SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
SECOND
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This
Second Amended and Restated Executive Employment Agreement (this “Agreement”) is
made as of the 16th day of June, 2005 by and between Mobilepro Corp., a Delaware
corporation (the “Company”), and Xxx X. Xxxxxx (“Executive”).
WHEREAS,
the Company and the Executive are parties to that certain Executive Employment
Agreement dated as of June 9, 2004 (“Original Agreement”), amending Executive’s
prior Executive Employment Agreement dated as of April 15, 2004, which states
the terms and conditions of the Executive’s employment as President and Chief
Executive Officer of the Company; and
WHEREAS,
the Company and Executive wish to amend the Original Agreement primarily to
amend various compensation provisions in light of the Company’s achievement of
certain acquisition milestones and increasing focus on earnings.
NOW,
THEREFORE, in consideration of the foregoing recitals and the representations,
covenants and terms, the parties hereto hereby agree to amend and restate the
Original Agreement in its entirety as follows:
| 1. |
Employment
Period
|
The
Company will employ Executive, and Executive will serve the Company, under
the
terms of this Agreement commencing April 1, 2005 (the “Commencement Date”)
through December 31, 2007 unless earlier terminated under Section 4 hereof.
On
November 1, 2007, the term of this Agreement shall automatically be extended
for
an additional period of twelve (12) months; provided, however, that either
party
hereto may elect not to so extend this Agreement by giving written notice to
the
other party at least sixty (60) days prior to such anniversary date. The period
of time between the commencement and the termination of Executive’s employment
hereunder shall be referred to herein as the “Employment Period.”
| 2. |
Duties
and Status
|
The
Company hereby engages Executive as its President and Chief Executive Officer
on
the terms and conditions set forth in this Agreement. During the Employment
Period, Executive shall report directly to the Board of Directors of the Company
(the “Board”) and shall exercise such authority, perform such executive
functions and discharge such responsibilities as are reasonably associated
with
Executive’s position, commensurate with the authority vested in Executive
pursuant to this Agreement and consistent with the governing documents of the
Company. These duties include, but are not limited to: (i) increasing the
revenue, earnings and financial strength of the Company; (ii) working with
the
CFO to build the Company’s presence on “Wall Street” and serving as the
Company’s “face” to the capital markets; (iii) identifying and recruiting
additional personnel to build the Company; (iv) seeking and closing acquisitions
for the Company to increase the Company’s revenue and earnings per share; (v)
working to shape and determine the strategic direction of the Company; and
(v)
handling such other leadership, administrative and managerial roles as is
customary and appropriate for a company’s President and Chief Executive
Officer.
| 3. |
Compensation
and Benefits
|
| (a) |
Salary.
During the Employment Period, the Company shall pay to Executive,
as
compensation for the performance of his duties and obligations under
this
Agreement, a base salary during the remainder of 2005 of Two Hundred
Ten
Thousand Dollars ($210,000), during 2006 Two Hundred Forty Thousand
Dollars ($240,000) and during 2007 Two Hundred Seventy Thousand Dollars
($270,000). The base salary may be increased at the discretion of
the
Board.
|
| (b) |
Bonus.
During the Employment Period, Executive shall be entitled to a bonus
during 2005 of $90,000 for refinancing the Company’s debt with Airlie
Opportunity Master Fund, Ltd. and up to $150,000 according to the
following percentages: 35% for achieving the profit projected in
the
Company’s 2006 budget; 20% for obtaining a listing of the Company on
NASDAQ (SmallCap or National Market) or AMEX (at the Board’s
discretion);15% for achieving the Company’s 2006 projected revenue as set
forth in its budget; and 30% at the discretion of the Board. During
2006
and 2007 the bonus shall be determined upon criteria mutually agreed
to
between the Board and Executive, provided,
however,
that the total cash compensation for Executive (base salary and bonus)
shall not exceed $450,000 unless otherwise mutually agreed between
the
Board and Executive.
|
| (c) |
Equity.
As partial consideration for entering into this Agreement, the Company
hereby grants Executive a warrant in the form attached hereto as
Exhibit
1
to
acquire five million (5,000,000) shares of the Company’s common stock, par
value $.001 per share at an exercise price of $0.22 per share (the
“Warrant Shares”) to vest ratably over thirty-two (32) months between
April 2005 and December 2008 or immediately if Executive’s employment is
terminated without cause or for good reason (as described in Section
4
hereof) or due to a change in control, sale of a majority of the
common
stock or substantially all of the assets of the Company or merger
of the
Company into or with another company (unless such company is less
than
ninety percent (90%) of the size (measured by market value) of the
Company) or reverse merger with another company. This warrant is
in
addition to (i) the warrant to acquire seven million two hundred
thousand
(7,200,000) shares of the Company’s common stock pursuant to Executive’s
prior Employment Agreement dated April 15, 2004 at an exercise price
of
$0.018 per share (the “Warrant Shares”) to vest three hundred thousand
(300,000) Warrant Shares each month commencing April 15, 2004 or
immediately if Executive’s employment is terminated without cause or for
good reason (as described in Section 4 hereof) or due to a change
in
control, sale of a majority of the common stock or substantially
all of
the assets of the Company or merger of the Company into or with another
company (unless such company is less than fifty percent (50%) of
the size
(measured by market value) of the Company) or reverse merger with
another
company; and (ii) the warrant(s) to acquire seven million nine hundred
eighty two thousand five hundred (7,982,500) Warrant Shares which
have
already vested. The Warrant Shares granted hereunder must be exercised
by
the tenth anniversary of the date of vesting or shall be forfeited
by
Executive. All Warrant Shares granted hereunder shall have a “cashless”
exercise provision which enables Executive to give up a portion of
his
Warrant Shares in order to exercise others without paying cash for
them.
Further, the number, kind and strike price of the stock Warrant Shares
granted hereunder shall be appropriately and equitably adjusted to
reflect
any stock dividend, stock split, spin-off, split-off, extraordinary
cash
dividend, recapitalization, reclassification or other major corporate
action affecting the stock of the Company to the end that after such
event
Executive’s proportionate interest in the Company shall be maintained as
before the occurrence of such event. Executive shall also receive
payment
of any cash dividend or stock dividend declared and paid by the Company
as
if Executive had already exercised all of his Warrant Shares, including
unvested Warrant Shares.
|
-2-
| (d) |
Appointment
to the Board.
The Company shall nominate Executive to be a member of the Board
during
the Employment Period.
|
| (e) |
Other
Benefits.
During the Employment Period, Executive shall be entitled to participate
in all of the employee benefit plans, programs and arrangements of
the
Company in effect during the Employment Period which are generally
available to senior executives of the Company, subject to and on
a basis
consistent with the terms, conditions and overall administration
of such
plans, programs and arrangements. In addition, during the Employment
Period, Executive shall be entitled to fringe benefits and perquisites
comparable to those of other senior executives of the Company including,
but not limited to, twenty (20) days of vacation pay plus five (5)
sick/personal days, to be used in accordance with the Company’s vacation
pay policy for senior executives.
|
-3-
| (f) |
Business
Expenses.
During the Employment Period, the Company shall promptly reimburse
Executive for all appropriately documented, reasonable business expenses
incurred by Executive in the performance of his duties under this
Agreement, including, but not limited to, telecommunications expenses
and
travel expenses.
|
| (g) |
Office.
During the Employment Period, the Company shall provide an office
at a
place mutually agreeable to Executive and the Company and, to the
extent
that the Company’s budget allows, secretarial assistance to Executive
suitable to Executive’s position as the Company’s Chief Executive Officer.
Executive agrees that the Company’s existing offices at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx, Xxxxxxxx 00000 are sufficient to satisfy this
covenant.
|
| 4. |
Termination
of Employment
|
| (a) |
Termination
for Cause.
The Company may terminate Executive’s employment hereunder for Cause
(defined below). For purposes of this Agreement and subject to Executive’s
opportunity to cure as provided in Section 4(c) hereof, the Company
shall
have Cause to terminate Executive’s employment hereunder if such
termination shall be the result of:
|
|
(i)
|
a
willful or grossly negligent material breach
of fiduciary duty or material breach
of the terms of this Agreement or any other agreement between Executive
and the Company (including without limitation any agreements regarding
confidentiality, inventions assignment and non-competition), which,
in the
case of a material breach
of the terms of this Agreement or any other agreement, remains uncured
for
a period of thirty (30) days following receipt of written notice
from the
Board specifying the nature of such
breach;
|
|
(ii)
|
the
commission by Executive of any act of embezzlement, fraud, larceny
or
theft on or from the Company;
|
|
(iii)
|
substantial
and continuing gross neglect or inattention by Executive of the duties
of
his employment or the willful misconduct or gross negligence of Executive
in connection with the performance of such duties which remains uncured
for a period of thirty (30) days following receipt of written notice
from
the Board specifying the nature of such breach;
and
|
-4-
|
(iv)
|
the
commission by and indictment of Executive of any crime involving
moral
turpitude or a felony.
|
| (b) |
Termination
for Good Reason.
Executive shall have the right at any time to terminate his employment
with the Company upon not less than thirty (30) days prior written
notice
of termination for Good Reason (defined below). For purposes of this
Agreement and subject to the Company’s opportunity to cure as provided in
Section 4(c) hereof, Executive shall have Good Reason to terminate
his
employment hereunder if such termination shall be the result
of:
|
| (i) |
The
breach by the Company of any material provision of this Agreement;
or
|
| (ii) |
A
requirement by the Company that Executive perform any act or refrain
from
performing any act that would be in violation of any applicable law.
|
| (c) |
Notice
and Opportunity to Cure.
Notwithstanding the foregoing, it shall be a condition precedent
to the
Company’s right to terminate Executive’s employment for Cause and
Executive’s right to terminate for Good Reason that (i) the party seeking
termination shall first have given the other party written notice
stating
with specificity the reason for the termination (“breach”) and (ii) if
such breach is susceptible of cure or remedy, a period of fifteen
(15)
days from and after the giving of such notice shall have elapsed
without
the breaching party having effectively cured or remedied such breach
during such 15-day period, unless such breach cannot be cured or
remedied
within fifteen (15) days, in which case the period for remedy or
cure
shall be extended for a reasonable time (not to exceed an additional
thirty (30) days) provided the breaching party has made and continues
to
make a diligent effort to effect such remedy or
cure.
|
| (d) |
Voluntary
Termination.
Executive, at his election, may terminate his employment upon not
less
than sixty (60) days prior written notice of termination other than
for
Good Reason.
|
| (e) |
Termination
Upon Death or Permanent and Total Disability.
The Employment Period shall be terminated by the death of Executive.
The
Employment Period may be terminated by the Board if Executive shall
be
rendered incapable of performing his duties to the Company by reason
of
any medically determined physical or mental impairment that can be
reasonably expected to result in death or that can be reasonably
be
expected to last for a period of either (i) six (6) or more consecutive
months from the first date of Executive’s absence due to the disability or
(ii) nine (9) months during any twelve-month period (a “Permanent and
Total Disability”). If the Employment Period is terminated by reason of a
Permanent and Total Disability of Executive, the Company shall give
thirty
(30) days’ advance written notice to that effect to
Executive.
|
-5-
| (f) |
Termination
Without Cause.
The Company, at its election, may terminate Executive’s employment
otherwise than for Cause, upon not less than sixty (60) days written
notice of termination.
|
| (g) |
Termination
for Business Failure.
Anything contained herein to the contrary notwithstanding, in the
event
the Company’s business is discontinued because continuation is rendered
impracticable by substantial financial losses, lack of funding, legal
decisions, administrative rulings, declaration of war, dissolution,
national or local economic depression or crisis or any reasons beyond
the
control of the Company, then this Agreement shall terminate as of
the day
the Company determines to cease operation with the same force and
effect
as if such day of the month were originally set as the termination
date
hereof. In the event this Agreement is terminated pursuant to this
Section
4(g), Executive will not be entitled to severance
pay.
|
| 5. |
Consequences
of Termination
|
| (a) |
Without
Cause, due to a Change of Control or for Good Reason.
In the event of a termination of Executive’s employment during the
Employment Period by the Company other than for Cause pursuant to
Section
4(f) or by Executive for Good Reason pursuant to Section 4(b)
(e.g.,
due to a Change of Control of the Company, where Change of Control
means:
(i) the acquisition (other than from the Company) in one or
more
transactions by any Person, as defined in this Section 5(a), of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under
the Securities Exchange Act of 1934, as amended) of 50% or more of
(A) the then outstanding shares of the securities of the Company,
or
(B) the combined voting power of the then outstanding securities
of
the Company entitled to vote generally in the election of directors
(the
“Company Voting Stock”); (ii) the closing of a sale or other
conveyance of all or substantially all of the assets of the Company;
or
(iii) the effective time of any merger, share exchange,
consolidation, or other business combination of the Company if immediately
after such transaction persons who hold a majority of the outstanding
voting securities entitled to vote generally in the election of directors
of the surviving entity (or the entity owning 100% of such surviving
entity) are not persons who, immediately prior to such transaction,
held
the Company Voting Stock; provided,
however,
that a Change of Control shall not include a
public offering of capital stock of the Company. For
purposes of this Section 5(a), a “Person” means any individual,
entity or group within the meaning of Section 13(d)(3) or 14(d)(2)
of the
Securities Exchange Act of 1934, as amended, other than: employee
benefit
plans sponsored or maintained by the Company and corporations controlled
by the Company, the Company shall pay Executive (or his estate) and
provide him with the following:
|
-6-
| (i) |
Lump-Sum
Payment.
A
lump-sum cash payment, payable ten (10) days after Executive’s termination
of employment, equal to the sum of the
following:
|
| (A) |
Salary.
The equivalent of nine (9) months (the “Severance Period”) of Executive’s
then-current base salary; plus
|
| (B) |
Earned
but Unpaid Amounts.
Any previously earned but unpaid salary through Executive’s final date of
employment with the Company, and any previously earned but unpaid
bonus
amounts prior to the date of Executive’s termination of
employment.
|
| (C) |
Equity.
All Warrant Shares vested at time of termination shall be retained
by
Executive. All unvested Warrant Shares shall immediately vest and
be
retained by Executive. Executive shall have the benefit of the full
ten
year option period to exercise such Warrant
Shares.
|
| (ii) |
Other
Benefits.
The Company shall provide continued coverage for the Severance Period
under all health, life, disability and similar employee benefit plans
and
programs of the Company on the same basis as Executive was entitled
to
participate immediately prior to such termination, provided that
Executive’s continued participation is possible under the general terms
and provisions of such plans and programs. In the event that Executive’s
participation in any such plan or program is barred, the Company
shall use
its commercially reasonable efforts to provide Executive with benefits
substantially similar (including all tax effects) to those which
Executive
would otherwise have been entitled to receive under such plans and
programs from which his continued participation is barred. In the
event
that Executive is covered under substitute benefit plans of another
employer prior to the expiration of the Severance Period, the Company
will
no longer be obligated to continue the coverages provided for in
this
Section 5(a)(ii).
|
-7-
| (b) |
Other
Termination of Employment.
In the event that Executive’s employment with the Company is terminated
during the Employment Period by the Company for Cause (as provided
for in
Section 4(a) hereof) or by Executive other than for Good Reason (as
provided for in Section 4(b) hereof), the Company shall pay or grant
Executive any earned but unpaid salary, bonus, and Warrant Shares
through
Executive’s final date of employment with the Company, and the Company
shall have no further obligations to
Executive.
|
| (c) |
Withholding
of Taxes.
All payments required to be made by the Company to Executive under
this
Agreement shall be subject only to the withholding of such amounts,
if
any, relating to tax, excise tax and other payroll deductions as
may be
required by law or regulation.
|
| (d) |
No
Other Obligations.
The benefits payable to Executive under this Agreement are not in
lieu of
any benefits payable under any employee benefit plan, program or
arrangement of the Company, except as specifically provided herein,
and
Executive will receive such benefits or payments, if any, as he may
be
entitled to receive pursuant to the terms of such plans, programs
and
arrangements. Except for the obligations of the Company provided
by the
foregoing and this Section 5, the Company shall have no further
obligations to Executive upon his termination of
employment.
|
| (e) |
No
Mitigation or Offset.
Executive shall have no obligation to mitigate the damages provided
by
this Section 5 by seeking substitute employment or otherwise and
there
shall be no offset of the payments or benefits set forth in this
Section 5
except as provided in Section
5(a)(ii).
|
| 6. |
Governing
Law
|
This
Agreement and the rights and obligations of the parties hereto shall be
construed in accordance with the laws of the State of Maryland, without giving
effect to the principles of conflict of laws.
| 7. |
Indemnity
and Insurance
|
The
Company shall indemnify and save harmless Executive for any liability incurred
by reason of any act or omission performed by Executive while acting in good
faith on behalf of the Company and within the scope of the authority of
Executive pursuant to this Agreement and to the fullest extent provided under
the Bylaws, the Certificate of Incorporation and the General Corporation Law
of
the State of Delaware, except that Executive must have in good faith believed
that such action was in, or not opposed to, the best interests of the Company,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that such conduct was unlawful
-8-
The
Company shall provide that Executive is covered by any Directors and Officers
insurance that the Company provides to other senior executives and/or Board
members.
| 8. |
Non-Disparagement
|
At
all
times during the Employment Period and for a period of five (5) years thereafter
(regardless of how Executive’s employment was terminated), Executive shall not,
directly or indirectly, make (or cause to be made) to any person any
disparaging, derogatory or other negative or false statement about the Company
(including its products, services, policies, practices, operations, employees,
sales representatives, agents, officers, members, managers, partners or
directors), provided, however, that any statements that Executive makes to
his
immediate family and in-laws
shall
be
immune from this provision.
| 9. |
Cooperation
with the Company After Termination of
Employment
|
Following
termination of Executive’s employment for any reason, Executive shall fully
cooperate with the Company in all matters relating to the winding up of
Executive’s pending work on behalf of the Company including, but not limited to,
any litigation in which the Company is involved, and the orderly transfer of
any
such pending work to other employees of the Company as may be designated by
the
Company. Following any notice of termination of employment by either the Company
or Executive, the Company shall be entitled to such full time or part time
services of Executive as the Company may reasonably require during all or any
part of the sixty (60)-day period following any notice of termination, provided
that Executive shall be compensated for such services at the same rate as in
effect immediately before the notice of termination.
| 10. |
Lock-up
Period and Volume
Limitation.
|
Executive
agrees that he will not sell or otherwise transfer or dispose of more than
one
million (1,000,000) shares of the Company’s common stock during any calendar
quarter during the Employment Period.
| 11. |
Notice
|
All
notices, requests and other communications pursuant to this Agreement shall
be
sent by overnight mail to the following addresses:
--
-9-
If
to
Executive:
Xxx
X.
Xxxxxx
If
to the
Company:
Attn:
Board of Directors
0000
Xxxxxxxxx Xxxx.
Xxxxx
000
Xxxxxxxxx,
Xxxxxxxx 00000
Phone:
301/000-0000
| 12. |
Waiver
of Breach
|
Any
waiver of any breach of this Agreement shall not be construed to be a continuing
waiver or consent to any subsequent breach on the part of either Executive
or of
the Company.
| 13. |
Non-Assignment
/ Successors
|
Neither
party hereto may assign his or its rights or delegate his or its duties under
this Agreement without the prior written consent of the other party; provided,
however, that (i) this Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the Company upon any sale or all or
substantially all of the Company’s assets, or upon any merger, consolidation or
reorganization of the Company with or into any other corporation, all as though
such successors and assigns of the Company and their respective successors
and
assigns were the Company; and (ii) this Agreement shall inure to the benefit
of
and be binding upon the heirs, assigns or designees of Executive to the extent
of any payments due to them hereunder. As used in this Agreement, the term
“Company” shall be deemed to refer to any such successor or assign of the
Company referred to in the preceding sentence.
| 14. |
Severability
|
To
the
extent any provision of this Agreement or portion thereof shall be invalid
or
unenforceable, it shall be considered deleted there from and the remainder
of
such provision and of this Agreement shall be unaffected and shall continue
in
full force and effect.
-10-
| 15. |
Counterparts
|
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together will constitute one and
the
same instrument.
| 16. |
Arbitration
|
Executive
and the Company shall submit to mandatory and exclusive binding arbitration,
any
controversy or claim arising out of, or relating to, this Agreement or any
breach hereof where the amount in dispute is greater than or equal to Fifty
Thousand Dollars ($50,000), provided,
however,
that
the parties retain their right to, and shall not be prohibited, limited or
in
any other way restricted from, seeking or obtaining equitable relief from a
court having jurisdiction over the parties. In the event the amount of any
controversy or claim arising out of, or relating to, this Agreement, or any
breach hereof, is less than Fifty Thousand Dollars ($50,000), the parties hereby
agree to submit such claim to mediation. Such arbitration shall be governed
by
the Federal Arbitration Act and conducted through the American Arbitration
Association (“AAA”) in the District of Columbia, before a single neutral
arbitrator, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association in effect at that
time. The parties may conduct only essential discovery prior to the hearing,
as
defined by the AAA arbitrator. The arbitrator shall issue a written decision
which contains the essential findings and conclusions on which the decision
is
based. Mediation shall be governed by, and conducted through, the AAA. Judgment
upon the determination or award rendered by the arbitrator may be entered in
any
court having jurisdiction thereof.
| 17. |
Entire
Agreement
|
This
Agreement and all schedules and other attachments hereto constitute the entire
agreement by the Company and Executive with respect to the subject matter hereof
and, except as specifically provided herein, supersedes any and all prior
agreements or understandings between Executive and the Company with respect
to
the subject matter hereof, whether written or oral. This Agreement may be
amended or modified only by a written instrument executed by Executive and
the
Company. This Agreement takes precedence over any other agreement, including
the
Company’s 2001 Equity Performance Plan, for interpreting the provisions of this
Agreement.
IN
WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the
date written above.
| XXX X. XXXXXX | MOBILEPRO CORP. | ||
|
|
|
||
|
By:
Xxxxxx Xxxxxx
Its:
Board Member
|
-11-
Exhibit
1
WARRANT
-12-
