EXHIBIT VII
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of
January 15, 1999, by and between VSE Corporation, a Delaware
corporation, and Energetics, Incorporated, a Maryland corporation
(collectively "Employer") and Xxxxxx X. Xxxxx ("Employee");
WHEREAS, Employee currently is employed as a member of Employer's
board of directors (the "Board") and as an employee of VSE
Corporation;
WHEREAS, Employee will continue to be an employee of VSE
Corporation until appointed President and Chief Operating Officer
of Energetics, Incorporated;
WHEREAS, Employee has rendered good and valuable service to
the Employer and has contributed greatly to Employer's success;
WHEREAS, Employer wishes to induce Employee to remain in
Employer's employ to prevent the loss which Employer would incur
if Employee were to leave and to enter the employment of a
competitor;
WHEREAS, Employer wishes to ensure Employee suffers no loss
of benefits or compensation in transition from VSE Corporation to
Energetics, Incorporated;
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,
2002, except as otherwise provided in Section 7. If the term of
Employee's employment hereunder shall have continued until
January 1, 2002, 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 either Employer or
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 party of his or its intention 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. All references
herein to "Employer" refer to the entity where Employee is then
currently employed, unless the context clearly indicates
otherwise.
2. Duties
(a) Offices
From the date of this Agreement until on or about March 1, 1999,
Employee shall serve as a director of VSE Corporation, Chairman
of the Board of Energetics, Incorporated, and as Employee of VSE
Corporation. From about March 1, 1999, through the Term,
Employee shall serve as a director of VSE Corporation and
Energetics, Incorporated and as President and Chief Operating
Officer of Energetics, Incorporated. The Board shall renominate
Employee as a director of VSE Corporation and Energetics,
Incorporated, and as President and Chief Operating Officer of
Energetics, Incorporated, and Employee shall perform the duties
of those positions, as assigned to him by the Board. 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 stipulated herein, and he shall
report directly to VSE Corporation's 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 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 as President of Energetics, Incorporated,
Employer shall pay to Employee a base salary at the rate of not
less than the ending base salary of his predecessor to this
position (Xx. Xxxxxx Xxxxxxx), payable in installments in
accordance with Employer's policy governing salary payments to
senior officers generally ("Base Salary"). Once per 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 rate herein.
(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 Employer's policy and
based on the same criteria as Employer's bonuses have
historically been awarded. 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 any
stock option, stock purchase or similar stock plans or
arrangements. Employer will work in good faith to ensure
continuity of benefits in the transition from VSE Corporation to
Energetics, Incorporated. This specifically includes continuous
eligibility under the Employer's 401(k) Plan.
(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, Employer shall provide Employee
with the standard benefits Employer provides to other employees
who are similarly situated, including vacation, holidays, group
health insurance, other group insurance, vehicle allowances and
supplemental health care benefits. Employer will work in good
faith to ensure continuity of benefits in the transition from VSE
Corporation to Energetics Incorporated.
5. Expenses and Other Perquisites. Employer shall reimburse
Employee for reasonable moving expenses from Texas to the
Washington metropolitan area. Employer shall reimburse Employee
for all reasonable and proper business expenses incurred by him
in the performance during the Term of his 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 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.
(i) 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 his 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 property of Employer or any Subsidiary and
Confidential Information that 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 that 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 him 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; (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 VSE Corporation 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 VSE
Corporation 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, any vested deferred 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) 90 days'
prior notice thereof and (b) 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 hereunder, based upon
the amount in effect as of the effective Termination Date.
Employee shall also be reimbursed for reasonable relocation
expenses to Texas or such other place (which is of equal or less
distance) within the Continental U.S. as Employee may select, and
reimbursement of any remaining lease payments on Employee's
Washington-area residence, not to exceed two years. 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, any vested deferred compensation and
reimbursement 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 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 90 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 prior to the expiration
of said notice period. Under these circumstances Employee shall
be entitled to 90 days' pay to cover the notice period, but shall
not be entitled to any further Base Salary or to the accrual or
provision of any compensation or benefits after the Termination
Date, except standard medical and hospitaliza-tion benefits in
accordance with Employer's policy.
(i) 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 three (3) 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)(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.
(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 of VSE Corporation;
(ii) a cash tender or exchange offer is completed for such amount
of Voting Securities of VSE Corporation 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 of VSE
Corporation;
(iii) except in the case of a merger or consolidation in which
(a) Employer (VSE Corporation) is the surviving corporation and
(b) the holders of Voting Securities of VSE Corporation
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 (VSE
Corporation's) shareholders approve an agreement to merge,
consolidate, liquidate, or sell all or substantially all of
Employer's (VSE Corporation's) assets; or
(iv) two or more directors are elected to the Board of VSE
Corporation 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. In addition,
"Change of Control" also refers to the sale of more than 50% of
the Voting Securities of Energetics, Incorporated to any "person"
or "group" as defined above.
(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. 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 both 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 first class mail, or sent by telegram,
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, 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 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
/s/ M. A. Xxxxx By: /s/ X. X. Xxxxxx
_________________________ ____________________________
Witness X. X. Xxxxxx
Xxxxxx Chairman and
Chief Executive Officer
EMPLOYEE
/s/ M. A. Xxxxx /Xxxxxx X. Xxxxx
_________________________ ____________________________
Witness Xxxxxx X. Xxxxx
