EXHIBIT VII
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of December 10, 1997, by
and between VSE Corporation, a Delaware corporation ("Employer"), and Xxxxx X.
Xxxxxx ("Employee");
WHEREAS, Employee currently is employed by Employer as a senior corporate
officer;
WHEREAS, Employee has rendered good and valuable service to the Employer
and has contributed greatly to Employer's growth and success;
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 employment and 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, 1999, except as
otherwise provided in Section 7. If the term of Employee's employment
hereunder shall have continued until January 1, 1999, 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 other 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.
2. Duties
(a) Offices
During the Term, Employee shall serve in Employee's current or
comparable capacity, and the Board shall renominate Employee,
and Employee shall perform duties as assigned. 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 have, at a minimum,
the same perquisites of office as on the date hereof, and shall
report directly to the Employer's Chief Operating Officer.
(b) Full-Time Basis
During the Term, Employee shall devote, on a full-time basis,
Employee's services, skills and abilities to 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 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 Employee's current rate per annum,
payable in installments in accordance with Employer's policy
governing salary payments to senior officers generally ("Base
Salary"). In February of every year during the Term, Employee's
compensation, including Base Salary, will be subject to review,
provided that, the Base Salary shall not be less than the
current 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 in accordance with Company
policy ("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.
(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 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. These fringe benefits and perquisites shall include
holidays, group health insurance, disability insurance, and life
insurance.
5. Expenses and Other Perquisites. Employer shall reimburse Employee for
all reasonable and proper business expenses incurred in the
performance during the Term of duties hereunder, in accordance with
Employer's customary practices for senior officers, and provided such
business expenses are reasonably documented.
6. Exclusive Services, Confidential Information, Business Opportunities
and Non-Solicitation
(a) Exclusive Services
(i) During the Term, Employee shall at all times devote
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 written consent of the Chief
Executive Officer or Chief Operating Officer, 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.
(ii) During the Term, Employee shall not, without the prior
written consent of the Chief Executive Officer or Chief
Operating Officer, 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
Employee's 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 govern-mental 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 Emplyee as a consequence of
or through 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. Upon termination of the Term, regardless of
the circum-stances 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 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 termina-tion, 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 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 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 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 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 a
material breach of 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 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 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
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 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, 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 the total amount of
Employee's Base Salary payable for one (1) year
hereunder, based upon the amount in effect as of the
effective Termination Date. If Employee has less than
five years of service with the Employer as of the
Termination Date, the lump sum severance compensation
payment shall equal 6 months' pay rather than one year
of pay. 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 after the Termination Date, in
accordance with "COBRA" or other Company policy if
covered by a Company-sponsored plan, (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 Supple-mental 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 Employee's 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 death or
Disability for any period of six consecutive months, Employee
(or designated beneficiary) will be paid Base Salary then in
effect for one full year following the date of death or
disability (6 months pay rather than one year of pay if
Employee has less than five years of service with Employer as
of the final day worked).
(c) By Employee
(i) Employee may, in Employee's 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 medical and hospitalization benefits to the
extent permitted by "COBRA" or other Company policy.
(ii) If, during the Term, a Change of Control (as defined
below) occurs, Employee may, in Employee's sole
discretion, terminate the Term upon 30 days' notice of
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:
(a) to receive on or prior to the Termination Date 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. If Employee
has less than five years of service with the
Employer as of the date of Employee's notice to
Employer, the lump sum severance compensation
payment shall be equal to one (1) times the total
amount of the Employee's Base Salary rather than
two (2) times the total amount;
(b) the medical and hospitalization benefits and all
compensation and other benefits that shall have
accrued as of the Termination Date, as described
in Section 7(a)(ii)(1); 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, but shall be permitted to
continue medical and hospitalization benefits to
the extent permitted by "COBRA" or other Company
policy.
(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 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 ex-change
for stock of such other corporation), Employer's
share-holders 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.
(f) Other Policies
This Agreement supersedes and replaces applicable provisions
of General Policy Memorandum (GPM) No. 31 and GPM 31-1
concerning Executive Severance Program for Corporate Officers.
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, 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 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 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 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 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, telelex, 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 President, 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: December 10, 1997 By: /s/ X. X. XxXxxxxxx
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X. X. XxXxxxxxx
President and
Chief Operating Officer
Date: December 10, 1997 /s/ X. X. Xxxxxx
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X. X. Xxxxxx
Employee
