Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of February 10,
2005, by and between Energetics Incorporated, a Maryland corporation ("Employer"
or "Energetics"), and James E. Reed ("Employee");
WHEREAS, Employee has rendered several years of service to Employer;
WHEREAS, Employee resigned his position as a Senior Vice President of
Energetics in 2001;
WHEREAS, Employer wishes to induce Employee to return to service as
Chief Operating Officer and later, as President of Energetics;
WHEREAS, Employer is a wholly owned subsidiary of VSE Corporation, a
Delaware corporation ("VSE" or "Parent Company"), which Parent Company together
with its wholly owned subsidiaries, including Energetics, is referred to herein
as the "Covered Company";
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 of VSE ("Change of 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 engage objectively
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 31,
2007, except as otherwise provided in Section 7. If the term of
Employee's employment hereunder shall have continued until
January 31, 2007, 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 Employer,
at least 60 days prior to the expiration of the original term or
any such extended term, shall give written notice to the other
party 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 any
extensions thereof.
2. Duties
(a) Offices
During the Term, Employee shall serve as Employer's
Chief Operating Officer and commencing on a date prior
to July 30, 2005, as Employer's President. Employer
agrees that Employee will be assigned only duties of the
type, nature and dignity normally assigned to someone in
a comparable position at a corporation of the size,
stature and nature of Employer. During the Term,
Employee shall report to Energetics' President, and on
assuming the duties of Energetics' President, shall
report to the Energetics' board of directors (the
"Board") and the Board's chairman (the "Chairman") for
all operational and administrative matters concerning
Energetics.
(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 any Covered Company.
3. Compensation
(a) Salary
During the Term, as compensation for services rendered
by Employee hereunder, Employer shall pay to Employee a
base salary of $175,000 per annum, payable in
installments in accordance with Employer's policy
governing salary payments to senior officers generally
("Base Salary"). Effective July 1 of every year during
the Term, 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 of
Directors ("Performance Bonus"). Any Performance Bonus
payable pursuant to this Section 3(b) shall be paid
within 60 days after the end of the 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.
(d) Consultation with VSE
It is understood that the Chairman and the Board will
consult with VSE's board of directors and compensation
committee in respect of review of Employee's Base
Salary, Performance Bonus, and other benefits hereunder.
(e) 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
vacation benefits and 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 Employer.
These fringe benefits and perquisites may include holidays,
group health insurance, short-term and long-term disability
insurance, life insurance, and profit sharing plan
contributions.
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 Chairman's written consent provided
that such prior consent shall not be required
with respect to (1) business interests that
neither compete with any Covered Company 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
Chairman'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, partnership, limited
liability company, trust, joint venture, or
other entity (collectively a "Person") with
which any Covered Company is currently or has
previously done business or any subsequent line
of business developed by Employee or any Covered
Company 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 one
percent of any such company's outstanding
equity.
(b) Confidential Information
During the Term and the period commencing on the date of
termination thereof and ending on the second anniversary
of such termination date, 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,
where such information is not generally known in the
trade or industry or was regarded or treated as
confidential by any Covered Company, and where such
information refers or relates in any manner whatsoever
to the business activities, processes, services or
products of any Covered Company. 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 any
Covered Company and all 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 any
Covered Company, Employer or any other Covered
Company might reasonably consider pursuing. Upon
termination of the Term, regardless of the
circumstances thereof, Employer or such other
Covered Company 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 any Covered Company, and
he shall avoid any acts or omissions which are
disloyal to, or competitive with any Covered
Company.
(d) Non-Solicitation of Employees
During the Term and until the second anniversary of the
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 any Covered Company, or solicit or offer employment
to any person who was employed by any Covered Company
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, before
the second anniversary of such termination,
engage in competition with any Covered Company,
or solicit, from any Person who purchased any
then existing product or service from any
Covered Company during the Term, the purchase
of any then existing product or service in
competition with then existing products or
services of any Covered Company.
(ii) For purposes of this Agreement, Employee shall
be deemed to engage in competition with a
Covered Company if Employee shall directly or
indirectly, either individually or as a
stockholder, director, officer, partner,
consultant, owner, employee, agent, or in any
other capacity, consult with or otherwise assist
any Person engaged in providing technical and
management services to any Person which any
Covered Company, during the Term, has developed
or is working to develop.
(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 the business of each Covered Company, and are
reasonably required for each Covered Company'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 or Parent Company would be inadequate
and in lieu thereof, or in addition thereto, Employer
or Parent Company 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 and Parent Company 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 terminate the Term for Cause (as
defined below) 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
Employer's policy; (2) the breach or violation
by Employee of this Agreement, provided that
Employee must first be given notice by the
Energetics President or the Chairman 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
Chairman 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
the business of any Covered Company, provided
that Employee must first be given notice by the
Chairman or the 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, 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) five days' prior
notice thereof and (b) on or prior to the
Termination Date, a lump sum severance
compensation payment equal to Employee's Base
Salary as of the effective Termination Date
(e.g., if the Base Salary was $175,000, Employee
would be entitled to a lump sum severance
payment of $175,000). 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, and reimbursements of incurred
expenses; and (c) all stock options or similar
rights to acquire capital stock granted by VSE
to Employee shall automatically become vested
and exercisable in whole or in part.
Notwithstanding anything herein to the contrary,
the expiration or non-renewal of the Term by
Employer or Employee pursuant to Section 1 shall
not be considered a termination without Cause
for the purposes of this Agreement, including
Section 7(a)(ii).
(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 period of 365
consecutive days 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 Parent Company 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 180 consecutive days,
Employee (or designated beneficiary) will be paid his
Base Salary then in effect for 365 days 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 the Chairman. 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, and such termination shall not
constitute a termination without Cause pursuant
to this Agreement, including Section 7(a)(ii).
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 terminate
the Term for Good Reason (as defined below) 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
constitute a termination without Cause pursuant
to this Agreement, including Section 7(a)(ii).
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 Employee's Annual Base Salary as of the
Termination Date (e.g., if the Base Salary was
$175,000, Employee would be entitled to a lump
sum payment of $175,000); (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 VSE
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 and Good Reason
(i) 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:
(1) any "person," including a "group," as
such terms are 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 VSE ("Voting Securities")
under any VSE-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 45% or more of
the outstanding Voting Securities;
(2) 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 45% or more of the
outstanding Voting Securities;
(3) except in the case of a merger or
consolidation in which (a) VSE 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), VSE's shareholders approve
an agreement to merge, consolidate,
liquidate, or sell all or substantially
all of VSE's assets; or
(4) either a majority or three or more
directors are elected to the VSE Board
of Directors without having previously
been nominated and approved by the
members of the VSE Board of Directors
incumbent on the day immediately
preceding such election. For purposes
of this Section 7, "affiliate" of a
Person shall mean a Person that directly
or indirectly controls, is controlled
by, or is under common control with the
Person or other entity specified.
(ii) For purposes of this Section 7, "Good Reason"
shall mean after the occurrence of a Change in
Control, any one or more of the following events
has occurred:
(1) a material change in the nature of
Employee's authorities, duties,
responsibilities or status (including
offices and titles) from those in effect
immediately prior to the Change in
Control;
(2) the relocation of Employee's place of
employment to a location in excess of
75 miles from the place of Employee's
employment immediately prior to the
Change in Control, except for required
travel on Employee's business to an
extent substantially equivalent to
Employee's business travel obligations
immediately prior to the Change in
Control; or
(3) any reduction by Employer of Employee's
Base Salary or material reduction in
Employee's incentive benefits from those
in effect immediately prior to the
Change in Control; or
(4) Employer breaches any obligation
hereunder and such breach is not cured
within 30 days after Employer's receipt
of notice thereof from Employee.
(e) No Duty to Mitigate
If Employee is entitled to the compensation and other
benefits provided under Sections 7(a)(ii) or (c)(ii),
Employee shall have no obligation to seek employment to
mitigate damages hereunder.
(f) VSE Board Approval
Notwithstanding anything herein to the contrary, the
Term shall expire as of March 31, 2005, if this
Agreement has not been previously approved by VSE's
board of directors, and any such termination shall not
constitute a termination without Cause pursuant to this
Agreement, including Section 7(a)(ii).
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
Chairman c/o Chief Executive Officer, VSE Corporation, 2550
Huntington Avenue, Alexandria, Virginia 22303-1499; 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.
ENERGETICS INCORPORATED, a Maryland corporation
By: /s/ R J KELLY
______________________
R. J. Kelly, President
By: /s/ James E. Reed
______________________
James E. Reed