Document:

ex10_5.htm

EXHIBIT 10.5

 

EMPLOYMENT AGREEMENT

THIS  EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of this _____ day of September 2012 by and between Telos Corporation, a Maryland corporation, for itself and its subsidiary companies, divisions, affiliates and operating entities (the “Company”) and [NAME] (the “Executive”).

WHEREAS, the Company and the Executive desire to enter into this Agreement pertaining to the employment of the Executive by the Company;

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below and other good and valuable consideration, the receipt of which is hereby acknowledged, the Executive and the Company hereby agree as follows:

1.           Performance of Services. The Executive’s employment with the Company shall be subject to the following:

	
(a)

	
Subject to the terms of this Agreement, the Company hereby agrees to employ the Executive as its [TITLE] during the Agreement Term (as defined below).

	
(b)

	
During the Agreement Term, the Executive shall devote full time (paid time off and other authorized leave excepted) and best efforts, energies and talents to serving the Company as an employee.

	
(c)

	
The Executive agrees to perform his duties faithfully, efficiently and with integrity subject to the direction of the Company.  The Executive will have such authority, power, responsibilities and duties as are inherent in such position and necessary to carry out such responsibilities and the duties required hereunder, as well as any additional duties and authority granted to him by the his designated supervisor.

	
(d)

	
Notwithstanding the foregoing, during the Agreement Term, the Executive may devote reasonable time to activities other than those required under this Agreement, including activities involving professional, charitable, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other profit or not-for-profit organizations, and similar activities, to the extent that such other activities do not, in the sole discretion of the Company, inhibit or prohibit the performance of the Executive’s duties under this Agreement or conflict in any material way with the Company’s business.

	
(e)

	
The Executive shall not be required to perform services under this Agreement during any period in which determined as Disabled (as defined below).

	
(f)

	
The “Agreement Term” shall be the period beginning on January 1, 2012 for a one year period, and thereafter shall automatically renew for consecutive one year periods unless terminated in accordance with the provisions hereof.

 

  

  

  

 

2.           Compensation and Benefits.  While the Executive is employed by the Company pursuant to this Agreement, the Company shall compensate him for his services as follows:

	
(a)

	
Base Salary.  The Executive shall receive an annual base salary of [SALARY] (the “Salary”), plus any salary increases authorized during the Agreement Term, if any, payable in accordance with the Company’s payroll cycle.

	
(b)

	
Bonus.  The Executive shall have the opportunity to participate in a bonus plan for which he is eligible under the terms and conditions as defined by the Company.  Any bonus for the Executive shall be subject to the then-existing requirements of the Company governing internal recommendation and approval of such bonus.  Any such bonus payment shall be paid to the Executive per the bonus plan.

	
(c)

	
Stock Options and Restricted Stock Grants. The Executive shall be eligible for additional stock options and restricted stock grants under any of the Company’s stock option and restricted stock plans in an amount recommended by the Chief Executive Officer and approved by the Board of Directors.  Such options and/or grants shall be subject to the terms and conditions of the applicable standard stock option and restricted stock plans and agreements adopted by the Company.

	
(d)

	
Expense Reimbursement.  While the Agreement is in effect, the Company will reimburse the Executive for all reasonable and necessary business expenses incurred by the Executive in connection with the performance of his duties for the Company.  Such reimbursement is subject to the submission to the Company by the Executive of appropriate documentation and/or vouchers, and will be made in accordance with the customary business procedures of the Company for expense reimbursement, as may from time to time be established.

	
(e)

	
Paid Time Off.  While the Agreement is in effect, in each fiscal year of the Company, the Executive shall be eligible to accrue paid time off, subject to the terms of the current benefits policy.

	
(f)

	
Other Benefits.  The Executive shall be eligible to participate in any and all plans maintained by the Company to provide benefits for its salaried senior executives, including, without limitation, any pension, profit sharing or other retirement plan, any life, accident, disability, medical, hospital or similar group insurance program and any other benefit plan, subject to the normal terms and conditions of such plans.

3.           Termination.  The Executive’s employment with the Company pursuant to this Agreement may terminate under the following circumstances, hereinafter referred to as “Termination”.

(a)           Death.  The Executive’s employment hereunder shall terminate upon his death.

 

 

 

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(b)

	
Disability. If the Executive becomes Disabled, the Company may terminate Executive’s employment. For purposes of this Agreement, the Executive shall be deemed to be “Disabled” if (i) eligible for disability benefits under the Company’s long-term disability plan, or (ii) has a physical or mental disability which renders Executive incapable, after reasonable accommodation, of performing substantially all of Executive’s duties hereunder for a period of 180 days (which need not be consecutive) in any 12-month period.  In the event of a dispute as to whether the Executive is Disabled, the Company may, at its expense, refer Executive to a licensed practicing physician of the Company’s choice and the Executive agrees to submit to such tests and examination as such physician shall deem customary and appropriate.

	
  

	 

	
(c)

	
Cause.  The Company may terminate the Executive’s employment hereunder immediately and at any time for Cause by written notice to the Executive detailing the basis for the Cause termination.  For purposes of this Agreement, “Cause” means (i) gross negligence or willful and continued failure by the Executive to substantially perform his duties as an employee of the Company (other than any such failure resulting from incapacity due to physical or mental illness); (ii) Executive’s dishonesty, fraudulent misrepresentation, willful misconduct, malfeasance, violation of fiduciary duty relating to the business of the Company; or (iii) conviction of a felony.

	
(d)

	
Without Cause.  The Company may terminate the Executive’s employment hereunder immediately and at any time without Cause by written notice to the Executive.

	
(e)

	
Termination by Executive.  The Executive may terminate his employment hereunder at any time for any reason by giving the Company prior written notice not less than thirty (30) days prior to such termination.

	
(f)

	
Termination upon a Change in Control.  The Executive’s employment hereunder shall terminate automatically, and such termination shall be considered to be without Cause (as defined above), upon the occurrence of a Change in Control (as defined below).

	
(g)

	
Mutual Agreement.  This Agreement may be terminated at any time by mutual written agreement of the parties.

	
(h)

	
Date of Termination.  “Date of Termination” means the last day that the Executive is employed by the Company under the terms of this Agreement or, in the event of a Change in Control, the date of the Change in Control, provided that Executive’s employment is terminated in accordance with one of the foregoing provisions in this paragraph 3.

4.           Rights Upon Termination.   The Executive’s right to payments and benefits under this Agreement for periods after his Date of Termination shall be determined in accordance with the following:

	
(a)

	
If, prior to the occurrence of a Change in Control, the Company terminates the Executive’s employment for Cause in accordance with paragraph 3(c) above, or if the Executive terminates his employment in accordance with paragraph 3(e) above, the Company shall pay to the Executive:

 

 

 

Employment Agreement 2012

 

  

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(i)

	
A lump-sum payment equivalent to the remaining unpaid portion of the Executive’s Salary for the period ending on the Date of Termination.

	
  

	
(ii)

	
A lump-sum payment for all accrued and unused Paid Time Off.

	
  

	
(iii)

	
Any other payments or benefits to be provided to the Executive by the Company pursuant to any employee benefit plans or arrangements adopted by the Company, to the extent such payments and benefits are earned and vested as of the Date of Termination, or are required by law to be offered for periods following the Date of Termination.  In addition, any bonus which has been earned by Executive and approved by the appropriate corporate authorities but which remains unpaid as of the Date of Termination shall be paid to Executive at such time and in such manner as if Executive had continued to be employed by the Company.

	
(b)

	
If, prior to the occurrence of a Change in Control, the Company terminates the Executive’s employment without Cause in accordance with paragraph 3(d) above, by mutual agreement in accordance with paragraph 3 (g) above, or due to Disability in accordance with paragraph 3(b) above, Executive shall be entitled to the amounts payable under paragraph 4(a), and in addition, the Executive shall be entitled to monthly payments over a 18-month period of an amount equal to the amount of monthly salary which the Executive was being paid as of the Date of Termination.  Such payments will commence as of the month following the date that the Executive incurs a separation from service, as such term is defined in the context of Section 409A of the Code (as defined below).  Such payments will continue over the 18-month period in accordance with the Company’s normal payroll cycle.  In the event that the Executive dies prior to the completion of the 18-month payment cycle, any amounts remaining unpaid as of the date of Executive’s death will be paid to Executive’s estate in lump sum.

	
(c)

	
If, prior to the occurrence of a Change in Control, the Executive’s employment is terminated due to death, the Executive’s estate shall be entitled to the amounts payable under paragraph 4(a), and in addition, the Executive’s estate shall be entitled to a lump-sum payment of an amount equal to the amount of monthly salary which the Executive was being paid as of the Date of Termination times 18 months.

	
(d)

	
Upon the termination of the Executive’s employment as a result of a Change in Control in accordance with paragraph 3(f), Executive shall be entitled to the amounts payable under paragraph 4(a), and in addition, the Executive shall be entitled to a lump-sum payment of an amount equal to the amount of monthly salary which the Executive was being paid as of the Date of Termination times 18 months.  Such payment in lump sum shall be made contemporaneously with the consummation of the transaction or the election of directors that constitutes the Change in Control. “Change in Control” means an occasion upon which (i) any one person, or more than one person acting as a group (as defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other than a member of the Board of Directors or fiduciary holding securities under an employee benefit plan of the Company or a corporation controlled by the Company, acquires (either directly and/or through becoming the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act)), directly or indirectly, securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities (or has acquired securities representing 50% or more of the combined voting power of the Company’s then outstanding securities during the 12-month period ending on the date of the most recent acquisition of Company securities by such person); or (ii) during any period of twelve (12) consecutive months , a majority of the members of the Board of Directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of the appointment or election; or (iii) any one person, or more than one person acting as a group (as defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) all, or substantially all, of the Company’s assets.  Each Change in Control event described in this paragraph is intended to constitute a change in ownership or effective control of the Company or in the ownership of a substantial portion of the Company’s assets within the meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as amended (“Code”), and the IRS guidance issued thereunder and this Agreement shall be interpreted accordingly.  Notwithstanding anything to the contrary set forth in this Agreement, the Executive shall not be entitled to any payments under paragraphs 4(a), 4(b), or 4(c) upon Termination if the Executive receives the payments under this paragraph 4(d) upon a Change in Control.

 

 

 

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(e)

	
In the event that the Executive’s employment is terminated for any reason discussed in paragraphs 4(b), 4(c) or 4(d), in addition to the amounts payable under paragraphs 4(b), 4(c) or 4(d) as applicable, the Executive or the Executive’s estate shall be entitled to the following:

	
  

	
(i)

	
Immediate vesting of the unvested portion of any outstanding stock option and any outstanding share of restricted stock, notwithstanding any contrary terms in any stock option or restricted stock agreement applicable to Executive.

	
  

	
(ii)

	
Cash payment equal to 18 months of premium payments for medical and dental coverage.  The amount of the monthly payments shall be equal to the amount of the “applicable premium” as determined pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) (without regard to whether or not the Executive elects COBRA continuation coverage) based on the Executive’s choices under the Company’s plan as of the Date of Termination and further based upon the current premiums as of the Date of Termination, less the amount that the Executive was contributing for coverage.  The Company benefits package in which the Executive participated will cease as of the Date of Termination.

	
  

	
(iii)

	
Cash payment equal to 18 months of benefit premiums based upon the premium rate at the Date of Termination under the terms of the Company’s Group Life Policy issued by CIGNA which allows the option to convert to an individual policy for basic life and accidental death and dismemberment (AD&D) coverage.  However, the cash payments shall be no more than the amount of the premiums that the Company was paying as if the Executive was still employed.  This paragraph shall not apply if the Executive’s employment is terminated per section 4(c).

 

 

 

Employment Agreement 2012

 

  

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(iv)

	
Cash payment equal to the employer matching contribution, as if the Executive was still a plan participant that would otherwise have been contributed on Executive's behalf to the Code Section 401(k) program maintained by the Company with respect to the 18-month period commencing on the Date of Termination under the following assumptions:

	
  

	
(a)

	
Executive would have made a voluntary salary reduction contribution to the Code Section 401(k) program with respect to the 18-month period based upon the salary reduction election in effect on behalf of the Executive as of the Date of Termination.

	
  

	
(b)

	
No additional "constructive matching" payments will be made under this provision with respect to a calendar year once the combination of the actual matching contributions made on behalf of Executive to the Code Section 401(k) program for such calendar year plus the "constructive matching" payments made to Executive pursuant to this provision for such calendar equal the maximum amount of matching contributions that could have been allocated to Executive's account under the terms of the Code Section 401(k) program with respect to such calendar year.

	
  

	
(c)

	
Except as otherwise contemplated by paragraph 4(e)(v) below, the "constructive matching" payments will be made at such times as the Company remits the actual matching contributions to the Code Section 401(k) program.

	
  

	
(v)

	
If the Executive’s employment is terminated per paragraph 4(b), all payments under paragraph this 4(e) shall be made on a periodic basis on the same schedule as such benefits otherwise would have been payable as if the Executive was still employed at the Company.  If the Executive’s employment is terminated per paragraph 4(c) or paragraph 4(d), all payments under this paragraph 4(e) shall be paid in a lump-sum payment at the same time the lump sum payment is paid in accordance with paragraph 4(c) or paragraph 4(d).  Notwithstanding anything to the contrary set forth in this Agreement, the Executive shall not be entitled to receive the payments contemplated by this paragraph 4(e) upon the termination of the Executive’s employment with the Company if the Executive receives the payments under this paragraph 4(e) upon the termination of the Executive’s employment as a result of a Change in Control.

	
  

	
(vi)

	
If the Executive was receiving other benefits as of the Date of Termination that are not listed above, and to the extent such payments or benefits are earned and vested or are required by law to be offered to the Executive for the 18-month period following the Date of Termination, then the cash equivalent or arrangements for continuing coverage will be determined at that time.  However, the cash payments shall be no more than the amount that the Company was paying as if the Executive was still employed.

 

 

 

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(vii)

	
If any of the benefits listed above are no longer available to the Executive as of the Date of Termination, then there will be no such payments made to continue the benefits after the Date of Termination or its cash equivalent.

	
(f)

	
The undertakings of the Company in connection with paragraphs 4(b), 4(c), 4(d) and 4(e), above, are contingent upon Executive’s or his estate’s compliance with Sections 5, 6, 7 and 8 following termination or a Change in Control.

	
(g)

	
To the extent required by Section 409A of the Code, if the Executive separates from service with the Company for any reason other than death and the Executive constitutes a “specified employee” as defined in Section 409A(2)(B)(i) of the Code at the time of separation from service, then payment to the Executive of any amounts pursuant to Section 4(b) or 4(d) and payment of any cash amounts pursuant to Section 4(e) shall not commence until a date that is six months following the date of the Executive’s separation from service with the Company.  Upon the date which is six months following the date of Executive’s separation from service, all previously accrued monthly amounts shall be payable in a lump-sum and future amounts will continue to be paid pursuant to the remaining term of the 18-month payment cycle.  The above-referenced six month delay in payment shall only apply to the extent required by Section 409A of the Code, such that such delay shall not apply to payments made in connection with an involuntary termination of employment provided such payments fall within the dollar threshold described in Treas. Reg. § 1.409A-1(b)(9)(iii).

	
(h)

	
The Executive understands and agrees that he is obligated to pay all local, state and federal taxes that are or may be owed from the payments specified in this paragraph 4, and, as applicable, the payments will be subject to appropriate tax withholding by the Company.

5.           Non-Competition.  During the Agreement Term and for a period of 18 months subsequent to the Date of Termination, the Executive shall not, without the prior written consent of the Company, directly or indirectly, (i) own or acquire in any manner any interest (other than the ownership solely for investment purposes of not more than five percent (5%) of the shares of any corporation, the shares of which are publicly and regularly traded on a national securities exchange or in the over-the-counter market) in any person, firm, partnership, company, association or other entity that competes with the Company in the business of enterprise security solutions and services to customers in the United States government and industry (the “Business”), (ii) be employed by, or serve as an employee, agent, officer, director of, any person, firm, partnership, corporation or provider of services competitive with the Business of the Company, or (iii) provide financial, technical, marketing or other assistance or act as a representative, broker, director, officer, employee, advisor, consultant or agent of any person or entity that is competitive with the Business of the Company.  Notwithstanding anything to the contrary set forth in this Agreement, the provisions of this paragraph 5 shall survive the termination of the Executive’s employment hereunder and the termination of this Agreement.

 

 

 

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6.           Confidentiality.  The Executive promises that he will receive, develop and hold Confidential Information (as defined below) in strict confidence and will not use or disclose Confidential Information, or make copies of any documents containing Confidential Information, except in furtherance of the Business of the Company, unless the Board of Directors provides prior written consent.  The Executive further agrees to use reasonable efforts to safeguard the Confidential Information and protect it from disclosure, misuse, loss or theft. The foregoing promises of confidentiality shall not apply if and to the extent that the Executive is ordered by a court or other governmental agency to disclose Confidential Information, provided the Executive has given the Company prompt written notice of the order or subpoena and provides all reasonable cooperation necessary to limit such disclosure and to protect the confidentiality of any Confidential Information so disclosed.  “Confidential Information” means all nonpublic information (whether or not specifically labeled or identified as confidential), that has been or is disclosed to, developed or learned by the Executive as a result of employment with the Company and that relates to the business, finances, products, services, customers, research or development of the Company or third parties with whom the Company does business or from whom the Company receives information. The definition of Confidential Information includes, but is not limited to, the following: access codes, security devices and naming conventions used in software and hardware systems; databases of information; other proprietary software; proprietary specifications for hardware and software platforms, the identity and transactions with customers, clients and suppliers; marketing product and service plans, objectives and strategies; tactical objectives, approaches, and competitive advantages; internal financial information; specialized marketing programs related to products and services offered or under development by the Company (or any parent or affiliate of the Company); data and reports related to marketing programs; proprietary systems and operations manuals; proprietary training manuals; proprietary technical and scientific know-how, data and strategies; the Company’s information gathering processes and compilations of information; and information disclosed to the Company by its business partners, licensees, customers and clients in reliance on promises that its confidentiality will be preserved.  Notwithstanding anything to the contrary set forth in this Agreement, the provisions of this paragraph 6 shall survive the termination of the Executive’s employment hereunder and the termination of this Agreement.

7.           Non-Solicitation.

	
(a)

	
The Executive recognizes that the Company incurs significant expense in training employees to provide services in accordance with the Company’s Business and that the Company will disclose Confidential Information to each such employee.  The Executive promises that, during the Agreement Term and for a period of 18 months subsequent to the Date of Termination, the Executive will not, without the prior written consent of the Company, knowingly hire, directly or indirectly, any person then employed by the Company, or knowingly solicit, directly or indirectly, such a person either to terminate or diminish employment with the Company, or to work for any other person or entity, whether or not a competitor, and the Executive shall not approach any such employee for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity.

 

 

 

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(b)

	
The Executive also acknowledges that the Company incurs significant expense in developing business partners, licensees, customers and clients.  The Executive promises that, during the Agreement Term and for a period of 18 months subsequent to the Date of Termination, the Executive will not, without the prior written consent of the Company, knowingly directly or indirectly, solicit any customer, business partner, licensee or client of the Company to terminate or diminish its business relationship with the Company or to purchase any product or service that is or may be used as a substitute for any product or service of the Company, and the Executive shall not knowingly approach any such customer, supplier, lessor or lessee for such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity.

	
(c)

	
Notwithstanding anything to the contrary set forth in this Agreement, the provisions of this paragraph 7 shall survive the termination of the Executive’s employment hereunder and the termination of this Agreement.

8.           Non-Disparagement.  During the Agreement Term and for a period of 18 months subsequent to the Date of Termination, neither the Company nor the Executive will publish, including but not limited to, with the media, directly or indirectly, disparaging or negative comments concerning the other, whether or not slanderous or libelous.  The Executive further agrees not to make public, directly or indirectly, disparaging comments concerning any former or current employee, officer or director of the Company.  The Company further agrees that neither it nor its officers or directors will comment negatively, formally or informally, with respect to or concerning the Executive’s performance of his duties at or any reason for departure from the Company or his ability, experience, or qualifications with respect to similar employment.  Notwithstanding anything to the contrary set forth in this Agreement, the provisions of this paragraph 8 shall survive the termination of the Executive’s employment hereunder and the termination of this Agreement.

9.           Restrictions Reasonable.   Executive agrees that the restrictions set forth in Sections 5 (Non-Competition), 6 (Confidentiality), 7 (Non-Solicitation), and 8 (Non-Disparagement) are reasonable, proper and necessitated by the legitimate business interests of the Company, and do not constitute an unlawful or unreasonable restraint upon Executive’s ability to earn a living.  Executive acknowledges that it may be impossible to assess the monetary damages occurred by Executive’s violation of sections 5, 6, 7 or 8 of this Agreement, that violations of those sections will be material breaches of this Agreement and will cause irreparable injury to the Company.  Accordingly, Executive agrees that Company will be entitled, in addition to all other rights and remedies which may be available, to an injunction enjoining and restraining Executive and any other involved party from committing a violation of this Agreement, and Executive consents to the issuance and entry of such injunction.  In addition, Company will be entitled to such damages as it can demonstrate that it sustained by reason of the violation of this Agreement by the Executive and/or others.  The parties agree that in the event of any litigation to enforce or interpret this Agreement, the prevailing party will be entitled to recover all costs, including reasonable attorney’s fees, from the non-prevailing party.  In the event Company enforces this section through a Court Order, Executive agrees that the restriction on Executive following termination of employment set forth in this Agreement shall remain in effect for a period of one year from the date of the final Court Order enforcing this Agreement.

 

 

 

Employment Agreement 2012

 

  

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10.           Return of Materials. Upon the Executive’s Date of Termination, or at any time upon the Company’s request, the Executive (or if deceased, the Executive’s personal representative) shall promptly deliver to the Company without retaining copies, all tangible things that are or contain Confidential Information.  The Executive or such personal representative shall also promptly deliver to the Company all computer print-outs, books, software manuals and directions, floppy disks and other such media for storing software and information, work papers, files, customer lists, supplier lists, employee lists, telephone and/or address books, Rolodex or equivalent cards, memoranda, appointment books, calendars, employee manuals, sales aides, keys and other tangible things provided to the Executive by the Company, or authored in whole or in part by the Executive within the scope of his employment by the Company, even if they do not contain Confidential Information; provided that the Executive shall not be required to deliver personal files and personal information unrelated to the Company’s business.  At the time of such deliveries, the Executive shall disclose to the Company any passwords or other knowledge required to access and use any of the foregoing.  The Executive acknowledges that he does not have, and will not acquire, any ownership rights in such materials and things.

11.           Section 409A.  To the extent applicable, it is intended that the compensation arrangements set forth in this Agreement be in full compliance with Section 409A of the Code. This Agreement shall be construed in a manner to give effect to such intention.

12.           Nonalienation.  The interests of the Executive under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Executive’s creditors or beneficiaries.

13.           Successors.  This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business.

14.           Notices.  Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid overnight courier to the parties at the addresses set forth below (or such other addresses as shall be specified by the parties by like notice):

	
To the Company:

	
To the Executive:

	
Telos Corporation

	  
	
19886 Ashburn Road

	  
	
Ashburn, VA  20147

	  
	
Attn.:  Legal Department

	  

 

15.           Severability.  The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, and this Agreement will be construed as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified).

 

 

 

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16.           Waiver of Breach.  No waiver of either party hereto of a breach of any provision of this Agreement by the other party will operate or be construed as a waiver of any subsequent breach by such other party.  The failure of either party to take any action by reason of such breach will not deprive such party of the right to take action at any time while such breach continues.

17.           Amendment.  This Agreement may be amended or canceled only by mutual agreement of the parties in writing.  So long as the Executive lives, no person, other than the Executive and the Company, shall have any rights under or interest in this Agreement or the subject matter hereof.

18.           Choice of Law and Forum Selection.  This Agreement shall be governed by the laws of the Commonwealth of Virginia as to its validity, interpretation and enforcement.  Should it be necessary for the Company to file suit, exclusive jurisdiction will lie in the courts of the Commonwealth of Virginia.

19.           Survival of Agreement.  Except as otherwise expressly provided in this Agreement, the rights and obligations of the parties to this Agreement shall survive the termination of the Executive’s employment with the Company.

20.           Entire Agreement.   This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior and contemporaneous agreements, if any, between the parties relating to the subject matter hereof.

21.           Acknowledgement by Executive.  The Executive represents to the Company that he is knowledgeable and sophisticated as to business matters, including the subject matter of this Agreement, that he has read this Agreement and that he understands its terms.  The Executive acknowledges that, prior to assenting to the terms of this Agreement, he has been given a reasonable time to review it, to consult with counsel of his choice, and to negotiate at arm’s-length with the Company as to the contents.  The Executive and the Company agree that the language used in this Agreement is the language chosen by the parties to express their mutual intent, and that no rule of strict construction is to be applied against either party hereto.

IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the Company has caused these presents to be executed in its name and on its behalf, as of the date above first written.

 

	
EXECUTIVE

	
TELOS CORPORATION

	 	 
	 	
 

	 	
 

	
[NAME] 

	
John B. Wood

	
[TITLE] 

	
President, Chief Executive Officer

 

 

 

Employment Agreement 2012  

11ex10_1.htm

Exhibit 10.1

 

GRAPHON CORPORATION

2012 EQUITY INCENTIVE PLAN

NOTICE OF GRANT

AND

RESTRICTED STOCK AGREEMENT

You have been granted the number of shares of Restricted Common Stock of GraphOn Corporation (the “Company”), as set forth below (“Common Shares”), subject to the terms and conditions of the GraphOn Corporation 2012 Equity Incentive Plan (“Plan”), and this Notice of Grant and Restricted Stock Agreement including the attachments hereto (collectively, “Notice and Agreement”).  Unless otherwise defined in the Notice and Agreement, terms with initial capital letters shall have the meanings set forth in the Plan.

	
Participant:

	
Eldad Eilam

	 	 
	
Home Address:

	  
	  	  
	
Soc. Sec. No:

	  
	 	 
	
Number of shares of Restricted Common Stock Granted:

	
1,320,900

	  	  
	
Grant Date:

	
08/15/12

	  	  
	
Period of Restriction and Release of Common Shares from Company’s Return Right (see Sections 2 and 3 of attached Agreement)

	
The Common Shares granted hereunder shall be “released” and shall no longer be subject to the Company’s Return Right as provided in Exhibit D.  However, notwithstanding the foregoing, in the event the Participant’s Continuous Status as an Employee, Consultant or Director is involuntarily terminated by the Company without Cause (as defined in the Plan), all Common Shares granted hereunder shall be “released” to Participant and shall no longer be subject to the Company’s Return Right.  For clarity, termination due to death or Disability is not considered an involuntary termination by the Company for this purpose.

By signing below, you accept this grant of Common Shares and you hereby represent that you: (i) agree to the terms and conditions of this Notice and Agreement and the Plan; (ii) have reviewed the Plan and the Notice and Agreement in their entirety, and have had an opportunity to obtain the advice of legal counsel and/or your tax advisor with respect thereto; (iii) fully understand and accept all provisions hereof; (iv) agree to accept as binding, conclusive, and final all of the Administrator’s decisions regarding, and all interpretations of, the Plan and the Notice and Agreement; and (v) agree to notify the Company upon any change in your home address indicated above.

	 	
AGREED AND ACCEPTED:

	 	 
	 	 
	 	
Signature:

	
/s/ Eldad Eilam

	 	 	 
	 	
Print Name:

	
Eldad Eilam

 

  

- 1 -

  

 

GRAPHON CORPORATION

2012 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

1.           Grant of Restricted Stock.  The Company has granted to you the number of shares of Restricted Common Stock specified in the Notice of Grant on the preceding page (“Notice of Grant”), subject to the following terms and conditions.  In consideration of such grant, you agree to be bound by the terms and conditions hereof, and by the terms and conditions of the Plan.

2.            Period of Restriction.  During the Period of Restriction specified in the Notice of Grant, the Common Shares shall remain subject to the Company’s Return Right (defined in Section 3).  The Period of Restriction shall expire and the Company’s Return Right shall lapse as to the Common Shares granted in the amount(s) and on the date(s) specified in the Notice of Grant (each, a “Release Date”); provided, however, that no Common Shares shall be released on any Release Date if the Participant has ceased Continuous Status as an Employee, Consultant or Non-Employee Director on or prior to such date.  Any and all Common Shares subject to the Company’s Return Right at any time shall be defined in this Notice and Agreement as “Unreleased Common Shares.”

3.            Return of Restricted Stock to Company.  If Participant ceases Continuous Status as an Employee, Consultant or Non-Employee Director for any reason (a “Return Event”), the Company shall become the legal and beneficial owner of the Unreleased Common Shares and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer such Unreleased Common Shares to its own name.  The Participant shall continue to own any Common Shares subject to the terms of the Plan and this Notice and Agreement with respect to which the Participant has Continuous Status as an Employee, Consultant or Non-Employee Director through the Release Date(s) specified in the Notice of Grant for such Common Shares.

4.            Restriction on Transfer. Except for the transfer of the Common Shares to the Company or its assignees contemplated by this Notice and Agreement, none of the Common Shares or any beneficial interest therein shall be transferred, encumbered or otherwise disposed of in any way until the Release Date for such Common Shares set forth in this Notice and Agreement. In addition, as a condition to any transfer of the Common Shares after such Release Date, the Company may, in its discretion, require: (i) that the Common Shares shall have been duly listed upon any national securities exchange or automated quotation system on which the Company's Common Stock may then be listed or quoted; (ii) that either (a) a registration statement under the Securities Act of 1933, as amended (“Securities Act”) with respect to the Common Shares shall be effective, or (b) in the opinion of counsel for the Company, the proposed purchase shall be exempt from registration under the Securities Act and the Participant shall have entered into agreements with the Company as reasonably required; and (iii) fulfillment of any other requirements deemed necessary by counsel for the Company to comply with Applicable Law.

 

5.            Retention of Common Shares.  To ensure the availability for delivery of the Participant’s Unreleased Common Shares upon their return to the Company pursuant to this Notice and Agreement, the Company shall retain possession of the share certificates representing the Unreleased Common Shares, together with a stock assignment duly endorsed in blank, attached hereto as Exhibit A.  The Company shall hold the Unreleased Common Shares and related stock assignment until the Release Date for such Common Shares. In addition, the Company may require the spouse of Participant, if any, to execute and deliver to the Company the Consent of Spouse in the form attached hereto as Exhibit B.  When a Return Event or Release Date occurs, the Company shall promptly deliver the certificate for the applicable Common Shares to the Company or to the Participant, as the case may be.

 

  

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6.            Stockholder Rights.  Subject to the terms hereof, the Participant shall have all the rights of a stockholder with respect to the Common Shares while they are retained by the Company pursuant to Section 5, including without limitation, the right to vote the Common Shares and to receive any cash dividends declared thereon. If, from time to time prior to the Release Date, there is (i) any stock dividend, stock split or other change in the Common Shares, or (ii) any merger or sale of all or substantially all of the assets or other acquisition of the Company, any and all new, substituted or additional securities to which the Participant shall be entitled by reason of the Participant’s ownership of the Common Shares shall be immediately subject to the terms of this Notice and Agreement and included thereafter as “Common Shares” for purposes of this Notice and Agreement.

7.            Legends.  The share certificate evidencing the Common Shares, if any, issued hereunder shall be endorsed with the following legend (in addition to any legend required under applicable state securities laws):

THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND OBLIGATIONS TO RETURN TO THE COMPANY, AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE HOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

8.            U.S. Tax Consequences.  The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Notice and Agreement.  The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its employees or agents. The Participant understands that for U.S. taxpayers, Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income the difference between the purchase price for the Common Shares, if any, and the fair market value of the Common Shares as of the date any restrictions on the Common Shares lapse. In this context, “restriction” includes the right of the Company to the return of the Common Shares upon a Return Event. The Participant understands that if he/she is a U.S. taxpayer, the Participant may elect to be taxed at the time the Common Shares are awarded as Restricted Stock rather than when and as the Return Right expires by filing an election under Section 83(b) of the Code with the IRS within 30 days from the date of acquisition. The form for making this election is attached as Exhibit C hereto.  The Participant understands that the Company and its Subsidiaries shall have the right to require, prior to the release of Common Shares awarded hereunder, payment by Participant of any Federal, state, local or other taxes which may be required to be withheld or paid to the applicable tax authorities, as provided in the Plan.

THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), IF APPLICABLE, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PARTICIPANT'S BEHALF.

9.            General.

(a)           This Notice and Agreement shall be governed by and construed under the laws of the State of Delaware.  The Notice and Agreement and the Plan, which is incorporated herein by reference, represents the entire agreement between the parties with respect to the shares of Restricted Common Stock granted to the Participant.  In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Notice and Agreement, the terms and conditions of the Plan shall prevail.

 

  

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(b)           Any notice, demand or request required or permitted to be delivered by either the Company or the Participant pursuant to the terms of this Notice and Agreement shall be in writing and shall be deemed given when delivered personally, deposited with a reputable courier service, or deposited in the U.S. Mail, First Class with postage prepaid, and addressed to the parties at the addresses set forth in the Notice of Grant, or such other address as a party may request by notifying the other in writing.

(c)           The rights of the Company under this Notice and Agreement and the Plan shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns. The rights and obligations of the Participant under this Notice and Agreement may only be assigned with the prior written consent of the Company.

(d)           The Participant agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Notice and Agreement.

(e)          PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE RELEASE OF COMMON SHARES PURSUANT TO THIS AGREEMENT SHALL BE EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE, CONSULTANT OR NON-EMPLOYEE DIRECTOR, AND NOT THROUGH THE ACT OF BEING HIRED, APPOINTED OR OBTAINING COMMON SHARES HEREUNDER.

#####

 

  

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EXHIBIT A

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, __________________________, hereby sell, assign and transfer unto _______________________________________(__________) Common Shares of GraphOn Corporation standing in my name of the books of said corporation represented by Certificate No. ________ herewith and do hereby irrevocably constitute and appoint _____________________________ to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Notice of Grant and the Restricted Stock Agreement between GraphOn Corporation and the undersigned dated_____________, 20__.

	Dated: _______________, 20___	 
	  	  
	  	
Signature:    /s/ Eldad Eilam

	  	  
	  	
Print Name: Eldad Eilam

	  	  
	
INSTRUCTIONS:

	  

Please DO NOT fill in any blanks other than the signature lines.

The purpose of this assignment is to enable the Company to receive the return of the Common Shares as set forth in the Notice and Agreement, without requiring additional signatures on the part of the Participant.

 

  

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EXHIBIT B

CONSENT OF SPOUSE

I, __Hodaya Eilam______________, spouse of __Eldad Eilam_______________, have read and approve the foregoing Notice of Grant and Restricted Stock Agreement (the “Notice and Agreement”). In consideration of the Company's grant to my spouse of the Common Shares of GraphOn Corporation as set forth in the Notice and Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Notice and Agreement and agree to be bound by the provisions of the Notice and Agreement insofar as I may have any rights in said Notice and Agreement or any Common Shares issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state or country of our residence as of the date of the signing of the foregoing Notice and Agreement.

	
Dated: September 15, 2012

	  
	  	  
	  	
/s/ Hodaya Eilam

	  	
Signature of Spouse

	  	  
	  	
Print Name:  Hodaya Eilam

 

  

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EXHIBIT C

ELECTION UNDER SECTION 83(b)

OF THE U.S. INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with his or her receipt of the property described below:

1.      The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

	 	
Name:

	
Eldad Eilam

	 	
Spouse:

	
Hodaya Eilam

	 	
Taxpayer I.D. No.:

	  
	 	
Address:

	  
	 	  	  
	 	
Tax Year:

	
2012

2.      The property with respect to which the election is made is described as follows: one million three hundred twenty thousand nine hundred (1,320,900) shares of the common stock (“Common Shares”) of GraphOn Corporation (the "Company").

3.      The date on which the property was transferred is August 15, 2012.

4.      The property is subject to the following restrictions:

The Common Shares are required to be returned to the Company in the event that the undersigned ceases to perform services for the Company through certain dates specified in the Notice of Grant and Restricted Stock Agreement between me and the Company dated as of August 15, 2012. This right lapses with regard to a portion of the Common Shares based on my Continued Status as an Employee, Consultant  or Non-Employee Director over time.

5.      The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:  $237,762.00.

6.      The amount (if any) paid for such property is: none.

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.  The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

	
Dated:   September 15, 2012

	
/s/ Eldad Eilam

	  	
Signature of Taxpayer

	  	  
	
The undersigned spouse of taxpayer joins in this election.

	  
	  	  
	
Dated:   September 15, 2012

	
/s/ Hodaya Eilam

	  	
Spouse of Taxpayer

 

  

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EXHIBIT D

VESTING SCHEDULE

	
Month

	
Release Date

	
Shares

Released

	
Cumulative

Shares

Released

	
Shares

Subject to

Company’s

Return

Right

	
1

	
09/15/12

	
—

	
—

	
1,320,900

	
2

	
10/15/12

	
—

	
—

	
1,320,900

	
3

	
11/15/12

	
—

	
—

	
1,320,900

	
4

	
12/15/12

	
40,027

	
40,027

	
1,280,873

	
5

	
01/15/13

	
40,027

	
80,054

	
1,240,846

	
6

	
02/15/13

	
40,027

	
120,081

	
1,200,819

	
7

	
03/15/13

	
40,027

	
160,108

	
1,160,792

	
8

	
04/15/13

	
40,027

	
200,135

	
1,120,765

	
9

	
05/15/13

	
40,027

	
240,162

	
1,080,738

	
10

	
06/15/13

	
40,027

	
280,189

	
1,040,711

	
11

	
07/15/13

	
40,027

	
320,216

	
1,000,684

	
12

	
08/15/13

	
40,027

	
360,243

	
960,657

	
13

	
09/15/13

	
40,027

	
400,270

	
920,630

	
14

	
10/15/13

	
40,027

	
440,297

	
880,603

	
15

	
11/15/13

	
40,027

	
480,324

	
840,576

	
16

	
12/15/13

	
40,027

	
520,351

	
800,549

	
17

	
01/15/14

	
40,027

	
560,378

	
760,522

	
18

	
02/15/14

	
40,027

	
600,405

	
720,495

	
19

	
03/15/14

	
40,027

	
640,432

	
680,468

	
20

	
04/15/14

	
40,027

	
680,459

	
640,441

	
21

	
05/15/14

	
40,027

	
720,486

	
600,414

	
22

	
06/15/14

	
40,027

	
760,513

	
560,387

	
23

	
07/15/14

	
40,027

	
800,540

	
520,360

	
24

	
08/15/14

	
40,027

	
840,567

	
480,333

	
25

	
09/15/14

	
40,027

	
880,594

	
440,306

	
26

	
10/15/14

	
40,027

	
920,621

	
400,279

	
27

	
11/15/14

	
40,027

	
960,648

	
360,252

	
28

	
12/15/14

	
40,027

	
1,000,675

	
320,225

	
29

	
01/15/15

	
40,027

	
1,040,702

	
280,198

	
30

	
02/15/15

	
40,027

	
1,080,729

	
240,171

	
31

	
03/15/15

	
40,027

	
1,120,756

	
200,144

	
32

	
04/15/15

	
40,027

	
1,160,783

	
160,117

	
33

	
05/15/15

	
40,027

	
1,200,810

	
120,090

	
34

	
06/15/15

	
40,027

	
1,240,837

	
80,063

	
35

	
07/15/15

	
40,027

	
1,280,864

	
40,036

	
36

	
08/15/15

	
40,036

	
1,320,900

	
—

	  	  	
1,320,900

	  	  

 

 

- 8 -

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