EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement (this “Agreement”) is made as of the 1st day of
November 2004 by and among Mobilepro Corp., a Delaware corporation (the
“Company”) and Xxxxxxxx X. Xxxxx, a natural person, residing in Kansas (“Xx.
Xxxxx”).
WHEREAS, the
Company wishes to employ Xx. Xxxxx as its General Counsel of the Company and Xx.
Xxxxx wishes to accept such employment;
WHEREAS, the
Company and Xx. Xxxxx wish to set forth the terms of Xx. Xxxxx’x employment and
certain additional agreements between Xx. Xxxxx and the Company.
NOW,
THEREFORE, in
consideration of the foregoing recitals and the representations, covenants and
terms contained herein, the parties hereto agree as follows:
(1) Employment
Period
The
Company will employ Xx. Xxxxx, and Xx. Xxxxx will serve the Company, under the
terms of this Agreement commencing November 1, 2004 (the “Commencement Date”)
for a term of twenty-four (24) months unless earlier terminated under Section 4
hereof. The period of time between the commencement and the termination of Xx.
Xxxxx’x employment hereunder shall be referred to herein as the “Employment
Period.”
(2) Duties
and Status
The
Company hereby engages Xx. Xxxxx as its General Counsel on the terms and
conditions set forth in this Agreement. During the term of the Employment
Period, Xx. Xxxxx shall report directly to the Chief Executive Officer of the
Company and shall exercise such authority, perform such executive functions and
discharge such responsibilities as are reasonably associated with Xx. Xxxxx’x
position, commensurate with the authority vested in Xx. Xxxxx pursuant to this
Agreement and consistent with the governing documents of the Company.
(3) Compensation
and Benefits
| (a) |
Salary.
During the Employment Period the Company shall pay to Xx. Xxxxx, as
compensation for the performance of his duties and obligations under
this Agreement, a base salary of Twelve Thousand Five Hundred Dollars
($12,500) per month, payable semi-monthly, beginning November 15,
2004. |
|
(b) |
Insurance.
The
Company shall reimburse Xx. Xxxxx for all health, dental, vision, life,
AD&D, and disability insurance policies (not to exceed $1,000 per
month) until such time as Company establishes like type insurance
coverage. |
|
(c) |
Vacation:
The Company will provide Xx. Xxxxx with three (3) weeks paid vacation per
annum. |
|
(d) |
Bonus.
During the Employment Period, Xx. Xxxxx shall be entitled to the following
bonuses: |
|
(i) |
Annual
Company EBIDTA bonus. The EBIDTA bonus shall be equal to 1.0% of the
Company’s EBITDA for each fiscalyear; payable 90 days after the end of
each fiscal year and based on the Company’s audited financial statements
as filed with the SEC. It is understood that this EBIDTA bonus shall be
capped at $90,000 for any 12 month period. As
a means of clarification, EBITDA shall mean GAAP operating profit plus
depreciation and amortization, but excluding one-time extraordinary
expenses (as defined by GAAP) incurred by Mobilepro but shall take into
account all other expenses of Mobilepro, including acquistion related
expenses and the bonuses of other executives.
|
|
(e) |
Equity.
As partial consideration for entering into this Agreement, the Company
hereby grants Xx. Xxxxx warrants to acquire two million (2,000,000) shares
of the Company’s common stock at an exercise price or $0.20 per share (the
“Option”). One million (1,000,000) warrants shall vest on the Company
achieving $5,000,000 in EBIDTA over the prior twelve calendar months (but
not necessarily during a particular fiscal year). The remaining one
million warrants of the Option shall vest ratably over the twenty-four
(24) months of the Agreement, or immediately if Xx. Xxxxx’x employment is
terminated without cause or for good reason (as described in Section 4
hereof) or, along with the first million warrants, 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. |
|
(f) |
Business
Expenses.
During the Employment Period, Company shall promptly reimburse Xx. Xxxxx
for all appropriately documented and reasonable business and travel
expenses incurred by Xx. Xxxxx in the performance of his duties under this
Agreement. |
|
(g) |
Office.
During the Employment Period, Company agrees to pay Xx. Xxxxx for all
expenses incurred to maintain his current office in an amount equal to
$600 per month. |
|
(h) |
Relocation.
The Company will not require Employee to relocate from Wichita,
Kansas. |
(4) Termination
of Employment
| (a) |
Termination
for Cause.
The Company may terminate Xx. Xxxxx’x employment hereunder for Cause
(defined below). For purposes of this Agreement and subject to Xx. Xxxxx’x
opportunity to cure as provided in Section 4(c) hereof, the Company shall
have Cause to terminate Xx. Xxxxx’x employment hereunder if such
termination shall be the result of: |
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(i)
|
a
material breach
of fiduciary duty or material breach
of the terms of this Agreement or any other agreement between Xx. Xxxxx
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 Xx. Xxxxx of any act of embezzlement, fraud, larceny or
theft on or from the Company; |
|
(iii)
|
Substantial
and continuing neglect or inattention by Xx. Xxxxx of the duties of his
employment or the willful misconduct or gross negligence of Xx. Xxxxx in
connection with the performance of such duties which remains uncured for a
period of fifteen (15) calendar days following receipt of written notice
from the Board specifying the nature of such
breach; |
|
(iv)
|
The
commission by Xx. Xxxxx of any crime involving moral turpitude or a
felony; |
|
(v) |
Xx.
Xxxxx’x performance or omission of any act which, in the judgment of the
Board, if known to the customers, clients, stockholders or any regulators
of the Company, would have a material and adverse impact on the business
of the Company; and |
| (b) |
Termination
for Good Reason.
Xx. Xxxxx 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, Xx. Xxxxx 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 any
stock option or warrant agreement; or |
| (ii) |
A
requirement by the Company that Xx. Xxxxx 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 Xx. Xxxxx’x employment for Cause and Xx.
Xxxxx’x 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. |
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| (d) |
Voluntary
Termination.
At the election of Xx. Xxxxx, 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 Xx. Xxxxx. The
Employment Period may be terminated by the Board of Directors of the
Company if Xx. Xxxxx 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 Xx. Xxxxx’x 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 Xx. Xxxxx, the Company
shall give thirty (30) days’ advance written notice to that effect to Xx.
Xxxxx. |
| (f) |
Termination
Without Cause.
At the election of the Company, 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), the Executive will be entitled to severance
pay. |
(5)
Consequences
of Termination
| (a) |
Without
Cause or for Good Reason.
In the event of a termination of Xx. Xxxxx’x employment during
the Employment Period by the Company other than for Cause pursuant
to Section 4(f) or by Xx. Xxxxx 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
Xx. Xxxxx (or his estate) and provide him with the following: |
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|
(i) |
Lump-Sum
Payment. A
lump-sum cash payment, payable thirty (30) days after Xx. Xxxxx’x
termination of employment, equal to the sum of the
following: |
1) Salary. The
equivalent of six months (the “Severance Period”) of Xx. Xxxxx’x then-current
base salary; plus
2) Earned
but Unpaid Amounts. Any
previously earned but unpaid salary through Xx. Xxxxx’x final date of employment
with the Company, and any previously earned but unpaid bonus amounts prior to
the date of Xx. Xxxxx’x termination of employment.
3) Equity. Xx.
Xxxxx shall retain all Warrants vested at time of termination, but shall be
required to exercise them within six (6) months of termination. All unvested
Warrants (except for those warrants tied to EBITDA, which shall only vest if the
EBITDA target is hit within 90 days of termination except that if the
termination is subsequent to a change in control they shall vest) shall
immediately vest and be retained by Xx. Xxxxx, but he shall be required to
exercise them within six (6) months of termination.
|
(b) |
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 Xx. Xxxxx was entitled to
participate immediately prior to such termination, provided that Xx.
Xxxxx’x continued participation is possible under the general terms and
provisions of such plans and programs. In the event that Xx. Xxxxx’x
participation in any such plan or program is barred, the Company shall use
its commercially reasonable efforts to provide Xx. Xxxxx with benefits
substantially similar (including all tax effects) to those which Xx. Xxxxx
would otherwise have been entitled to receive under such plans and
programs from which his continued participation is barred. In the event
that Xx. Xxxxx 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 coverage’s provided for in this
Section 5(a)(ii). |
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(c) |
Other
Termination of Employment.
In the event that Xx. Xxxxx’x 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 Xx. Xxxxx other than for Good Reason (as
provided for in Section 4(b) hereof), the Company shall pay or grant Xx.
Xxxxx any earned but unpaid salary, bonus, and Option Shares through Xx.
Xxxxx’x final date of employment with the Company, and the Company shall
have no further obligations to Xx. Xxxxx. |
|
(d) |
Withholding
of Taxes.
All payments required to be made by the Company to Xx. Xxxxx 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. |
|
(e) |
No
Other Obligations.
The benefits payable to Xx. Xxxxx 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
Xx. Xxxxx 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 Xx. Xxxxx upon his termination of
employment. |
|
(f) |
No
Mitigation or Offset.
Xx. Xxxxx 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.
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(7) Indemnity
and Insurance
The
Company shall indemnify and save harmless Xx. Xxxxx for any liability incurred
by reason of any act or omission performed by Xx. Xxxxx while acting in good
faith on behalf of the Company and within the scope of the authority of Xx.
Xxxxx 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 Xx. Xxxxx 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
The
Company shall provide that Xx. Xxxxx 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 Xx. Xxxxx’x employment was terminated), Xx. Xxxxx 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).
(9) Cooperation
with the Company After Termination of Employment
Following
termination of Xx. Xxxxx’x employment for any reason, Xx. Xxxxx shall fully
cooperate with the Company in all matters relating to the winding up of Xx.
Xxxxx’x 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 Xx. Xxxxx, the Company shall be entitled to such full time or part time
services of Xx. Xxxxx as the Company may reasonably require during all or any
part of the sixty (60)-day period following any notice of termination, provided
that Xx. Xxxxx 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.
Xx. Xxxxx
agrees that he will not sell or otherwise transfer or dispose of any shares of
the Company’s common stock that he owns or is entitled to receive following the
exercise of any Warrants or convertible securities that he may receive following
the Commencement Date until January 1, 2006. Xx. Xxxxx also agrees that he will
not sell or otherwise transfer or dispose of more than five hundred thousand
(500,000) shares of the Company’s common stock during any calendar quarter
thereafter 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:
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If to Xx.
Xxxxx:
Xxxxxxxx
X. Xxxxx, Esq.
000 X.
Xxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
If to the
Company:
Attn: Xxx
X. Xxxxxx, Chairman and Chief Executive Officer
0000
Xxxxxxxxx Xxxx.
Xxxxx
000
Xxxxxxxxx,
Xxxxxxxx 00000
Phone:
000.000.0000
(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 Xx. Xxxxx 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 Xx. Xxxxx 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.
(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.
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(16) Arbitration
Xx. Xxxxx
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 state of Maryland, 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 Xx. Xxxxx with respect to the subject matter hereof
and, except as specifically provided herein, supersedes any and all prior
agreements or understandings between Xx. Xxxxx and the Company with respect to
the subject matter hereof, whether written or oral (including that certain
consulting arrangement between Xx. Xxxxx and the Company). This Agreement may be
amended or modified only by a written instrument executed by Xx. Xxxxx and the
Company.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of October ___,
2004.
|
Xxxxxxxx
Xxxxx |
|
|
_______________________ |
By:______________________ |
|
|
Xxx
X. Xxxxxx, Chairman and CEO |
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