EXHIBIT VI
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of 21
October, 1998, by and between VSE Corporation, a Delaware corporation
("Employer"), and Xxxxxx X. Xxxxxx, SSN ###-##-#### ("Employee");
WHEREAS, Employee currently is employed by Employer as chairman of
Employer's board of directors (the "Board") and Employer's chief executive
officer pursuant to an Employment Agreement dated as of January 1, 1996.
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 employ-
ment opportunities;
WHEREAS, Employer desires to ensure that, if a Change in Control appears
possible, Employee will be in a secure position from which to objectively
engage in any potential deliberations or negotiations respecting such Change
in Control without fear of any direct or implied threat to employment, status
and responsibilities; and
WHEREAS, Employee desires to have the foregoing assurances;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the adequacy of which is
hereby acknowledged, Employer and Employee, each intending to be legally bound,
agree as follows:
1. Term. The term of Employee's employment hereunder shall commence
on the date hereof and shall continue until January 1, 2001, except as
otherwise provided in Section 7. If the term of Employee's employment
hereunder shall have continued until January 1, 2001, thereafter, such
term of Employee's employment hereunder shall be deemed to be
renewed automatically, on the same terms and conditions contained
herein, for successive periods of one year each, unless and until
Employee, at least 90 days prior to the expiration of the original
term or any such extended term, shall give written notice to the
Employer of intent not to renew the term of Employee's employment
hereunder. All references herein to the "Term" refer to the original
term of Employee's employment hereunder and all extensions thereof.
2. Duties
(a) Offices
During the Term, Employee shall serve as a director of
Employer, chairman of the Board and Employer's chief executive
officer, and the Board shall renominate Employee as a director of
Employer, reelect Employee as chairman of the Board and
reappoint Employee as Employer's chief executive officer, 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 executive officer of a corporation of the
size, stature and nature of Employer. During the Term, Employee
shall have, at a minimum, the same perquisites of office as he
bad on the date hereof, and he shall report directly to the
Board.
(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 I of every year during the Term,
Employee's compensation, including Base Salary, will be subject
to the Board's review, provided that, the Base Salary shall not
be less than the current annual rate.
(b) Performance Bonus
Except as otherwise provided in Section 7, in addition to the
Base Salary, Employee shall be eligible for an annual performance
bonus as determined by the Board or its Compensation
Committee ("Performance Bonus"). Any Performance Bonus
payable pursuant to this Section 3(b) shall be paid within 30
days after the end of the fiscal period to which such Performance
Bonus relates.
(c) Other Compensation Plans or Arrangements
During the Term, Employee shall also be eligible to participate
in all other currently existing or subsequently implemented
compensation or benefit plans or arrangements available generally
to other officers or senior officers of Employer, including
Employer's "Deferred Supplemental Compensation Plan,"
ESOP/401(k), and any stock grant, stock option, stock purchase
or similar stock plans or arrangements.
(d) Tax Withholdings
Employer shall withhold from Employee's compensation
hereunder and pay over to the appropriate governmental agencies
all payroll taxes, including income, social security, and
unemployment compensation taxes, required by the federal, state
and local governments with jurisdiction over Employer.
4. Benefits. During the Term, Employee shall be entitled to such
comparable fringe benefits and perquisites as may be provided to any
or all of Employer's senior officers pursuant to policies established
from time to time by the Board. These fringe benefits and perquisites
shall include holidays, group health insurance, short-term and long-
term disability insurance, and life insurance, vehicle allowances, and
supplemental executive health care benefits. Also, during the Term,
Employee shall be entitled to 40 days paid leave per annum and to
accrue unused leave from year to year and to be reimbursed for the
costs of physical examinations up to $1,000 per annum.
5. Expenses and Other Perquisites. Employer shall reimburse Employee for
all reasonable and proper business expenses incurred by him during
the Term in the performance of his duties hereunder, in accordance
with Employer's customary practices for senior officers, and provided
such business expenses are reasonably documented. Also, during the
Term, Employer shall continue to provide Employee with an office and
suitable office fixtures, telephone services, and secretarial
assistance of a nature appropriate to Employee's position and status.
6. Exclusive Services, Confidential Information, Business Opportunities
and Non-Solicitation
(a) Exclusive Services
(i) During the Term, Employee shall at all times devote his
full-time attention, energies, efforts and skills to
Employer's business and shall not, directly or indirectly,
engage in any other business activity, whether or not
for profit, gain or other pecuniary advantages, without
the Board's written consent provided that such prior
consent shall not be required with respect to (1)
business interests that neither compete with Employer
or any Subsidiaries
nor interfere with Employee's duties and obligations
hereunder, and (2) Employee's charitable, eleemosynary,
philanthropic or professional association activities.
(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) If Employee voluntarily terminates the Term, or if
Employer terminates the Term for Cause (as defined
below), Employee shall not, during the first 24
consecutive months following such termination, engage
in competition with Employer or any Subsidiary, or
solicit, from any person or entity who purchased any
then existing product or service from Employer or any
Subsidiary during his employment hereunder, the
purchase of any then existing product or service in
competition with then existing products or services of
Employer or any Subsidiary.
(ii) For purposes of this Agreement, Employee shall be
deemed to engage in competition with Employer if he
shall directly or indirectly, either individually or as a
stockholder, director, officer, partner, consultant, owner,
employee, agent, or in any other capacity, consult with or
otherwise assist any person or entity engaged in providing
technical and management services to any person or entity
which Employer or any Subsidiary, during the Term, has
developed or is working to develop. Notwithstanding
anything herein to the contrary, if Employer is in material
breach of this Agreement, the provisions of this Section 6
shall not apply.
(f) Employee Acknowledgment
Employee hereby agrees and acknowledges that the restrictions
imposed upon by the provisions of this Section 6 are fair and
reasonable considering the 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; (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
two (2) times the total amount of
Employee's Base Salary payable hereunder,
based upon the amount in effect as of the
effective Termination Date. In such
event, Employee shall not be entitled to
the accrual or provision of any other
compensation or benefit after the
Termination Date other than (a) the
medical and hospitalization benefits for
the first 18 months after the Termination
Date or longer if permitted under
Employer's policies and procedures; (b)
the provision of all compensation and
other benefits that shall have accrued as
of the Termination Date, including Base
Salary, Performance Bonus, paid leave
benefits, Deferred Compensation Units,
Deferred Supplemental Compensation and
reimbursements of incurred expenses; and
(c) all stock options or similar rights
to acquire capital stock granted by
Employer to Employee shall automatically
become vested and exercisable in whole or
in part.
(b) Death or Disability
The Term shall be terminated immediately and
automatically upon Employee's death or
"Disability." The term "Disability" shall mean
Employee's inability to perform all of the
essential functions of his position hereunder
for a period of 26 consecutive weeks or for an
aggregate of 150 work days during any 12-month
period by reason of illness, accident or any
other physical or mental incapacity, as may be
permitted by applicable law. Employee's
capability to continue performance of
Employee's duties hereunder shall be
determined by a panel composed of two
independent medical doctors appointed by the
Board and one appointed by the Employee or
designated representative. If the panel is
unable to reach a decision, the matter will be
referred to arbitration in accordance with
Section 8. In the event of Employee's death or
Disability for any period of six consecutive
months, Employee (or designated beneficiary)
will be paid his Base Salary then in effect
for one full year following the date of death
or disability.
(c) By Employee
(i) Employee may, in his sole discretion,
without cause, terminate the Term at any
time upon 60 days' written notice to
Employer. If Employee exercises such
termination right, Employer may, at its
option, at any time after receiving such
notice from Employee, relieve Employee
of all duties and terminate the Term at
any time prior to the expiration of said
notice period. If the Term is terminated
by Employee or Employer pursuant to this
Section 7(c)(i), Employee shall not be
entitled to any further Base Salary or
the accrual or provision of any
compensation or benefits after the
Termination Date, except standard
medical and hospitalization benefits in
accordance with Employer's policy.
(ii) If, during the Term, a Change of Control
(as defined below) occurs, Employee may,
in his sole discretion, terminate the
Term upon 30 days' notice to Employer. If
Employee exercises such termination
right, Employer may, at its option, at
any time after receiving such notice from
Employee, relieve Employee of all duties
hereunder and terminate the Term at any
time prior to the expiration of said
notice period. If this Agreement is
terminated by Employee or Employer
pursuant to this Section 7(c)(ii),
Employee shall be entitled to (a) payment
on or prior to the Termination Date of a
lump sum severance compensation payment
equal to 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)(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 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,
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 Financial Officer, 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 November 18, 1998 By: /s/ X. X. Xxxxx
_________________________ _______________________
X. X. Xxxxx
Chief Financial Officer
Date: November 18, 1998 By: /s/ X. X. Xxxxxx
_________________________ _______________________
X. X. Xxxxxx
