EXHIBIT V
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of 3 June 1999,
by and between VSE Corporation, a Delaware corporation ("Employer"), and
Xxxxx X. Xxxxxxxx ("Employee");
WHEREAS, Employee currently is employed by Employer as president and
chief operating officer;
WHEREAS, Employee has rendered many years of good and valuable service
to the Employer and has contributed greatly to Employer' s growth and success;
WHEREAS, the parties desire to update the Employment Agreement dated
10 December 1997 to reflect Employee's current position and responsibilities;
WHEREAS, Employer wishes to induce Employee to remain in Employer's
employ to prevent the significant loss which Employer would incur if Employee
were to leave and to enter the employment of a competitor;
WHEREAS, in the current business climate of takeovers and acquisitions,
Employee may be concerned about the continuation of his employment and his
status and responsibilities if a Change in Control (as defined below) occurs,
and Employer is concerned that Employee may be approached by others with
employment opportunities;
WHEREAS, Employer desires to ensure that, if a Change in Control appears
possible, Employee will be in a secure position from which to objectively engage
in any potential deliberations or negotiations respecting such Change in Control
without fear of any direct or implied threat to employment, status and
responsibilities; and
WHEREAS, Employee desires to have the foregoing assurances;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the adequacy of which
is hereby acknowledged, Employer and Employee, each intending to be legally
bound, agree as follows:
1. Term. The term of Employee's employment hereunder shall
commence on the date hereof and shall continue until
January 1, 2001, except as otherwise provided in Section 7. If
the term of Employee's employment hereunder shall have continued
until January 1, 2001, thereafter, such term of Employee's
employment hereunder shall be deemed to be renewed
automatically, on the same terms and conditions contained
herein, for successive periods of one year each, unless and
until Employee, at least 90 days prior to the expiration of the
original term or any such extended term, shall give written
notice to the Employer of intent not to renew the term of
Employee's employment hereunder. All references herein to the
"Term" refer to the original term of Employee's employment
hereunder and all extensions thereof.
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2. Duties
(a) Offices
During the Term, Employee shall serve as Employer's
president and chief operating officer, and the Board
shall renominate Employee as a director of Employer,
reappoint Employee as Employer's president and chief
operating officer, and Employee shall perform the duties
of those positions, as assigned to him by the chairman.
Employer agrees that Employee will be assigned only
duties of the type, nature and dignity normally assigned
to the chief operating officer of a corporation of the
size, stature and nature of Employer. During the Term,
Employee shall have, at a minimum, the same perquisites
of office as he had on the date hereof, and he shall
report to the chairman and chief executive officer.
(b) Full-Time Basis
During the Term, Employee shall devote, on a full-time
basis, his services, skills and abilities to his employ-
ment hereunder, excepting periods of vacation, illness
or Disability (as defined below), and excepting any
pursuits which do not materially interfere with duties
hereunder or present a conflict of interest with the
interests of Employer or of any subsidiary thereof
("Subsidiary").
3. Compensation
(a) Salary
During the Term, as compensation for services rendered
by Employee hereunder, Employer shall pay to Employee a
base salary at the rate of not less than his current
annual rate, payable in installments in accordance with
Employer's policy governing salary payments to senior
officers generally ("Base Salary"). Effective January 1
of every year during the Term, Employee's compensation,
including Base Salary, will be subject to the Board's
review, provided that, the Base Salary shall not be
less than the current annual rate.
(b) Performance Bonus
Except as otherwise provided in Section 7, in addition
to the Base Salary, Employee shall be eligible for an
annual performance bonus as determined by the Board or
its Compensation Committee ("Performance Bonus"). Any
Performance Bonus payable pursuant to this Section 3(b)
shall be paid within 30 days after the end of the fiscal
period to which such Performance Bonus relates.
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(c) Other Compensation Plans or Arrangements
During the Term, Employee shall also be eligible to
participate in all other currently existing or
subsequently implemented compensation or benefit
plans or arrangements available generally to other
officers or senior officers of Employer, including
Employer's "Deferred Supplemental Compensation Plan,"
ESOP/401(k), and any stock grant, stock option, stock
purchase or similar stock plans or arrangements.
(d) Tax Withholdings
Employer shall withhold from Employee's compensation
hereunder and pay over to the appropriate governmental
agencies all payroll taxes, including income, social
security, and unemployment compensation taxes, required
by the federal, state and local governments with
jurisdiction over Employer.
4. Benefits. During the Term, Employee shall be entitled to such
comparable fringe benefits and perquisites as may be provided
to any or all of Employer's senior officers pursuant to policies
established from time to time by the Board. These fringe
benefits and perquisites shall include holidays, group health
insurance, short-term and long-term disability insurance, and
life insurance, vehicle allowances, and supplemental executive
health care benefits. Also, during the Term, Employee shall be
entitled to 30 days paid leave per annum and to accrue unused
leave from year to year and to be reimbursed for the costs of
physical examinations up to $1,000 per annum.
5. Expenses and Other Perquisites. Employer shall reimburse
Employee for all reasonable and proper business expenses
incurred by him during the Term in the performance of his
duties hereunder, in accordance with Employer's customary
practices for senior officers, and provided such business
expenses are reasonably documented. Also, during the Term,
Employer shall continue to provide Employee with an office
and suitable office fixtures, telephone services, and
secretarial assistance of a nature appropriate to Employee's
position and status.
6. Exclusive Services, Confidential Information, Business
Opportunities and Non-Solicitation
(a) Exclusive Services
(i) During the Term, Employee shall at all times
devote his full-time attention, energies,
efforts and skills to Employer's business and
shall not, directly or indirectly, engage in
any other business activity, whether or not for
profit, gain or other pecuniary advantages,
without the Board's written consent provided
that such prior consent shall not be required
with respect to (1) business interests that
neither compete with Employer or any
Subsidiaries nor interfere with Employee's
duties and obligations hereunder, and
(2) Employee's charitable, eleemosynary,
philanthropic or professional association
activities.
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(ii) During the Term, Employee shall not, without the
Board's prior written consent, directly or
indirectly, either as an officer, director,
employee, agent, advisor, consultant, principal,
stockholder, partner, owner or in any other
capacity, on Employee's own behalf or otherwise,
in any way engage in, represent, be connected
with or have a financial interest in, any
business which is, or to his knowledge, is about
to become, engaged in the business of providing
engineering, management, energy or environmental
services to the United States Government or any
department, agency, or instrumentality thereof
or any state or local governmental agency or to
any person, corporation or other entity
(collectively a "Person") with which Employer or
any Subsidiary is currently or has previously
done business or any subsequent line of business
developed by Employee or any Subsidiary during
the term. Notwithstanding the foregoing,
Employee shall be permitted to own passive
investments in publicly held companies provided
that such investments do not exceed five percent
of any such company's outstanding equity.
(b) Confidential Information
During the Term and for the first 24 consecutive months
after the termination of the Term, Employee shall not
disclose or use, directly or indirectly, any
Confidential Information (as defined below). For the
purposes of this Agreement, "Confidential Information"
shall mean all information disclosed to Employee, or
known by him as a consequence of or through his
employment with Employer or any Subsidiary, where such
information is not generally known in the trade or
industry or was regarded or treated as confidential by
Employer or any Subsidiary, and where such information
refers or relates in any manner whatsoever to the
business activities, processes, services or products of
Employer or its Subsidiaries. Confidential Information
shall include business and development plans (whether
contemplated, initiated or completed), information with
respect to the development of technical and management
services, business contacts, methods of operation,
results of analysis, business forecasts, financial data,
costs, revenues, and similar information. Upon
termination of Term, Employee shall immediately return
to Employer all of property of Employer or any
Subsidiary and Confidential Information which is in
tangible form, and all copies thereof.
(c) Business Opportunities
(i) During the Term, Employee shall promptly
disclose to Employer each business opportunity
of a type which, based upon its prospects and
relationship to the existing businesses of
Employer or any Subsidiary, Employer or any
Subsidiary might reasonably consider pursuing.
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Upon termination of the Term, regardless of the
circumstances thereof, Employer shall have the
exclusive right to participate in or undertake
any such opportunity on its own behalf without
any involvement of Employee.
(ii) During the Term, Employee shall refrain from
engaging in any activity, practice or act which
conflicts with, or has the potential to conflict
with, the interests of Employer or its
Subsidiaries, and he shall avoid any acts or
omissions which are disloyal to, or competitive
with Employer or its Subsidiaries.
(d) Non-Solicitation of Employees
During the Term and for the first 24 consecutive months
after termination of the Term, Employee shall not,
except in the course of duties hereunder, directly or
indirectly, induce or attempt to induce or otherwise
counsel, advise, ask or encourage any person to leave
the employ of Employer or any Subsidiary, or solicit or
offer employment to any person who was employed by
Employer or any Subsidiary at any time during the
twelve-month period preceding the solicitation or offer.
(e) Covenant Not To Compete
(i) If Employee voluntarily terminates the Term, or
if Employer terminates the Term for Cause (as
defined below), Employee shall not, during the
first 24 consecutive months following such
termination, engage in competition with Employer
or any Subsidiary, or solicit, from any person
or entity who purchased any then existing
product or service from Employer or any
Subsidiary during his employment hereunder,
the purchase of any then existing product or
service in competition with then existing
products or services of Employer or any
Subsidiary.
(ii) For purposes of this Agreement, Employee shall
be deemed to engage in competition with Employer
if he shall directly or indirectly, either
individually or as a stockholder, director,
officer, partner, consultant, owner, employee,
agent, or in any other capacity, consult with or
otherwise assist any person or entity engaged in
providing technical and management services to
any person or entity which Employer or any
Subsidiary, during the Term, has developed or is
working to develop. Notwithstanding anything
herein to the contrary, if Employer is in
material breach of this Agreement, the
provisions of this Section 6 shall not apply.
(f) Employee Acknowledgment
Employee hereby agrees and acknowledges that the
restrictions imposed upon by the provisions of this
Section 6 are fair and reasonable considering the
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nature of Employer's business, and are reasonably
required for Employer's protection.
(g) Invalidity
If a court of competent jurisdiction or an arbitrator
shall declare any provision or restriction contained in
this Section 6 as unenforceable or void, the provisions
of this Section 6 shall remain in full force and effect
to the extent not so declared to be unenforceable or
void, and the court may modify the invalid provision to
make it enforceable to the maximum extent permitted by
law.
(h) Specific Performance
Employee agrees that if Employee breaches any of the
provisions of this Section 6, the remedies available at
law to Employer would be inadequate and in lieu thereof,
or in addition thereto, Employer shall be entitled to
appropriate equitable remedies, including specific
performance and injunctive relief. Employee agrees not
to enter into any agreement, either written or oral,
which may conflict with this Agreement, and Employee
authorizes Employer to make known the terms of
Sections 6 and 7 hereof to any Person, including future
employers of Employee.
7. Termination
(a) By Employer
(i) Termination for Cause
Employer may for Cause (as defined below)
terminate the Term at any time by written notice
to Employee. For purposes of this Agreement,
the term "Cause" shall mean any one or more of
the following: (1) conduct by Employee which is
materially illegal or fraudulent or contrary to
Company policy; (2) the breach or violation by
Employee of any of the material provisions of
this Agreement, provided that Employee must
first be given notice by the Chairman or the
Board of the alleged breach or violation and 30
days to cure said alleged breach or violation;
(3) Employee's use of illegal drugs or abuse of
alcohol or authorized drugs which impairs
Employee's ability to perform duties hereunder,
provided that Employee must be given notice by
the Chairman or the Board of such impairment and
60 days to cure the impairment; (4) Employee's
knowing and willful neglect of duties or
negligence in the performance of duties which
materially affects Employer's or any
Subsidiary's business, provided that Employee
must first be given notice by the Chairman or
the Board of such alleged neglect or negligence
and 30 days to cure said alleged neglect or
negligence. If a termination occurs pursuant to
clause (1) above, the date on which the Term is
terminated (the "Termination Date") shall be the
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date Employee receives notice of termination
and, if a termination occurs pursuant to clauses
(2), (3) or (4) above, the Termination Date
shall be the date on which the specified cure
period expires. In any event, as of the Termina-
tion Date (in the absence of satisfying the
alleged breach or violation within the
applicable cure period), Employee shall be
relieved of all duties hereunder and Employee
shall not be entitled to the accrual or
provision of any compensation or benefit, after
the Termination Date but Employee shall be
entitled to the provision of all compensation
and other benefits that shall have accrued as
of the Termination Date, including Base Salary,
Performance Bonuses, paid leave benefits,
Deferred Compensation Units, Deferred
Supplemental Compensation to the extent
permitted by the plans, and reimbursement of
incurred business expenses.
(ii) Termination Without Cause
Employer may, in its sole discretion, without
Cause, terminate the Term at any time by
providing Employee with (a) 60 days' prior
notice thereof and (b) on or prior to the
Termination Date, a lump sum severance
compensation payment equal to one (1) times the
total amount of Employee's Base Salary payable
hereunder, based upon the amount in effect as of
the effective Termination Date. In such event,
Employee shall not be entitled to the accrual
or provision of any other compensation or
benefit after the Termination Date other than
(a) the medical and hospitalization benefits for
the first 18 months after the Termination Date
or longer if permitted under Employer's policies
and procedures; (b) the provision of all
compensation and other benefits that shall have
accrued as of the Termination Date, including
Base Salary, Performance Bonus, paid leave
benefits, Deferred Compensation Units, Deferred
Supplemental Compensation and reimbursements of
incurred expenses; and (c) all stock options or
similar rights to acquire capital stock granted
by Employer to Employee shall automatically
become vested and exercisable in whole or in
part.
(b) Death or Disability
The Term shall be terminated immediately and
automatically upon Employee's death or
"Disability." The term "Disability" shall mean
Employee's inability to perform all of the essential
functions of his position hereunder for a period of 26
consecutive weeks or for an aggregate of 150 work days
during any 12-month period by reason of illness,
accident or any other physical or mental incapacity,
as may be permitted by applicable law. Employee's
capability to continue performance of Employee's duties
hereunder shall be determined by a panel composed of two
independent medical doctors appointed by the Board and
one appointed by the Employee or designated
representative. If the panel is unable to reach a
decision, the matter will be referred to arbitration in
accordance with Section 8. In the event of Employee's
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death or Disability for any period of six consecutive
months, Employee (or designated beneficiary) will be
paid his Base Salary then in effect for one full year
following the date of death or disability.
(c) By Employee
(i) Employee may, in his sole discretion, without
cause, terminate the Term at any time upon 60
days' written notice to Employer. If Employee
exercises such termination right, Employer may,
at its option, at any time after receiving such
notice from Employee, relieve Employee of all
duties and terminate the Term at any time prior
to the expiration of said notice period. If
the Term is terminated by Employee or Employer
pursuant to this Section 7(c)(i), Employee shall
not be entitled to any further Base Salary or
the accrual or provision of any compensation
or benefits after the Termination Date, except
standard medical and hospitalization benefits in
accordance with Employer's policy.
(ii) If, during the Term, a Change of Control (as
defined below) occurs, Employee may, in his sole
discretion, terminate the Term upon 30 days'
notice to Employer. If Employee exercises such
termination right, Employer may, at its option,
at any time after receiving such notice from
Employee, relieve Employee of all duties
hereunder and terminate the Term at any time
prior to the expiration of said notice period.
If this Agreement is terminated by Employee or
Employer pursuant to this Section 7(c)(ii),
Employee shall be entitled to (a) payment on
or prior to the Termination Date of a lump sum
severance compensation payment equal to two
(2) times the total amount of Employee's Base
Salary payable hereunder, based on the amount
in effect as of the Termination Date;
(b) continue the medical and hospitalization
benefits in accordance with Employer's policy
and to payment of all compensation and other
benefits that shall have accrued as of the
Termination Date, as described in Section
7(a)(ii)(l); and (c) to the automatic vesting
and exercisability in whole or in part of all
stock options or similar rights to acquire
capital stock granted by Employer to Employee;
provided that Employee shall not be entitled,
after the Termination Date to the accrual or
provision of any other compensation payable
hereunder, including the Performance Bonus.
(d) Change of Control
For purposes of this Section 7, a "Change of Control"
shall be deemed to have occurred upon the happening of
any of the following events:
(i) any "person," including a "group," as such terms
as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, and
the rules promulgated thereunder (collectively
the "Exchange Act"), other than a trustee or
other fiduciary holding voting securities of
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Employer ("Voting Securities") under any
Employer-sponsored benefit plan, becomes the
beneficial owner, as defined under the Exchange
Act, directly or indirectly, whether by purchase
or acquisition or agreement to act in concert or
otherwise, of 30% or more of the outstanding
Voting Securities;
(ii) a cash tender or exchange offer is completed for
such amount of Voting Securities which, together
with the Voting Securities then beneficially
owned, directly or indirectly, by the offeror
(and affiliates thereof) constitutes 40% or more
of the outstanding Voting Securities;
(iii) except in the case of a merger or consolidation
in which (a) Employer is the surviving
corporation and (b) the holders of Voting
Securities immediately prior to such merger or
consolidation beneficially own, directly or
indirectly, more than 50% of the outstanding
Voting Securities immediately after such merger
or consolidation (there being excluded from the
number of Voting Securities held by such
holders, but not from the outstanding Voting
Securities, any Voting Securities received by
affiliates of the other constituent
corporation(s) in the merger or consolidation
in exchange for stock of such other
corporation), Employer's shareholders approve an
agreement to merge, consolidate, liquidate, or
sell all or substantially all of Employer's
assets; or
(iv) two or more directors are elected to the Board
without having previously been nominated and
approved by the members of the Board incumbent
on the day immediately preceding such election.
For purposes of this Section 7, "affiliate" of
a person or another entity shall mean a person
or other entity that directly or indirectly
controls, is controlled by, or is under common
control with the person or other entity
specified.
(e) No Duty to Mitigate
If Employee is entitled to the compensation and other
benefits provided under Sections 7(a)(ii) or (c)(ii),
Employee shall have no obligation to seek employment
to mitigate damages hereunder.
8. Arbitration. Whenever a dispute arises between the parties
concerning this Agreement or any of the obligations hereunder,
or Employee's employment generally, Employer and Employee shall
use their best efforts to resolve the dispute by mutual agree-
ment. If any dispute cannot be resolved by Employer and
Employee, it shall be submitted to arbitration to the exclusion
of all other avenues of relief and adjudicated pursuant to the
American Arbitration Association's Rules for Employment Dispute
Resolution then in effect. The decision of the arbitrator must
be in writing and shall be final and binding on the parties, and
judgment may be entered on the arbitrator's award in any court
having jurisdiction thereof. The arbitrator's authority in
granting relief to Employee shall be limited to an award of
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compensation, benefits and unreimbursed expenses as described
in Sections 3, 4, and 5 above, and to the release of Employee
from the provisions of Section 6 and the arbitrator shall have
no authority to award other types of damages or relief to
Employee, including consequential or punitive damages. The
arbitrator Shall also have no authority to award consequential
or punitive damages to Employer for violations of this Agreement
by Employee. The expenses of the arbitration shall be borne by
the losing party to the arbitration and the prevailing party
shall be entitled to recover from the losing party all of its
own costs and attorneys' fees with respect to the arbitration.
Nothing in this Section 8 shall be construed to derogate
Employer's rights to seek legal and equitable relief in a court
of competent jurisdiction as contemplated by Section 6(h).
9. Non-Waiver. It is understood and agreed that one party's
failure at any time to require the performance by the other
party of any of the terms, provisions, covenants or conditions
hereof shall in no way affect the first party's right thereafter
to enforce the same, nor shall the waiver by either party of the
breach of any term, provision, covenant or condition hereof be
taken or held to be a waiver of any succeeding breach.
10. Severability. If any provision of this Agreement conflicts
with the law under which this Agreement is to be construed, or
if any such provision is held invalid or unenforceable by a
court of competent jurisdiction or any arbitrator, such
provision shall be deleted from this Agreement and the Agreement
shall be construed to give full effect to the remaining
provision thereof.
11. Survivability. Unless otherwise provided herein, upon termina-
tion of the Term, the provisions of Sections 6(b), (d) and (e)
shall nevertheless remain in full force and effect.
12. Governing Law. This Agreement shall be interpreted, construed
and governed according to the laws of the Commonwealth of
Virginia, without regard to the conflict of law provisions
thereof.
13. Construction. The paragraph headings and captions contained
in this Agreement are for convenience only and shall not be
construed to define, limit or affect the scope or meaning of
the provisions hereof. All references herein to Sections shall
be deemed to refer to Sections of this Agreement.
14. Entire Agreement. This Agreement contains and represents the
entire agreement of Employer and Employee and supersedes all
prior agreements, representations or understandings, oral or
written, express or implied with respect to the subject matter
hereof. This Agreement may not be modified or amended in any
way unless in a writing signed by each of Employer and Employee.
No representation, promise or inducement has been made by either
Employer or Employee that is not embodied in this Agreement, and
neither Employer nor Employee shall be bound by or liable for
any alleged representation, promise or inducement not
specifically set forth herein.
15. Assignability. Neither this Agreement nor any rights or obliga-
tions of Employer or Employee hereunder may be assigned by
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Employer or Employee without the other party's prior written
consent. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of Employer and Employee
and their heirs, successors and assigns.
16. Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed properly given if delivered
personally or sent by certified or registered mail, postage
prepaid, return receipt requested, or sent by telegram, telex,
telecopy or similar form of telecommunication, and shall be
deemed to have been given when received. Any such notice or
communication shall be addressed: (a) if to Employer, to Chief
Executive Officer, c/o VSE Corporation, 0000 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000 or (b) if to Employee, to the
last known home address on file with Employer, or to such other
address as Employer or Employee shall have furnished to the
other in writing.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, to be effective as of the day and year first above written.
VSE CORPORATION
a Delaware corporation
Date: 3 June 1999 By: Signature on File
-----------------
X. X. Xxxxxx
Chairman and Chief
Executive Officer
Date: 3 June 1999 By: Signature on File
-----------------
X. X. Xxxxxxxx
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