Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of July
1, 2004, by and between VSE Corporation, a Delaware corporation
("Employer"), and Xxxxxx X. Xxxxxx ("Employee");
WHEREAS, Employee currently is employed by Employer as Senior
Vice President and Chief Financial 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, 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 December 31, 2006, except as otherwise provided in
Section 7. If the term of Employee's employment hereunder
shall have continued until December 31, 2006, 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 the Employer,
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.
2. Duties
(a) Offices
During the Term, Employee shall serve as Employer's
Chief Financial Officer or in a comparable or
higher management position. Employer agrees that
Employee will be assigned only duties of the type,
nature and dignity normally assigned to Senior Vice
Presidents 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 president and chief executive
officer, or to such other officer as the Employer
shall designate, or as the Bylaws of the Employer
shall otherwise require.
(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 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, 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 or its Compensation
Committee ("Performance Bonus"). Any Performance
Bonus payable pursuant to this Section 3(b) shall
be paid within 60 days after the end of the fiscal
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, 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 officers pursuant to
policies established from time to time by the Board.
These fringe benefits and perquisites may include
holidays, paid vacation, group health insurance, short-term
and long-term disability insurance, and life insurance.
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.
(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.
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) During the period of his employment and for a
one (1) year period commencing with the
effective date of the termination of
Employee's employment with the Company for any
reason and under any circumstances, Employee
shall not, without the prior written consent
of the Company, alone or with others, whether
as an owner, stockholder, partner, lender,
investor, employee, consultant, contractor,
subcontractor or in any other capacity,
directly or indirectly: (a) engage, within a
fifty (50) mile radius of any office of the
Company, in any business activity that is
competitive with the business of the Company
or otherwise in conflict with or contrary to
the interests of the Company, including
without limitation, the business of performing
engineering and management services for the
United States Government, all as such
businesses and services are more particularly
described in the then most recent "VSE
Corporation Annual Report", (b) solicit any
person or entity who then is or was at any
time during Employee's employment, a customer
of the Company (including without limitation
any person or entity who was at any time
during Employee's employment solicited to be a
customer of the Company where Employee was
directly or indirectly involved in such
solicitation) to cease doing business as to
curtail business with the Company, or (c)
solicit any person who then is or was in the
preceding six (6) months an employee or
independent contractor of the Company to end
his or her relationship with the Company or to
work for any other person or entity as an
employee or independent contractor.
(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
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.
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 President 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 President/CEO 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
President/CEO 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 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 one (1) times
the total amount of Employee's Annual 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. It is
understood and agreed that the expiration or
non-renewal of the Term by Employer shall not
be considered a termination without Cause for
the purposes of this Agreement.
(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 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, it being understood that such
termination would not be considered a
termination without Cause pursuant to Section
7(a)(ii) above. 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, and such termination
shall not be considered a termination without
Cause pursuant to Section 7(a)(ii) above.
However, 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 one (1) times the total amount of
Employee's Annual 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 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 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 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 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: July 1, 2004 By: /s/ X. X. Xxxxxx
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X. X. Xxxxxx
Chairman and Chief Executive Officer
Date: July 1, 2004 By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
