When Linda and Ted ask Veronica for help on a project, she literally falls asleep with her eyes open as they ramble on.  Ted discovers that Veronica's relationship with Mordor (the magician from season one), is forcing her to burn the candle at both ends and she isn't getting enough sleep.  Linda convinces Ted to butt into her relationship and ask Mordor to stop having so much sex.  After Ted does so, Linda catches Mordor cheating on Veronica, and again, makes Ted tell Veronica.  Veronica ends up shooting Mordor with a spear gun, and before Ted can find out the two forgave each other, he bad mouthes Mordor in front of Veronica.  Veronica banishes him to the second smallest office in Veridian and when he goes to pick up some things, discovers Mordor is still cheating on Veronica.  Ted ends up in a slap fight with Mordor and Veronica forgives Ted after seeing him stick up for her.

Meanwhile, Lem discovers the company put a red lab coat in his locker.  Phil and Lem attempt to figure why he was given a red lab coat and both continue to compete to be the best employee.  Veronica reveals to Ted, Veridian makes random changes to improve productivity.  Ted tries to convince the boys to stop competing for the red lab coat, but they interpret that as the coat is bad and work even harder.  Ted gets rid of the coat and tries to give them a positive flower, which again they misinterpret.