EXHIBIT III
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of January 1,
1996, by and between VSE Corporation, a Delaware corporation ("Employer"), and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Employee");
WHEREAS, Employee currently is employed by Employer as chairman of
Employer's board of directors ("the Board") and Employer's chief executive
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 he can objectively
engage in any potential deliberations or negotiations respecting such Change
in Control without fear of any direct or implied threat to his 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 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 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.
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 had 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 his 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 $225,000 per annum, payable in installments in accordance
with Employer's policy governing salary payments to senior officers generally
("Base Salary"). In January 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 rate of $225,000 per
annum.
(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 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 (a) to 30 days
paid leave per annum and to accrue unused leave from year to year and (b) 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 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.
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 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 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 Executives
During the Term and for the first 24 consecutive months
after termination of the Term, Employee shall not, except in the course of
his 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 he 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 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 his 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 his 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 of his 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, 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; (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 his 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 his 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 him of his
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, including, without limitation, any of the medical and
hospitalization benefits described in Section 7(a)(ii)(1).
(ii) If, during the Term, a "Change of Control" (as defined
below) occurs and, without his consent, Employee is assigned duties materially
inconsistent with his position and status with Employer as of the date hereof,
Employee may, in his 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 him
of his 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 continue on or prior to the Termination Date 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) 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 or benefits 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 his 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 or his 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 Chief Financial Officer, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ with a copy to: Carter Strong,
Esquire, Arent Fox ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇. , ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇ or (b) if to Employee, to his 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:12/8/95 By:/s/ ▇. ▇. ▇▇▇▇▇
▇. ▇. ▇▇▇▇▇,
Chief Financial Officer
Date:12/8/95 /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇