EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of May 31, 2007,
by and between VSE Corporation, a Delaware corporation ("Employer" or "VSE"),
and Xxxxx X. Xxxx ("Employee");
WHEREAS, Employee is to be employed by VSE as its Executive Vice
President for Strategic Initiatives and Business Development,
WHEREAS, VSE and its wholly owned subsidiaries are referred to herein as
the "Covered Company,"
WHEREAS, VSE may also assign specified duties to Employee at Integrated
Concepts and Research Corporation ("ICRC"), a wholly owned subsidiary of VSE,
VSE agrees that Employee's performance of such duties and services at ICRC do
not present a conflict of interest by virtue of his employment by VSE,
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
December 31, 2008, except as otherwise provided in Section 7.
If the term of Employee's employment hereunder shall have
continued until December 31, 2008, 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 or Employer, at least 60 days prior to the
expiration of the original term or any such extended term, shall
give written notice to the other party 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 any extensions thereof.
2. Duties
(a) Offices
During the Term, Employee shall serve as VSE's Executive
Vice President for Strategic Initiatives and Business
Development. Employer agrees that Employee will be assigned
only duties of the type, nature and dignity normally
assigned to someone in a comparable position at a
corporation of the size, stature and nature of Employer.
During the Term, Employee shall report to VSE's Chairman of
the Board of Directors (the "Board") and Chief Executive
Officer and VSE's President and Chief Operating Officer for
all operational and administrative matters.
(b) Full-Time Basis
During the Term, Employee shall devote, on a full-time
basis, his services, skills and abilities to his employment
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 any
Covered Company.
3. Compensation
(a) Salary
During the Term, as compensation for services rendered by
Employee hereunder, Employer shall pay to Employee a base
salary, 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, or on such other annual date as
shall be determined by the Employer, Employee's
compensation, including Base Salary, will be subject to
review.
(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 ("Performance
Bonus"). Any Performance Bonus payable pursuant to this
Section 3(b) shall be paid within 60 days after the later of
the date determined or the end of the year to which such
Performance Bonus relates.
(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.
(d) Consultation with Board
It is understood that the Chairman of the Board (the
"Chairman") will consult with the Board's compensation
committee in respect of review of Employee's Base Salary,
Performance Bonus, and other benefits hereunder.
(e) 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
vacation benefits and 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 Employer.
These fringe benefits and perquisites may include holidays,
group health insurance, short-term and long-term disability
insurance, life insurance, and retirement plan contributions.
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
Chairman's written consent provided that such
prior consent shall not be required with respect
to (1) business interests that neither compete
with any Covered Company nor interfere with
Employee's duties and obligations hereunder, and
(2) Employee's charitable, eleemosynary,
philanthropic, or professional association
activities.
(ii) During the Term, Employee shall not, without the
Chairman'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, partnership, limited
liability company, trust, joint venture, or other
entity (collectively a "Person") with which any
Covered Company is currently or has previously
done business or any subsequent line of business
developed by Employee or any Covered Company
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 one percent
of any such company's outstanding equity.
(b) Confidential Information
During the Term and the period commencing on the date of
termination thereof and ending on the second anniversary
of such termination date, 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,
where such information is not generally known in the
trade or industry or was regarded or treated as
confidential by any Covered Company, and where such
information refers or relates in any manner whatsoever
to the business activities, processes, services or
products of any Covered Company. Confidential
Information shall include business and development plans
(whether contemplated, initiated or completed), informa-
tion 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 property of any
Covered Company and all 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 any Covered
Company, Employer or any other Covered Company
might reasonably consider pursuing. Upon
termination of the Term, regardless of the
circumstances thereof, Employer or such other
Covered Company 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 any Covered Company, and
he shall avoid any acts or omissions which are
disloyal to, or competitive with any Covered
Company.
(d) Non-Solicitation of Employees
During the Term and until the second anniversary of the
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 any Covered Company, or solicit or offer employment
to any person who was employed by any Covered Company 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, before the
second anniversary of such termination, engage
in competition with any Covered Company, or
solicit, from any Person who purchased any then
existing product or service from any Covered
Company during the Term, the purchase of any then
existing product or service in competition with
then existing products or services of any Covered
Company.
(ii) For purposes of this Agreement, Employee shall be
deemed to engage in competition with a Covered
Company if Employee 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
engaged in providing technical and management
services to any Person which any Covered Company,
during the Term, has developed or is working to
develop.
(f) Employee Acknowledgment
Employee hereby agrees and acknowledges that the
restrictions imposed upon Employee by the provisions of
this Section 6 are fair and reasonable considering the
nature of the business of each Covered Company, and are
reasonably required for each Covered Company'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 or
prospective employers of Employee.
7. Termination
(a) By Employer
(i) Termination for Cause
Employer may terminate the Term for Cause (as
defined below) 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
Employer's policy; (2) the breach or violation
by Employee of this Agreement, provided that
Employee must first be given notice by VSE's
President or Chairman 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 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 the business of any Covered
Company, provided that Employee must first be
given notice by the Chairman or the 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 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 Termination 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, 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 (1) five days' prior
written notice thereof and (2) on or prior to
the Termination Date, a lump sum severance
compensation payment equal to Employee's Base
Salary as of the effective Termination Date
(e.g., if the Base Salary was $185,000, Employee
would be entitled to a lump sum severance payment
of $185,000). 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 (1) the medical and
hospitalization benefits for the first 18 months
after the Termination Date or longer if permitted
under Employer's policies and procedures; (2) 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, and reimbursements of
incurred expenses; and (3) all stock options or
similar rights to acquire capital stock granted
by VSE to Employee shall automatically become
vested and exercisable in whole or in part.
Notwithstanding anything herein to the contrary,
the expiration or non-renewal of the Term by
Employer or Employee pursuant to Section 1 shall
not be considered a termination without Cause for
the purposes of this Agreement, including this
Section 7(a)(ii).
(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 period of 365
consecutive days 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 Parent Company 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 death or
Disability, Employee (or designated beneficiary) will
be paid his Base Salary then in effect for 365 days
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 the Chairman. 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, and such
termination shall not constitute a termination
without Cause pursuant to this Agreement,
including Section 7(a)(ii). 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 terminate the
Term for Good Reason (as defined below) upon 30
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 hereunder and terminate the Term at any
time prior to the expiration of said notice
period, and such termination shall not constitute
a termination without Cause pursuant to this
Agreement, including Section 7(a)(ii). However,
if this Agreement is terminated by Employee or
Employer pursuant to this Section 7(c)(ii) within
365 days after a Change of Control has occurred,
Employee shall be entitled to (a) payment on or
prior to the Termination Date of a lump sum
severance compensation payment equal to
Employee's Annual Base Salary as of the
Termination Date (e.g., if the Base Salary was
$185,000, Employee would be entitled to a lump
sum payment of $185,000); (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 VSE 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 in Control and Good Reason
(i) For purposes of this Section 7, a "Change in
Control" shall be deemed to have occurred upon
the happening of any of the following events:
(1) any "person," including a "group," as
such terms are 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 VSE ("Voting
Securities") under any VSE-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 45%
or more of the outstanding Voting
Securities of VSE;
(2) 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 45% or more of the
outstanding Voting Securities;
(3) except in the case of a merger or
consolidation in which (a) VSE 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), VSE's shareholders approve
an agreement to merge, consolidate,
liquidate, or sell all or substantially
all of VSE's assets; or
(4) a majority of VSE's 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 shall mean a
Person that directly or indirectly
controls, is controlled by, or is under
common control with the Person or other
entity specified.
(ii) For purposes of this Section 7, "Good Reason"
shall mean after the occurrence of a Change in
Control, any one or more of the following events
has occurred:
(1) a material change in the nature of
Employee's authorities, duties,
responsibilities or status (including
offices and titles) from those in effect
immediately prior to the Change in
Control;
(2) the relocation of Employee's place of
employment to a location in excess of 75
miles from the place of Employee's
employment immediately prior to the
Change in Control, except for required
travel on Employee's business to an
extent substantially equivalent to
Employee's business travel obligations
immediately prior to the Change in
Control;
(3) any reduction by Employer of Employee's
Base Salary or material reduction in
Employee's incentive benefits from those
in effect immediately prior to the
Change in Control; or
(4) Employer breaches any obligation
hereunder and such breach is not cured
within 30 days after Employer's receipt
of notice thereof from Employee.
(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.
(f) Board Approval
Notwithstanding anything herein to the contrary, the
Term shall expire as of June 30, 2007, if this Agreement
has not been previously approved by the Board, and any
such termination shall not constitute a termination
without Cause pursuant to this Agreement, including
Section 7(a)(ii).
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
agreement. If any dispute cannot be resolved by Employer and
Employee, such dispute 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 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. A 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
termination 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 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
obligations of Employer or Employee hereunder may be assigned by
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
Chairman c/o Chief Executive Officer, 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, Employer and Employee have duly executed this
Agreement, to be effective as of the day and year first above written.
VSE CORPORATION, a Delaware corporation
By: /s/ X. X. Xxxxxx
________________________________
Chairman, President, and CEO/COO
/s/ Xxxxx X. Xxxx
________________________________
Xxxxx X. Xxxx
