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EXHIBIT 10.6 SM&A Executive Retention Agreement
THIS EXECUTIVE RETENTION AGREEMENT
(this "Agreement") by and between SM&A, a Delaware corporation
(the "Company"), and Daniel Hart (the "Executive") is made as of
August 25, 2008 (the "Effective Date").
WHEREAS, the Company recognizes that,
as is the case with many publicly-held corporations, the
possibility of a change in control of the Company exists and that
such possibility, and the uncertainty and questions which it may
raise among key personnel, may result in the departure or
distraction of key personnel to the detriment of the Company and
its stockholders; WHEREAS, the Board
of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the
continued employment and dedication of the Company’s key
personnel without distraction from the possibility of a change in
control of the Company and related events and circumstances; and
WHEREAS, the Executive entered into
that certain Proprietary Information and Invention Assignment
Agreement dated, February 22, 2004 ("Proprietary Information
Agreement"), which shall continue in full force and effect.
NOW, THEREFORE, as an inducement for
and in consideration of the Executive remaining in its employ, the
Company agrees that the Executive shall receive the severance
benefits set forth in this Agreement in the event the
Executive’s employment with the Company is terminated under
the circumstances described below.
1. Term of Agreement .
This Agreement, and all rights and obligations of the parties
hereunder, shall take effect upon the Effective Date and shall
expire upon: (a) the date twenty-four (24) months after
the Change in Control Date (as such term is defined below), if the
Executive is still employed by the Company after such later date,
(b) the fulfillment by the Company of all of its obligations
under this Agreement if the Executive’s employment with the
Company terminates within twenty-four (24) months after the
Change in Control Date, or (c) the termination of the
Executive’s employment with the Company if a Change in
Control (as such term is defined below) did not occur prior to the
date of such termination (the "Term").
2. Benefits to the
Executive .
2.1 The
effect of a Change in Control (as defined below) on any of the
Executive’s stock options, restricted stock awards or other
equity awards shall be determined in accordance with the terms of
such options or awards and shall not be affected by this Agreement.
SM&A Confidential
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Executive Retention Agreement Final
2.2
If a Change in Control occurs and if the Executive’s
employment with the Company terminates within twenty-four
(24) months after the Change in Control Date, then the
Executive shall be entitled to the following benefits:
(a)
Termination Without Cause Or For Good Reason . The
Executive’s employment with the Company may be terminated at
any time by the Company without Cause (as defined below) by giving
the Executive thirty (30) days’ advance written notice
of such termination, or by the Executive for Good Reason (as
defined below) by giving the Company thirty (30) days’
advance written notice of such termination; provided, however, that
no condition shall constitute Good Reason unless the Executive
provides notice of such condition to the Company within ninety
(90) days of its initial existence, and the Company fails to
remedy the condition within thirty (30) days of its receipt of
such notice; and provided, further, that the Executive terminates
employment with the Company within two (2) years following the
initial existence of the Good Reason condition. In the event of a
termination pursuant to this Section 2.2(a), the Company shall
pay to the Executive the following amounts:
(1) On
the effective date of the Executive’s termination (the "Date
of Termination"), the sum of (A) the Executive’s base
salary through the Date of Termination, (B) any earned but
unpaid bonus amounts with respect to periods ending prior to the
Date of Termination to which the Executive is entitled, and
(C) any accrued but unused paid time off through the Date of
Termination (the "Accrued Obligations"); and
(2) on
a monthly basis, in accordance with the Company’s standard
practice prior to the Date of Termination, for a period of twelve
(12) months following the Date of Termination, an amount equal
to the sum of (A) one-twelfth of the Executive’s highest
average annual base salary with the Company during the three-year
period prior to the Change in Control Date and (B) one-twelfth
of the Executive’s highest annual target bonus amount with
the Company during the three-year period prior to the Change in
Control Date;
(3) provided
the Executive is eligible to make, and makes, a timely election for
continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") under any group
health plan of the Company, continuation of coverage in effect for
the Executive at the Date of Termination shall be provided under
such plans of the Company, without a premium charge or cost to the
Executive for the twelve (12) month period commencing after
the Date of Termination, or, if earlier, until the date the
Executive is no longer eligible for COBRA (whether because the
Executive is covered by a new employer’s group health plan or
otherwise). After the expiration of the period set forth in the
prior sentence concludes, the Executive shall be responsible for
the payment of all further premiums attributable to COBRA
continuation coverage at the same rate as the Company charges all
COBRA beneficiaries. The Executive agrees to notify the Company
immediately if the Executive becomes covered by another group
health plan.
(4)
The Executive shall only be entitled to the severance and the COBRA
payments (if applicable) under Section 2.2(a)(2)-(3) of this
Agreement if (A) the Executive executes (and then the
Executive does not rescind, as may be permitted by law) a general
release of all claims against the Company and its affiliates in the
form required by the SM&A Confidential
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Executive Retention Agreement Final
Company and (B) the Executive continues to comply with the
Executive’s continuing obligations under the Proprietary
Information Agreement. The Company shall pay the Executive the
severance payments and commence payments of the reimbursements
described in Sections 2.2(a)(2)-(3) on the first regular
payroll period following the effective date of the general release
as set forth in the general release.
(b)
Termination for Cause . The Company may terminate
Executive’s employment for Cause at any time effective
immediately upon written notice. Except for the payment of the
Accrued Obligations (or as otherwise required by law), upon
termination for Cause the Company shall have no further obligation
to the Executive under this Agreement by way of compensation or
otherwise.
(c)
Resignation without Good Reason . The Executive may
terminate [his/her] employment without Good Reason at any time by
giving the Company thirty (30) days’ advance written
notice of such termination. Except for the payment of the Accrued
Obligations (or as otherwise required by law), upon such
termination without Good Reason the Company shall have no further
obligation to the Executive under this Agreement by way of
compensation or otherwise.
(d)
Death . The Executive’s employment will terminate
immediately upon the Executive’s death. Except for payment of
the Accrued Obligations (or as otherwise required by law), upon
termination for death, the Company shall have no further obligation
to the Executive’s heirs, legatees or estate under this
Agreement by way of compensation or otherwise.
(e)
Disability . The Company may terminate the Executive’s
employment at any time upon the Executive’s Disability (as
defined below) by giving the Executive thirty (30) days’
advance written notice of such termination. Except for payment of
the Accrued Obligations (or as otherwise required by law), upon
termination for Disability the Company shall have no further
obligation to the Executive under this Agreement by way of
compensation or otherwise.
(f)
Continuing Obligations . Upon the Executive’s
termination for any reason set forth in this Section 2 (except
death), the Executive shall continue to be bound by the
Executive’s continuing obligations set forth in the
Proprietary Information Agreement, which agreement shall continue
in full force and effect.
(g)
Mitigation . The Executive shall not be required to mitigate
the amount of any payment or benefits provided for in this
Section 2 by seeking other employment or otherwise. The amount
of any payment or benefits provided for in this Section 2
shall not be reduced by any compensation earned by the Executive as
a result of employment by another employer or self employment, by
retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
3. Key Definitions .
As used herein, the following terms
shall have the following respective meanings: SM&A
Confidential
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Executive Retention Agreement Final
3.1
" Cause " means:
(a) repeated
refusal or repeated failure to carry out any reasonable direction
from the Company or its Board;
(b) a
material breach of the terms or conditions of the Executive’s
employment;
(c) demonstrated
gross negligence or misconduct in the execution of the
Executive’s assigned duties;
(d) habitual
non-performance or incompetent performance of the Executive’s
duties and responsibilities;
(e) a
conviction for a felony or other serious crime involving moral
turpitude;
(f) engaging
in fraud, embezzlement or other illegal conduct;
(g) a
violation of the Executive’s Proprietary Information
Agreement; or
(h) a
material violation of any written policy or procedure of the
Company, including ethics guidelines adopted from time to time by
the Board.
3.2 "
Change in Control " means an event or occurrence set forth
in any one or more of subsections (a) through (c) below
(including an event or occurrence that constitutes a Change in
Control under one of such subsections but is specifically exempted
from another such subsection):
(a)
the acquisition by an 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 (the "Exchange Act")) (a "Person")
of beneficial ownership of any capital stock of the Company if,
after such acquisition, such Person beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) 50%
or more of either (i) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or
(ii) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change in Control: (w) any acquisition directly from the
Company (excluding an acquisition pursuant to the exercise,
conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the
Company, unless the Person exercising, converting or exchanging
such security acquired such security directly from the Company or
an underwriter or agent of the Company); (x) any acquisition
by the Company in which all or substantially all of the individuals
and entities who were the beneficial owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such acquisition beneficially own, directly or
indirectly, more than 50% of the SM&A Confidential
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Executive Retention Agreement Final
then-outstanding shares of common stock and the combined voting
power of the then-outstanding securities entitled to vote generally
in the election of directors, respectively, of the resulting or
acquiring corporation in such acquisition (which shall include,
without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) (such resulting or acquiring
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