the State of
Delaware (the “Company”), and Xxxxx X. XxXxxxxx, (“Executive”).
WITNESETH:
WHEREAS, the Company and
Executive desire to provide for the employment of the Executive as the Chief
Financial Officer of the Company, to engage in such activities and to render
such services under the terms and conditions hereof;
WHEREAS, the Company has
authorized and approved the execution of this Agreement, and Executive desires
to be employed by the Company under the terms and conditions hereinafter
provided; and
WHEREAS, this Agreement
constitutes the entire understanding and agreement between the Company and
Executive regarding its subject matter and supersedes all prior or
contemporaneous negotiations and agreements, whether oral or written, between
them with respect to such subject matter.
NOW, THEREFORE, in
consideration of the mutual covenants and undertakings herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto intending to be legally bound do hereby
agree as follows:
1. Effective Date, Appointment,
Title and Duties. The effective date of this Agreement is July 1,
2010 (“Effective
Date”). As of the Effective Date, the Company employs
Executive to serve as its Chief Financial Officer. In such capacity,
Executive shall report to the Chief Executive Officer of the Company, and shall
have such duties, powers and responsibilities as are customarily assigned to a
Chief Financial Officer of a publicly held corporation, but shall also be
responsible to the Chairman of the Audit Committee of the Board of Directors on
any matters related to the integrity of the financial operating environment of
the Company. In addition, Executive shall have such other duties and
responsibilities as the Board of Directors may reasonably assign him, with his
consent, including serving with the consent or at the request of the Board of
Directors as an officer or on the board of directors of affiliated corporations,
provided that such
duties are commensurate with and customary for a senior executive officer
bearing Executive’s experience, qualifications, title and position.
2. Term of
Agreement. The term of the Executive’s employment under this
Agreement shall commence on the Effective Date and shall terminate after a
period of twenty four (24) months, on June 30, 2012, except that by mutual
consent of the Executive and the Company, the Agreement may be optionally
extended for an additional twelve (12) month period, through and including June
30, 2013.
3. Acceptance of
Position. Executive accepts the position of Chief Financial Officer,
and agrees that during the term of this Agreement he will faithfully perform his
duties and, except as expressly approved by the Board of Directors, will devote
substantially all of his business time to the business and affairs of the
Company. It is acknowledged and agreed that Executive may serve as an
officer and/or director of companies in which the Company owns voting or
non-voting stock. In addition, it is acknowledged that Executive may,
from time to time, serve as a member of the Board of Directors of other
for-profit companies, but not without prior approval by the Board of Directors
of the Company. In the event the Executive, prior to the execution of
this Agreement, is holding a position as a member of a Board of Directors of a
public company, prior approval by the Board of Directors of the Company will not
be required. The Executive may, from time to time, serve as a member
of the Board of Directors of other non-profit associations, community
associations, and not for profit groups without the approval of the Board of
Directors of the Company. Any compensation or remuneration which
Executive receives in consideration of his service on the board of directors of
other companies shall be the sole and exclusive property of Executive, and the
Company shall have no right or entitlement at any time to any such compensation
or remuneration.
4. Salary and
Benefits. During the term of this Agreement:
(a) The
Company shall pay to Executive a base salary at an annual rate of not less than
(i) Two Hundred Five Thousand Dollars ($205,000) per annum for the initial
twelve (12) month period of this Agreement; (ii) Two Hundred Thirty Thousand
Dollars ($230,000) per annum for the second twelve (12) month period of this
Agreement; and (iii) Two Hundred Fifty Five Thousand Dollars ($255,000) per
annum for the optional third twelve (12) month period of this Agreement in the
event the parties jointly exercise that contractual option. The
foregoing amounts are hereafter collectively referred to as the “Base Salary”
and shall be paid in approximately equal monthly installments at intervals based
on any reasonable Company policy which is consistently applied to all other
executives of the Company. Any increase in the Base Salary above the
aforementioned amounts, once granted by the Company to the Executive, shall
automatically amend this Agreement to provide that thereafter Executive’s Base
Salary shall not be less than the annual amount to which such Base Salary has
been increased.
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(b) During
the term hereof, Executive shall be eligible to participate in all health,
retirement, Company-paid insurance, sick leave, vacation, disability, expense
reimbursement and other benefit programs which the Company or its subsidiaries
makes available to any of its senior executives.
(c) Executive
may be awarded an annual bonus (in cash or stock of the Company) in the sole
discretion of the Board of Directors. Executive also shall be
eligible to participate in any Company incentive stock, option or bonus plan
offered by the Company to its senior executives, subject to the terms thereof
and at the sole discretion of the Board of Directors.
(d) The
Company will provide Executive with (i) a home office/automobile expense
allowance of $500.00 per month to cover such expenses incurred in the pursuit of
Company business and; (ii) a phone allowance of $100.00 per month to cover such
expenses incurred in the pursuit of Company business.
5. Certain Terms
Defined. For purposes of this Agreement:
(a) Executive
shall be deemed to be “disabled” if a physical or mental condition shall occur
and persist which, in the written opinion of a licensed physician selected by
the Board of Directors in good faith, has rendered Executive unable to perform
the duties set forth in Section 1 hereof for a period of sixty (60) days or more
and, in the written opinion of such physician, the condition will continue for
an indefinite period of time, rendering Executive unable to return to his
duties.
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(b) A
termination of Executive’s employment by the Company shall be deemed for “Cause”
if, and only if, it is based upon (i) conviction of a felony by a federal
or state court of competent jurisdiction; (ii) material disloyalty to the
Company such as embezzlement or misappropriation of corporate assets; or (iii)
engaging in unethical or illegal behavior which is of a public nature, brings
the Company into disrepute, and results in material damage to the
Company. The Company shall have the right to suspend Executive with
pay, for a reasonable period to investigate allegations of conduct which, if
proven, would establish a right to terminate this Agreement for Cause, or to
permit a felony charge to be tried. Immediately upon the conclusion
of such temporary period, unless Cause to terminate this Agreement has been
established, Executive shall be restored to all duties and responsibilities as
if such suspension had never occurred.
(c) A
resignation by Executive shall not be deemed to be voluntary and shall be deemed
to be a resignation with “Good Reason” if it is based upon (i) a diminution
in Executive’s title, duties, or salary; (ii) a material reduction in
benefits; (iii) a direction by the Board of Directors that Executive report
to any person or group other than the Chief Executive Officer, or (iv) a
geographic relocation of the Company’s primary business operations outside of
the Washington Metropolitan Area (with the Washington Metropolitan Area being
deemed to not include the Winchester, VA-WV Metropolitan Statistical Area and/or
the Xxxxxxxxx, VA Micropolitan area).
(d) “Affiliate”
means with respect to any Person, a Person who, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control, with the Person specified.
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(e) “Base
Salary” means, as of any date of termination of employment, the highest base
salary of Executive in the then current fiscal year or in any of the last four
fiscal years immediately preceding such date of termination of
employment.
(f) “Beneficial
Owner” shall have the meaning given to such term in Rule 13d-3 under the
Exchange Act.
(g) A
“Change in Control” occurs if:
(i) Any
Person or related group of Persons (other than Executive and his Related
Persons, the Company or a Person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities;
(ii) The
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires 33 1/3% or more of the
combined voting power of the Company’s then outstanding securities shall not
constitute a Change in Control;
(iii) The
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets; or
(iv) A
majority of the members of the Board of Directors of the Company cease to be
Continuing Directors;
(h) “Code”
means the Internal Revenue Code of 1986, as amended.
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(i) “Continuing
Directors” means, as of any date of determination, any member of the Board of
Directors who (i) was a member of such Board of Directors on the date of
this Agreement or (ii) was nominated for election or elected to such Board
of Directors with the approval of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election.
(j) “Exchange
Act” means the Exchange Act of 1934, as amended.
(k)
“Person” means any individual, control group as defined in the Exchange Act,
corporation, partnership, limited liability company, trust, association or other
entity.
(l) “Related
Person” means any immediate family member (spouse, partner, parent, sibling or
child, whether by birth or adoption) of the Executive and any trust, estate or
foundation, the beneficiary of which is the Executive and/or an immediate family
member of the Executive.
6. Certain Benefits Upon
Termination. Executive’s employment shall be terminated upon the
earlier of (i) the voluntary resignation of Executive with or without Good
Reason; (ii) Executive’s death or permanent disability; or (iii) upon
the termination of Executive’s employment by the Company for any reason at any
time. In the event of such termination, the provisions of Section
6(a) shall apply, and in the event of a Change of Control, the provisions of
Section 6(b) shall apply.
(a) If
Executive’s employment by the Company terminates for any reason other than as a
result of a termination for Cause, or a voluntary resignation by Executive
without a Good Reason, then the Company shall pay Executive a lump sum severance
payment in cash equal to the greater of (A) the amount equal to twelve (12)
months of the Executive’s Base Salary at the time of such termination, or (B)
the amount equal to the Executive’s Base Salary for the remainder of the term as
if this Agreement had not been terminated; provided that if employment
terminates by reason of Executive’s death or disability, then Executive (or
Executive’s estate, if applicable) shall receive a one time payment equal to the
amount of Base Salary owed for the remainder of the term as if this Agreement
had not been terminated.
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(b) If
the Executive’s employment is terminated by the Company for any reason within
twenty four (24) months of a Change in Control of the Company other than as a
result of a termination for Cause, or a voluntary resignation by Executive
without a Good Reason, then the Company shall pay Executive a one time severance
payment in cash equal to the greater of (A) the amount equal to eighteen (18)
months Base Salary, or (B) the amount equal to the Executive’s Base Salary for
the remainder of the term as if this Agreement had not been terminated; provided that if employment
terminates by reason of Executive’s death or disability, then Executive (or
Executive’s estate, if applicable) shall receive a one time payment equal to the
amount of Base Salary owed for the remainder of the term as if this Agreement
had not been terminated. If the Executive is paid under this Section
6(b), then the Executive shall not receive payments under Section
6(a).
(c) If
Executive’s employment by the Company terminates for any reason, except for the
Company’s termination of Executive’s employment for Cause or a voluntary
resignation by Executive without a Good Reason, the Company shall offer to
Executive the opportunity to participate at Company expense in all medical and
dental plans provided by the Company to its executive officers to the extent
Executive elects for the remainder of the term of this Agreement. To
the extent that the Company cannot provide, for a legal reason or any other
matter, Executive with the opportunity to participate in such medical and dental
plans (at Company expense) for the remainder of the term of this Agreement, then
in such event the Company shall pay to Executive in cash an amount equal to the
fair market value of the benefits to be provided pursuant to this Section
6(c).
(d) The
Company shall make all payments pursuant to the foregoing subsections (a)
through (c) concurrently with the date of termination of Executive’s employment
or consummation of a Change in Control of the Company, as
applicable. Any such termination payments payable hereunder shall be
considered as part-consideration for the non-compete covenant provided by
Executive in Section 7 below.
(e) The
Company shall have no liability under this Section 6 if Executive’s employment
pursuant to this Agreement is terminated by the Company for Cause or by
Executive without a Good Reason.
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(f) Gross-Up.
(i) If
it shall be determined that any payment, distribution or benefit received or to
be received by Executive from the Company (whether payable pursuant to the terms
of this Agreement or any other plan, arrangements or agreement with the Company
or an Affiliate (“Payments”)) would be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then Executive shall be entitled to
receive an additional payment (the “Excise Tax Gross-Up Payment”) in an amount
such that the net amount retained by Executive, after the calculation and
deduction of any Excise Tax on the Payments and any federal, state and local
income taxes and Excise Tax on the Excise Tax Gross-Up Payment provided for in
this Section 6(f), shall be equal to the Payments. In determining
this amount, the amount of the Excise Tax Gross-Up Payment attributable to
federal income taxes shall be reduced by the maximum reduction in federal income
taxes that could be obtained by the deduction of the portion of the Excise Tax
Gross-Up Payment attributable to state and local income
taxes. Finally, the Excise Tax Gross-Up Payment shall be reduced by
income or Excise Tax withholding payment made by the Company or any Affiliate to
any federal, state or local taxing authority with respect to the Excise Tax
Gross-Up Payment that was not deducted from compensation payable to
Executive.
(ii) All
determinations required to be made under this Section 6(f), including whether
and when an Excise Tax Gross-Up Payment is required and the amount of such
Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, except as specified in Section 6(f)(i) above, shall be made
by the Company’s independent auditors (the “Accounting Firm”), which shall
provide detailed supporting calculations both to the Company and
Executive. Such determination of tax liability made by the Accounting
Firm shall be subject to review by Executive’s tax advisor and, if Executive’s
tax advisor does not agree with such determination reached by the Accounting
Firm, then the Accounting Firm and Executive’s tax advisor shall jointly
designate a nationally recognized public accounting firm, which shall make such
determination. All reasonable fees and expenses of the accountants
and tax advisors retained by either Executive or the Company shall be borne by
the Company. Any Excise Tax Gross-Up Payment, as determined pursuant
to this Section 6(f), shall be paid by the Company to Executive within five days
after the receipt of such final determination in writing. Any
determination by a jointly designated public accounting firm shall be binding
upon the Company and Executive.
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(iii) As
a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination thereunder, it is possible that Excise Tax
Gross-Up Payments will not have been made by the Company in an amount that
should have been made consistent with the calculations required to be made
hereunder (“Underpayment”). In the event that Executive thereafter is
required to make a payment of any Excise Tax, any such Underpayment calculated
in accordance with and in the same manner as the Excise Tax Gross-Up Payment in
Section 6(f)(i) above shall be promptly paid by the Company to or for the
benefit of Executive. In the event that the Excise Tax Gross-Up
Payment exceeds the amount subsequently determined to be due, such excess shall
be repaid by the Executive to the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) within one hundred eighty (180)
days from the date that Executive receives written notice of the final
determination of such excess payment.
7. Non-competition. Executive
agrees that at all times while he is employed by the Company and for a period of
twelve (12) months thereafter if Executive’s employment is terminated by
Executive with Good Reason or by the Company without Cause (or if Executive’s
employment is terminated under the provisions of Section 6(b) of this Agreement
or by the Executive without Good Reason or by the Company for Cause, then
Executive’s non-competition period shall be eighteen (18) months from the date
of termination), he will not, as a principal, agent, employee, employer,
consultant, stockholder, investor, director or co-partner of any person, firm,
corporation or business entity other than the Company, or in any individual or
representative capacity whatsoever, directly or indirectly, without the express
prior written consent of the Company :
(i) engage or participate in any
business whose products or services are directly competitive
with that of the Company and which conducts or solicits business, or transacts
with suppliers or customers located within the United States or Puerto
Rico;
(ii) aid or counsel any other
person, firm, corporation or business entity to do any of the
above;
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(iii) become employed by a firm,
corporation, partnership or joint venture which competes with the business of
the Company within the United States or Puerto Rico; or
(iv) approach, solicit business
from, or otherwise do business or deal with any customer of the Company in
connection with any product or service competitive to any provided by the
Company.
For
purposes of the definition of stockholder or investor used in this Section
7, the Executive may hold a non-control position as stockholder or investor in
the securities of publicly traded companies without the prior written consent of
the Company.
8. Indemnification. The
Company shall indemnify Executive and hold him harmless from and against all
claims, losses, damages, expense or liabilities (including expenses of defense
and settlement) based upon or in any way arising from or connected with his
employment by the Company, to the maximum extent permitted by law. To
the fullest extent permitted by law, the Company shall advance to Executive all
expenses necessary in connection with the defense of any action or claim which
is brought if indemnification cannot be determined to be available prior to the
conclusion of such action or the investigation of such claim. The
Company shall investigate in good faith the availability and cost of directors’
and officers’ insurance and shall include Executive as an insured in any
directors’ and officers’ insurance policy it maintains. The
provisions of this Section 8 shall survive any termination or expiration of this
Agreement.
9. Attorney Fees and
Costs. In the event that any action or proceeding is brought to
enforce the terms and provisions of this Agreement, the prevailing party shall
be entitled to recover reasonable attorney fees and costs.
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10. Notices. All
notices and other communications provided to either party hereto under this
Agreement shall be in writing and delivered by certified or registered mail,
postage prepaid, or by national overnight delivery service (such as Federal
Express), to such party at its/his address set forth below its/his signature
hereto, or at such other address as may be designated by either party in
conformity with the provisions of this Section 10, with any such notices being
deemed given when actually received by the recipient.
11. Construction. In
construing this Agreement, if any portion of this Agreement shall be found to be
invalid or unenforceable, the remaining terms and provisions of this Agreement
shall be given effect to the maximum extent permitted without considering the
void, invalid or unenforceable provisions. In construing this
Agreement, the singular shall include the plural, the masculine shall include
the feminine and neuter genders as appropriate. Without limitation to
the foregoing, nothing in this Agreement is intended to violate the
Xxxxxxxx-Xxxxx Act of 2002, and to the extent that any provision of this
Agreement would constitute such a violation, such provision shall be modified to
the extent required by such Act, or, to the extent that such provision cannot be
so modified and is found to be invalid or unenforceable, the remaining terms and
provisions shall be given effect to the maximum extent permitted without
considering the void, invalid or unenforceable provision.
12. Headings. The
section headings hereof have been inserted for convenience of reference only and
shall not be construed to affect the meaning, construction or effect of this
Agreement.
13. Governing
Law. This Agreement, and any statements, conduct, claims, causes of
action, liabilities or other matters relating to or arising out of or in
connection with this Agreement, shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to choice of
law or conflict of law principles. The federal or state courts sitting in the
State of Maryland, County of Xxxx Arundel, shall have exclusive jurisdiction to
adjudicate any disputes arising out of or in connection with this Agreement and
the parties hereby waive any objection based with respect
thereto. Any rights to trial by jury
with respect to any claim, action or proceeding, directly or indirectly, arising
out of, or relating to, this Agreement are waived by the
parties.
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14. Entire
Agreement. This Agreement constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among Executive and the Company, with respect to the subject matter
hereof.
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IN WITNESS WHEREOF, this
Agreement shall be effective as of the date specified in the first paragraph of
this Agreement.
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WIDEPOINT
CORPORATION:
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Signed
August 13, 2010
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/s/
Xxxxx X. Xxxxx
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Name:
Xxxxx X. Xxxxx
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Title: Chief
Executive Officer
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EXECUTIVE:
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Signed
August 13, 2010
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/s/
Xxxxx X. XxXxxxxx
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Name:
Xxxxx X. XxXxxxxx
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Title: Chief
Financial Officer
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