EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective as of August 1,
2004 (the "Effective Date"), is made
by and between Digital Fusion, Inc., a
Delaware corporation (the "Company") with
its corporate offices at 4940-A Corporate
Drive, Huntsville, Alabama 35805, and
Edward Rawlinson (the "Executive"),
residing at 1808 Cross Creek Rd.,
Huntsville, Al.
BACKGROUND INFORMATION
The Company and Executive wish to enter
into a new agreement upon the terms
and conditions set forth herein. Therefore,
in consideration of the mutual
promises and covenants contained herein and
for other good and valuable
consideration, the receipt and adequacy of
which are hereby acknowledged, the
parties hereto agree as follows:
OPERATIVE PROVISIONS
1. Employment; Term.
(a) Employment. Subject to the terms and conditions set forth herein, the
Company
agrees to employ and
Executive agrees to serve as the
Company's
Vice
President of
Engineering
Services. During the term of employment,
Executive
shall have such responsibilities, duties and authorities as
commensurate
with companies of similar size, and additionally, such
responsibilities,
duties and
authorities
as may be assigned to the
Executive
by the Company's President, provided, that, the same is not
inconsistent
with such position. Executive agrees that he will use his full
business
time to promote the
interests of the
Company and its
affiliates
and to fulfill his duties hereunder. Notwithstanding the foregoing,
Executive will
contribute
approximately
$125,000 of his direct
labor per
year in personal
billing coverage. Billing coverage is subject to
change
upon mutual
written agreement. Nothing in this Agreement shall however
preclude
Executive
from engaging, so long as, in the reasonable
determination
of the Company's Board
of Directors, such
activities do not
interfere with
the execution of his duties and responsibilities hereunder,
in charitable
and community affairs,
from managing any
passive investment
made by Executive in
publicly traded equity
securities or other
property
(provided,
that, no such investment may exceed 5% of the equity of any
entity,
without the prior
approval of the Company's Board of Directors) or
from
serving, subject to the prior approval of the Company's Board of
Directors,
as a member of boards
of directors or as a trustee of any other
corporation,
association or entity
(provided, that, no such prior approval
shall be
required for any such boards on which Executive shall currently
serve).
For purposes of the preceding sentence, any approval of the
Company's
Board of Directors
required herein shall not be unreasonably
withheld.
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(b) Term. Unless sooner terminated pursuant to Section 3, the term of
Executive's
employment
pursuant to this
Agreement shall commence on the
Effective Date
and shall continue thereafter for a period of two years (the
"Term").
Executive
and the Company understand and acknowledge that
Executive's
employment with the
Company constitutes
"at-will" employment.
Subject to the
Company's obligation to provide severance benefits as
specified
herein, Executive and the Company acknowledge that this
employment
relationship may be
terminated at any time, upon written notice
to the other
party, with or without
Cause or Good Reason,
as those terms
are defined
below, at the option of either the Company or Executive.
2. Compensation. During the employment term
under this Agreement, the Company
shall compensate Executive
as follows:
(a) Base Salary. Subject to adjustment
as set forth below, the Company will pay
Executive while
he is employed
hereunder, an
annualized base compensation
of not less than
One Seventy-Five Thousand ($175,000.00) per year,
payable
in substantially
equal semi-monthly installments, or more frequently in
accordance
with Company's usual payroll policy (the "Base Salary").
Executive
shall have a
performance and
compensation review in
January of
2005.
(b) Performance Bonus. Executive shall be entitled to a quarterly cash
incentive
bonus
based upon the Compensation Committee's approved
performance
objectives. Such bonus compensation shall be based, in part, on
the achievement of performance
criteria established by the Compensation
Committee,
including criteria relating to the profitability of the
Company.
Both parties
shall mutually agree upon a sliding performance scale between
$0 and 1/4 of
annual salary per quarter.
(c) Participation in Company Stock Ownership Plan. During the period of
Executive's
employment,
Executive will be entitled to participate in
the
Company's Stock
Option Plan (or such other successor plan), as the Board of
Directors or
Compensation Committee, in its sole discretion, may determine.
Executive
shall receive an
initial stock option
grant in accordance
with
Exhibit A
attached hereto.
(d) Benefits. Executive will be
eligible to participate in all benefit programs
of the Company
which are in effect for its senior executive personnel and,
to the extent
available to executive
personnel,
its employees
generally
from time to
time.
(e) Vacation. Executive will be entitled each
year to vacation for a period or
periods not
inconsistent
with the normal policy
of Company in effect from
time to time,
but in any event not
less than fifteen
vacation days each
year and to such
holidays as may be
customarily afforded
to its employees
by the Company,
during which periods Executive's compensation shall be paid
in full.
(f) Reimbursement of Expenses.
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(i) All reasonable travel and
entertainment expenses incurred by Executive
in the course of fulfilling this Agreement or otherwise
promoting the
Company and its business shall be reimbursed by the Company. Such
reimbursement shall be made to Executive promptly following
submission
to the Company of receipts and other documentation of such expenses
reasonably satisfactory to the Company.
(ii) In addition
to the expenses
reimbursable pursuant
to paragraph
(i)
above, the Company shall also pay to Executive a monthly
allowance of
$125.00 for telephone expenses.
3. Termination.
(a) Death and Legal Incapacity. Executive's employment hereunder shall
terminate upon
Executive's death or legal incapacity.
(b) Disability. Executive's employment hereunder may be terminated by the
Company in the event of
Executive's Disability. As used in this Agreement,
the term
"Disability" shall
mean the inability or failure of the Executive
to perform the
essential functions of the position for which he has
been
employed by the
Company, for more than
90 consecutive days or
for shorter
periods
aggregating
more than 150 days in
any period
of 12 consecutive
months,
all as determined in good faith by a majority vote of the
disinterested
members of the Company's Board of Directors. Until such
termination
occurs, Executive shall continue to receive his base
salary
Base Salary as
then in effect, provided, however, that such salary shall be
reduced to the
extent of any
short-term disability
benefits provided to
Executive under
a short-term disability plan sponsored by the Company.
(c) For Cause. Executive's employment hereunder may be terminated by the
Company for
cause ("Cause")
upon the occurrence of any of the following
events and in
accordance with the time periods set forth below:
(i) Executive's breach of any material
duty or obligation hereunder, which
breach continues
or renews at any time
after notice and a reasonable
opportunity to desist or otherwise cure has been furnished;
(ii) Executive
is convicted or pleads guilty or nolo contendre to any
felony (other than traffic violation) or any crime
involving fraud,
dishonesty or misappropriation;
(iii)Executive
willfully engages in misconduct that causes material harm
to the Company
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(iv) The
Executive willfully
engages in an act that constitutes a conflict
of interest with the Company or a usurpation of a business
opportunity
of the Company, in
either case without the prior written approval of
the Company's Board of Directors.
The determination as to whether any of the foregoing
Causes has
occurred
shall be made in
good faith by the affirmative vote of at least 75% of the
disinterested
members of the
Company's Board of Directors. No event shall
be deemed a
basis for Cause unless Executive is terminated therefore within
60 days
after such event is known to the
Chairman of the Company or if
Executive is
Chairman, known to the Chairman of any committee of the Board.
(d) For Good Reason. Executive may terminate his
employment hereunder for good
reason ("Good
Reason") if such
termination
occurs within sixty
(60) days
after:
(i) The Company assigns to Executive any duties or responsibilities
inconsistent with
Section 1, which assignment is not withdrawn within
20 business
days after Executive's notice to the Company of his
reasonable objection thereto;
(ii) Executive
is relocated
more than 40 miles
from Huntsville,
Alabama
without his prior written consent; or
(iii)The Company
breaches any material
provision of this Agreement and
such breach and the
effects thereof are
not remedied by the
Company
within 20 business days after Executive's notice to the Company of
the
existence of such breach.
(e) Effect of Termination.
(i) If the Company terminates Executive's employment for reasons other
than for Cause, or for Executive's death, legal incapacity or
disability, or if Executive terminates this Agreement for Good
Reason,
the obligations
of Executive
under this
Agreement will terminate
except that the
covenants contained in
Section 4(a) shall
continue
indefinitely, and the
obligations
in this section shall continue
pursuant to their terms. In such event, for a period of six (6)
months
after the date of
Executive's
termination,
the Company shall pay
Executive, in
accordance
with
customary
payroll
procedures,
Executive's base
salary as then in effect and, in addition, any
Performance Bonus that
Executive would have earned in the year he was
terminated, prorated as of the date of termination. For such
six-month
period, the Company
shall continue to provide medical coverage to
Executive under
substantially the same terms as were in effect on the
date Executive's
employment
terminated
under
this provision.
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Additionally, any and all vested options, warrants or other
securities
awarded to Executive
pursuant to the
Company's Stock Option
Plan or
any other similar plan or other written option agreement shall, as of
the date of
Executive's
termination,
immediately vest
and become
exercisable and all such vested options, warrants or other securities
shall remain
exercisable by
Executive for the duration of the period
during which the
options, warrants or other securities would have
remained exercisable
if Executive had remained employed by the
Company. The amounts
paid to Executive under this paragraph shall not
be affected in any way by Executive's acceptance of other employment
during the six-month period described above.
(ii) Except as
otherwise provided herein, if Executive terminates his
employment for any
reason other than Good Reason or Executive's
employment is terminated for Cause, the obligations of Executive and
the Company
under this
Agreement will terminate except that the
covenants of
Executive contained in Section 4(a) shall continue
indefinitely and the covenants of Executive contained in Section 4(d)
shall continue until the first anniversary of the date of
Executive's
termination. In such
event, Executive shall be entitled to receive
only the compensation
hereunder accrued and
unpaid as of the date of
Executive's termination.
(iii)If
Executive's employment
terminates due to a Disability, as defined
in Section 3(b), the
obligations
of Executive
under this
Agreement
will terminated
except that the covenants in Section 4(a) shall
continue indefinitely.
In such event, for a
period of one year after
the date of Executive's termination, the Company shall pay
Executive,
in accordance with
customary payroll
procedures,
Executive's
Base
Salary as then in effect, provided, however, that the payment of
such
salary shall be
reduced to the
extent of any
long-term disability
benefits provided
to Executive under a long-term disability plan
sponsored by the
Company. The vesting and exercise of any and all
options, warrants or other securities awarded to Executive pursuant
to
the Company's
Stock Option Plan or any other
similar plan shall
be
governed by the
terms of such
plan, or if awarded pursuant to a
written option agreement, then the terms of such agreement.
(iv) No amount
payable to Executive
pursuant to this
Agreement shall be
subject to mitigation due to Executive's acceptance or availability
of
other employment.
4. Restrictive Covenants;
Non-Competition.
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The parties
hereto recognize that Executive's services are special and
unique and that the level of compensation and the provisions herefor for
compensation are partly in consideration of
and conditioned upon Executive's not
competing with the Company.
(a) Except as otherwise permitted hereby, or by the Company's Board of
Directors,
Executive shall treat as confidential and not communicate or
divulge
to any other
person or entity any information related to the
Company or its
affiliates or the business, affairs, prospects, financial
condition
or ownership of the Company or any of its affiliates (the
"Information")
acquired by
Executive from the Company or the Company's
other
employees or agents, except (i) as may be required to comply with
legal
proceedings
(provided,
that, prior to such disclosure in legal
proceedings
Executive notifies the
Company and reasonably
cooperates with
any efforts by the Company to limit the scope of such
disclosure
or to
obtain
confidential treatment thereof by the court or tribunal seeking
such
disclosure) or
(ii) while employed by the Company, as Executive reasonably
believes
necessary in performing his duties. Executive shall use the
Information
only
in connection with the performance of his duties
hereunder,
and not otherwise for his benefit or the benefit of
any other
person or
entity. For the
purposes of this
Agreement, Information
shall
include,
but not be limited to,
any confidential
information
concerning
clients,
subscribers,
marketing,
business and
operational methods of the
Company
or its affiliates and its affiliates' clients, subscribers,
contracts,
financial
or other data, technical data or any other
confidential
or proprietary
information
possessed,
owned or used by
the
Company.
Excluded from
Executive's
obligations of
confidentiality is any
part of such
Information
that: (i) was in the public domain prior
to the
date of
commencement
of Executive's
employment
with the Company or
(ii)
enters the
public domain other
than as a result of
Executive's breach
of
this
covenant. This Section (4) (a) shall survive the expiration or
termination of
the other provisions of this Agreement.
(b) Executive shall fully disclose to the
Company
