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EXHIBIT 10.2 SM&A Executive Severance and
Retention Agreement THIS
EXECUTIVE SEVERANCE AND RETENTION AGREEMENT (this "Agreement") by
and between SM&A, a Delaware corporation (the "Company"), and
Cathy L. McCarthy (the "Executive"), is made and entered
into as of August 25, 2008.
WHEREAS, the Company has determined
that the Executive will play a critical role in the operations of
the Company; 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 Executive;
WHEREAS , the Executive
entered into that certain Employment Agreement, dated July 19,
2007 ("Employment Agreement"), which shall be superseded and
replaced in part by this Agreement, as set forth herein; and
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. Termination of
Employment .
1.1
Equity . The effect of a termination, whether in connection
with a Change in Control (as defined below) or not, 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.
1.2
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
termination pursuant to this Section 1.2, the Company shall
pay to the Executive the following amounts: SM&A
Confidential
McCarthy Executive Severance and Retention Agreement
(a) On
the effective date of the Executive’s termination (the "Date
of Termination"), the sum of (i) the Executive’s base
salary through the Date of Termination, (ii) any earned but
unpaid bonus amounts with respect to periods ending prior to the
Date of Termination to which the Executive is entitled, and
(iii) any accrued but unused paid time off through the Date of
Termination (collectively, the "Accrued Obligations").
(b) If
(i) no Change in Control has occurred in the twenty-four
(24) months immediately preceding the Date of Termination,
then, on a monthly basis, in accordance with the Company’s
standard payroll practice prior to the Date of Termination, for the
greater of a period of six (6) months following the Date of
Termination or until the expiration of the Executive’s
Employment Agreement, 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 Date of Termination and (B) one-twelfth of the
Executive’s highest annual target bonus amount with the
Company during the three-year period prior to the Date of
Termination; and (ii) if a Change in Control has occurred in
the twenty-four (24) months immediately preceding the Date of
Termination, or if the Executive’s employment with the
Company is terminated prior to the date on which a Change in
Control occurs, and it is reasonably demonstrated by the Executive
that such termination of employment was at the request of a third
party who had then taken steps reasonably calculated to effect a
future Change in Control or otherwise arose in connection with or
in anticipation of a future Change in Control, then on a monthly
basis, in accordance with the Company’s standard payroll
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 at the Company during the three-year
period prior to the Date of Termination and (B) one-twelfth of
the Executive’s highest annual target bonus amount at the
Company during the three-year period prior to the Date of
Termination.
(c) If
(i) no Change in Control has occurred in the twenty-four
(24) months immediately preceding the Date of Termination,
then (A) 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, 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 greater of a period of six (6) months
following the Date of Termination or until the expiration of the
Executive’s Employment Agreement, 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 or
otherwise); provided, however, the Executive agrees to notify the
Company immediately if the Executive becomes covered by another
group health plan; and (B) reimbursement to the Executive
under the Company’s Executive Edge plan for the twelve
(12) month period commencing after the Date of Termination,
which reimbursement shall continue even if the Executive commences
new employment; provided, however, that any reimbursements made to
the Executive for Executive Edge shall not exceed Ten Thousand
Dollars ($10,000.00); and (ii) if a Change in Control has
occurred in the SM&A Confidential
McCarthy Executive Severance and Retention Agreement
twenty-four (24) months immediately preceding the Date of
Termination, or if the Executive’s employment with the
Company is terminated prior to the date on which a Change in
Control occurs, and it is reasonably demonstrated by the Executive
that such termination of employment was at the request of a third
party who had taken steps reasonably calculated to effect a future
Change in Control or otherwise arose in connection with or in
anticipation of a future Change in Control, then (A) 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, 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 greater of a period of six (6) months following the Date
of Termination or until the expiration of the Executive’s
Employment Agreement, 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 or otherwise);
provided, however, the Executive agrees to notify the Company
immediately if the Executive becomes covered by another group
health plan; and (B) reimbursement to the Executive under the
Company’s Executive Edge plan for the twelve (12) month
period commencing after the Date of Termination, which
reimbursement shall continue even if the Executive commences new
employment; provided, however, that any reimbursements made to the
Executive for Executive Edge shall not exceed Ten Thousand Dollars
($10,000.00).
(d) The
Executive shall only be entitled to the severance, the COBRA
payments (if applicable) and the Executive Edge reimbursements
described in Sections 1.2(b)-(c) of this Agreement if
(i) 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 Company, and (ii) the Executive continues to comply
with the Executive’s continuing obligations under the
Employment Agreement. The Company shall pay the Executive the
severance payments and commence payments of the reimbursements
described in Sections 1.2(b)-(c) on the first regular payroll
period following the effective date of the general release as set
forth in the general release.
1.3
Termination For Cause . The Company may terminate the
Executive’s employment for Cause at any time effective
immediately upon written notice. Except for payment of the Accrued
Obligations (or as otherwise required by law), upon termination for
Cause, regardless of whether any Change in Control has occurred
prior to, or occurs at or after, the Date of Termination, the
Company shall have no further obligation to the Executive under
this Agreement by way of compensation or otherwise.
1.4
Resignation Without Good Reason . The Executive may
terminate 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, regardless of whether any Change in Control has
occurred prior to, or occurs at or after, the Date of Termination,
the Company shall have no further obligation to the Executive under
this Agreement by way of compensation or otherwise. SM&A
Confidential
McCarthy Executive Severance and Retention Agreement
1.5
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, regardless of whether any Change in Control
has occurred prior to, or occurs at or after, the Date of
Termination, the Company shall have no further obligation to the
Executive’s heirs, legatees or estate under this Agreement by
way of compensation or otherwise.
1.6
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, regardless of whether any Change in
Control has occurred prior to, or occurs at or after, the Date of
Termination, the Company shall have no further obligation to the
Executive under this Agreement by way of compensation or otherwise.
1.7
Continuing Obligations . Upon the Executive’s
termination for any reason set forth in this Section 1 (except
death), the Executive shall continue to be bound by the
Executive’s continuing obligations set forth in the
Employment Agreement, which agreement shall continue in full force
and effect.
1.8
Mitigation . The Executive shall not be required to mitigate
the amount of any payment or benefits provided for in this
Section 1 by seeking other employment or otherwise. The amount
of any payment or benefits provided for in this Section 1
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.
2. Key Definitions . As
used in this Agreement, the following terms shall have the meanings
indicated:
2.1 "
Cause " shall mean an action or actions by the Executive
during the employment including:
(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; SM&A Confidential
McCarthy Executive Severance and Retention Agreement
(f) engaging
in fraud, embezzlement or other illegal conduct;
(g) a
violation of the Executive’s Employment 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.
2.2 "
Change in Control " shall mean 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
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