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EXHIBIT 10.99
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
this 1st day of November, 1999, by and between VERSAR, INC., a Delaware
corporation ("Company"), its successors and assigns, and THEODORE M. PROCIv
("you" or "your"). This Agreement promises you an employment relationship and
certain severance benefits during the Term of this Agreement. Capitalized terms
are defined in the last section of the Agreement.
1. PURPOSE.
The Company considers a sound and vital management team to be essential.
The Company desires to assure itself of your services which you are willing to
provide. Further, management personnel who become concerned about the
possibility that the Company may undergo a Change in Control may terminate
employment or become distracted. Accordingly, the Board has determined that
appropriate steps should be taken to minimize the distraction executives may
suffer from the possibility of a Change in Control. One step is to enter into
this Agreement with you.
2. EMPLOYMENT
Company hereby employs you and you accept employment with Company on the
terms and conditions set forth in this Agreement.
3. DUTIES
You shall serve as President of the Company. Under the direction of the
Board of Directors, you shall perform all assigned duties reasonably required
of an employee in such positions and shall personally, diligently and
faithfully perform these duties to the best of your ability, on a full-time and
exclusive basis. Your principle office will be located in Springfield,
Virginia.
4. COMPENSATION
Your compensation for the services performed under this Agreement shall
consist of a Base Salary and Incentive Compensation, if any, as described
below:
4.1 Base Salary. You shall receive the base salary approved by
Company's Board of Directors, payable in regular bi-weekly installments (the
"Base Salary"). The Base Salary will be reviewed annually by the Board of
Directors in accordance with standard salary review procedures in effect from
time to time for executive officers of Company. In no event shall the Base
Salary be less than the Base Salary being paid to you on the date of this
Agreement, unless you agree to a reduction. In the event that your employment
with Company is terminated as provided in this Agreement, the Base Salary shall
be deemed to be your then current Base Salary or $235,000, whichever is
greater.
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4.2 Incentive Compensation. In addition to the Base Salary,
you shall be eligible to earn incentive compensation in the form of cash or
securities under bonus and incentive programs as may be in effect from time to
time for executive officers of Company generally ("Incentive Compensation").
4.3 Withholding. You agree and acknowledge that Company will
withhold from your compensation all taxes and other amounts which Company is
required by law to withhold, including without limitation (i) federal income
taxes, (ii) state income taxes, (iii) county, city or other local income taxes,
and (iv) social security taxes.
5. BENEFITS.
5.1 Generally. You shall be entitled to receive any and all
benefits made available to executive officers of Company generally and such
other benefits as the Board of Directors in its discretion may make available
to you from time to time.
5.2 Insurance. You shall be eligible to participate in all
medical, hospitalization, dental, life, disability and other insurance plans as
are in effect from time to time for executive officers of Company generally.
5.3 Personal Leave. You shall be entitled to take five (5)
weeks of paid personal leave annually.
5.4 Reimbursement for Reasonable Business Expenses. Company
shall reimburse you for customary and reasonable expenses incurred in
performing your duties pursuant to this Agreement, in accordance with Company's
then current reimbursement policy (including appropriate itemization and
substantiation of expenses incurred).
6. TERM.
Subject to early termination of this Agreement in accordance with
Section 7 or 8 below, the term of your employment hereunder shall commence on
the date hereof, and shall continue for a period of three years (3) years. You
agree and acknowledge that Company has no obligation to renew this Agreement or
to continue your employment after the three-year term.
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7. TERMINATION BY COMPANY.
7.1 Termination With Cause. Company shall be entitled to
terminate your employment and services immediately upon written notice to you,
except in the case of death, specifying the date of termination in the event
that (i) you fail to carry out assigned duties after being given prior warning
and an opportunity to remedy the failure; or (ii) you breach any material term
of this Agreement; (iii) you engage in fraud, dishonesty, willful misconduct,
gross negligence or breach of fiduciary duty (including without limitation any
failure to disclose a conflict of interest), in the performance of his duties
hereunder; (iv) you are convicted of a felony or crime involving moral
turpitude; (v) you suffer a permanent and total disability which for at least
six months prevents his performance of your duties hereunder if such permanent
disability is covered by Workers Compensation or long term disability
insurance, or both; or (vi) if you die. For eight weeks following Company's
termination of this Agreement with cause pursuant to this Section 7.1, Company
shall continue to pay your Base Salary in effect as of the date of termination
and make available the benefits set forth in Section 5. All other obligations
of Company hereunder shall cease as of the date of termination.
7.2 Termination Without Cause. Company shall be entitled to
terminate your employment and services without cause upon not less than sixty
(60) days' prior written notice to you specifying the date of termination. If
Company terminates your employment without cause at any time during the
three-year term, Company shall give you a lump sum payment equivalent of one
year, any Incentive Compensation to which you would have been entitled as of
the date of termination, any deferred compensation, any accrued personal leave
and continue to make available the benefits set forth in Section 5 for twelve
(12) months. All other obligations of Company hereunder shall cease as of the
date of termination. Notwithstanding the foregoing, during the eighteen months
immediately following Company's termination of this Agreement without cause,
you shall be entitled to the vesting of any and all stock options issued by
Company pursuant to its Incentive Stock Option Plan in accordance with the
vesting schedule in your grant of options, and vesting of any and all other
options, warrants, or shares, and you shall have the right to exercise such
options or warrants, or purchase such shares under the same terms and
conditions applicable to you prior to termination.
8. TERMINATION BY YOU.
You may terminate your employment and services at any time and for any
reason by giving Company at least thirty (30) days' prior written notice
specifying the date of termination. If you terminate the Agreement in
accordance with this Section 8.1, then from the date of your notice to the date
of termination (provided that during this notice period, Company does not
terminate you for cause under Section 7.1 above), Company shall continue to pay
you the Base Salary in effect as of the date of termination, and any Incentive
Compensation to
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which you could have been entitled as of the date of termination, any deferred
compensation, any accrued personal leave and continue to make available the
benefits set forth in Section 5 until the date of termination. All other
obligations of Company hereunder shall cease as of the date of termination.
9. YOUR AGREEMENT ON CHANGE IN CONTROL
If one or more Potential Changes in Control occur during the Term of
this Agreement, you agree not to resign for at least six full calendar months
after a Potential Change in Control occurs, except as follows: (a) you may
resign after a Change in Control occurs; (b) you may resign if you are given
Good Reason to do so; and (c) you may terminate employment on account of
retirement on or after 65 or because you become unable to work due to serious
illness or injury.
10. EVENTS THAT TRIGGER SEVERANCE BENEFITS
10.1 Termination After a Change in Control. You will receive Severance
Benefits under this Agreement if, during the Term of this Agreement and after a
Change in Control has occurred, your employment is terminated by the Company
without Cause (other than on account of your Disability or death) or you resign
for Good Reason.
10.2 Termination After a Potential Change in Control. You also will
receive Severance Benefits under this Agreement if, during the Term of this
Agreement and after a Potential Change in Control has occurred but before a
Change in Control actually occurs, your employment is terminated by the Company
without Cause or you resign for Good Reason, but only if either: (i) you are
terminated at the direction of a Person who has entered into an agreement with
the Company that will result in a Change in Control; or (ii) the event
constituting Good Reason occurs at the direction of such Person.
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10.3 Successor Fails to Assume This Agreement. You also will receive
Severance Benefits under this Agreement if, during the Term of this Agreement,
a successor to the Company fails to assume this Agreement, as provided in
Section 20.1.
11. EVENTS THAT DO NOT TRIGGER SEVERANCE BENEFITS
You will not be entitled to Severance Benefits if your employment ends
because you are terminated for Cause or on account of Disability or because you
resign without Good Reason, retire, or die. Except as provided in Section 10.3,
you will not be entitled to Severance Benefits while you remain protected by
this Agreement and remain employed by the Company, its affiliates, or their
successors.
12. TERMINATION PROCEDURES
If you are terminated by the Company after a Change in Control and
during the Term of this Agreement, the Company shall provide you with 30 days'
advance written notice of your termination, unless you are being terminated for
Cause. The notice will indicate why you are being terminated and will set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
your termination. If you are being terminated for Cause, your notice of
termination will include a copy of a resolution duly adopted by the affirmative
vote of not less than 51% of the entire membership of the Board (at a meeting
of the Board called and held for the purpose of considering your termination
(after reasonable notice to you and an opportunity for you and your counsel to
be heard before the Board)) finding that, in the good faith opinion of the
Board, Cause for your termination exists and specifying the basis for that
opinion in detail. If you are purportedly terminated without the notice
required by this Section, your termination shall not be effective.
13. SEVERANCE BENEFITS
13.1 In General. If you become entitled to Severance Benefits under this
Agreement, you will receive all of the Severance Benefits described in this
Section.
13.2 Lump-Sum Payment in Lieu of Future Compensation. In lieu of any
further cash compensation for periods after your employment ends, you will be
paid a cash lump sum equal to two times your Base salary in effect when your
employment ends or, if higher, in effect immediately before the Change in
Control, Potential Change in Control or Good Reason event for which you
terminate employment. In addition, and without duplication, you will be paid a
cash lump sum equal to 2 times the higher of the amounts paid to you (if any)
under any existing bonus or incentive plans in the calendar year preceding
the calendar year in which your employment ends or in the calendar year
preceding
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the calendar year in which the Change in Control occurred (or in which the
Potential Change in Control occurred, if benefits are payable under Section
10.2 hereof).
13.3 Incentive Compensation and Options. The Company will pay you a cash
lump sum equal to any unpaid Incentive Compensation (that is not otherwise paid
to you) that you have been allocated or awarded under any existing bonus or
incentive plans for measuring periods completed before you became entitled to
Severance Benefits under this Agreement. All unvested options to purchase
Company common stock will immediately vest and remain exercisable for the
longest period of time permitted under the applicable stock option plan.
13.4 Group Insurance Benefit Continuation. During the period that begins
when you become entitled to Severance Benefits under this Agreement and ends on
the last day of the 24th calendar month beginning thereafter, the Company shall
provide, at no cost to you or your spouse or dependents, the life, disability,
accident, and health and dental insurance benefits (or substantially similar
benefits) it was providing to you and your spouse and dependents immediately
before you became entitled to Severance Benefits under this Agreement (or
immediately before a benefit reduction that constitutes Good Reason, if you
terminate employment for that Good Reason). These benefits shall be treated as
satisfying the Company's COBRA obligations. After benefit continuation under
this subsection ends, you and your spouse and dependents will be entitled to
any remaining COBRA rights.
14. TIME FOR PAYMENT
You will be paid your cash Severance Benefits within five days after you
become entitled to Severance Benefits under this Agreement (e.g., within five
days following your termination of employment). If the amount you are due
cannot be finally determined within that period, you will receive the minimum
amount to which you are clearly entitled, as estimated in good faith by the
Company. The Company will pay the balance you are due (together with interest
at the rate provided in Internal Revenue Code Section 1274(b)(2)(B)) as soon as
the amount can be determined, but in no event later than 30 days after you
terminate employment. If your estimated payment exceeds the amount you are due,
the excess will be a loan to you, which you must repay to the Company within
five business days after demand by the Company (together with interest at the
rate provided in Code Section 1274(b)(2)(B)).
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15. PAYMENT EXPLANATION
When payments are made to you, the Company will provide you with a
written statement explaining how your payments were calculated and the basis
for the calculations. This statement will include any opinions or other advice
the Company has received from auditors or consultants as to the calculation of
your benefits. If your benefit is affected by the golden parachute limitation
in Section 17, the Company will provide you with calculations relating to that
limitation and any supporting materials you reasonably need to permit you to
evaluate those calculations.
16. RELATION TO OTHER SEVERANCE PROGRAMS
Your Severance Benefits under this Agreement are in lieu of any
severance or similar benefits that may be payable to you under any other
employment agreement or other arrangement; to the extent any such benefits are
paid to you, they shall be applied to reduce the amount due under this
Agreement. This Agreement constitutes the entire agreement between you and the
Company and its affiliates with respect to such benefits.
17. POTENTIAL LIMITATIONS
17.1 Golden Parachute Limitation. Your aggregate payments and benefits
under this Agreement and all other contracts, arrangements, or programs shall
not exceed the maximum amount that may be paid without triggering golden
parachute penalties under Section 280G and related provisions of the Internal
Revenue Code, as determined in good faith by the Company's independent
auditors. The preceding sentence shall not apply to the extent the shareholder
approval requirements of Code Section 280G(b)(5) are satisfied. If your
benefits must be reduced to avoid triggering such penalties, your benefits will
be reduced in the priority order you designate or, if you fail promptly to
designate an order, in the priority order designated by the Company. If an
amount in excess of the limit set forth in this Section is paid to you, you
must repay the excess amount to the Company on demand, with interest at the
rate provided in Code Section 1274(b)(2)(B). You and the Company agree to
cooperate with each other reasonably in connection with any administrative or
judicial proceedings concerning the existence or amount of golden parachute
penalties on payments or benefits you receive.
17.2 Section 162(m) Limitation. To the extent payments or benefits under
this Agreement would not be deductible under Code Section 162(m) if made or
provided when otherwise due under this Agreement, they shall be made or
provided later, immediately after Section 162(m) ceases to preclude their
deduction, with interest thereon at the rate provided in Code Section
1274(b)(2)(B).
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17.3 Pooling of Interests Limitation. If the Company enters into a
business combination transaction that is intended to qualify for "pooling of
interests" accounting treatment and the transaction would qualify for such
treatment but for one or more provisions of this or any other agreement you
have with the Company, then such agreement, to the extent practicable, shall be
interpreted so as to permit such accounting treatment. To the extent that is
not sufficient to preserve pooling of interests accounting, any provisions of
the Agreement that would preclude such accounting treatment shall be void. All
determinations under this Section shall be made by the accounting firm whose
pooling of interests accounting opinion is required as a condition of the
consummation of the business combination transaction in question.
18. DISABILITY
Following a Change in Control, while you are absent from work as a
result of physical or mental illness, the Company will continue to pay you your
full salary and provide you all other compensation and benefits payable to you
under the Company's compensation or benefit plans, programs, or arrangements.
These payments will stop if and when your employment is terminated by the
Company for Disability or at the end of the Term of this Agreement, whichever
is earlier. Severance Benefits under this Agreement are not payable if you are
terminated on account of your Disability.
19. EFFECT OF REEMPLOYMENT
Your Severance Benefits will not be reduced by any other compensation
you earn or could have earned from another source.
20. SUCCESSORS
20.1 Assumption Required. In addition to obligations imposed by law on a
successor to the Company, during the Term of this Agreement the Company will
require any successor to all or substantially all of the business or assets of
the Company expressly to assume and to agree to perform this Agreement in the
same manner and to the same extent that the Company was required to perform. If
the Company fails to obtain such an assumption and agreement before the
effective date of a succession, you will be entitled to Severance Benefits as
if you were terminated by the Company without Cause on the effective date of
that succession.
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20.2 Heirs and Assigns. This Agreement will inure to the benefit of, and
be enforceable by, your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If you
die while any amount is still payable to you under this Agreement, that amount
will be paid to the executor, personal representative, or administrator of your
estate.
21. GOVERNING LAW
This Agreement creates a "top hat" employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, and it shall be interpreted,
administered, and enforced in accordance with that law; the Company is the
"plan administrator." To the extent that state law is applicable, the statutes
and common law of the State of Virginia(excluding its choice of laws statutes
or common law) shall apply.
22. CLAIMS [ERISA REQUIREMENT]
22.1 When Required; Attorneys' Fees. You do not need to present a formal
claim to receive benefits payable under this Agreement. However, if you believe
that your rights under this Agreement are being violated, you must file a
formal claim with the Company in accordance with the procedures set forth in
this Section. The Company will pay your reasonable attorneys' fees and related
costs in enforcing your rights under this Agreement.
22.2 Initial Claim. Your claim must be presented to the Company in
writing. Within 30 days after receiving the claim, a claims official appointed
by the Company will consider your claim and issue his or her determination
thereon in writing. With your consent, the initial claim determination period
can be extended further. If you can establish that the claims official failed
to respond to your claim in a timely manner, you may treat the claim as having
been denied by the claims official.
22.3 Claim Decision. If your claim is granted, the benefits or relief
you are seeking will be provided. If your claim is wholly or partially denied,
the claims official shall, within three days, provide you with written notice
of the denial, setting forth, in a manner calculated to be understood by you:
(i) the specific reason or reasons for the denial; (ii) specific references to
the provisions on which the denial is based; (iii) a description of any
additional material or information necessary for you to perfect your claim,
together with an explanation of why the material or information is necessary;
and (iv) an explanation of the procedures for appealing denied claims. If you
establish that the claims official has failed to respond to your claim in a
timely manner, you may treat the claim as having been denied by the claims
official.
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22.4 Appeal of Denied Claims. You may appeal the claims official's
denial of your claim in writing to an appeals official designated by the
Company (which may be a person, committee, or other entity) for a full and fair
appeal. You must appeal a denied claim within fifteen days after your receipt
of written notice denying your claim, or within 60 days after such written
notice was due, if the written notice was not sent. In connection with the
appeals proceeding, you (or your duly authorized representative) may review
pertinent documents and may submit issues and comments in writing. You may only
present evidence and theories during the appeal that you presented during the
initial claims stage, except for information the claims official requested you
to provide to perfect the claim. You will irrevocably waive any theories you do
not in good faith pursue through the appeal stage, such as by failing to file a
timely appeal request.
22.5 Appeal Decision. The decision by the appeals official will be made
within 10 days after your appeal request, unless special circumstances require
an extension of time, in which case the decision will be rendered as soon as
possible, but not later than fifteen days after your appeal request, unless you
agree to a greater extension of that deadline. The appeal decision will be in
writing, set forth in a manner calculated to be understood by you; it will
include specific reasons for the decision, as well as specific references to
the pertinent provisions of this Agreement on which the decision is based. If
you do not receive the appeal decision by the date it is due, you may deem your
appeal to have been denied.
22.6 Procedures. The Company will adopt procedures by which initial
claims and appeals will be considered and resolved; different procedures may be
established for different claims. All procedures will be designed to afford you
full and fair consideration of your claim.
23. SURVIVAL.
This Agreement shall survive any Changes in Control, change in
management of Company, and any merger, consolidation, reorganization, sale of
assets or sale of stock of Company.
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24. NON-COMPETITION AND NON-SOLICITATION.
24.1 Prohibition. You acknowledges that Company's business and
employee relationships are maintained at great expense and effort. You further
acknowledges that, by virtue of your employment under this Agreement, you will
have an extensive and unique opportunity to establish and maintain valuable
contacts with Company's customers and employees and the opportunity both during
and after employment to unfairly compete with Company, its subsidiaries and
affiliates. Therefore, you agree that during the term of your employment with
Company and for a period of the balance of the term of this Agreement or twelve
(12) months following termination of such employment, whichever is greater, you
shall not compete with the business of Company, its subsidiaries or affiliates.
For the purpose of this Agreement, activities among others which shall be
deemed competitive include: (i) encouraging any customers of Company, its
subsidiaries or affiliates to become a customer of you or of any other person
except through normal competitive bidding; or (ii) encouraging any employee of
Company, its subsidiaries or affiliates to become your employee or of any other
person.
24.2 Remedies for Breach. You acknowledge that the damage to
Company, its subsidiaries and affiliates resulting from a breach of this
Section 24 may cause irreparable injury. Therefore, in the event of any such
breach, Company, its subsidiaries and affiliates shall be entitled to seek such
remedies as are available at law or equity to restrain and enjoin you from
continuing to violate the provisions of this Section 24.
24.3 Binding Effect. In the event that any part of this Section
24 shall be deemed by a court of competent jurisdiction to be in violation of
applicable law for any reason whatsoever, than such part shall not be deemed to
be void, but shall be deemed to be modified so as to be valid and enforceable,
and the remaining provisions of this Section 24 or of this Agreement shall not
be affected. The provisions of Section 24 shall survive the termination of your
employment for any reason.
25. CONFIDENTIALITY AND NON-DISCLOSURE.
25.1 Prohibition. You understand and acknowledge that the
success of Company's business is dependent upon the secrecy and non-disclosure
of many confidential plans, procedures and methods. Therefore, you agree that
you will not directly or indirectly disclose to any person or use for your own
purpose any confidential information, records, data, formulae, specifications,
customer lists, ideas, inventions, plans concerning business or product
development, business procedures, contract proposals or such proprietary
information or other trade secrets of Company, its subsidiaries or affiliates
("Confidential Information") provided such information is marked as such or you
have reason to know it is confidential. Upon termination of this Agreement and
employment hereunder, You agree to promptly deliver to
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Company all papers, records, files, other documents and Confidential
Information belonging to Company, its subsidiaries and affiliates and to not
retain any copies thereof.
25.2 Remedies for Breach. You acknowledge that the damage to
Company, its subsidiaries and affiliates resulting from a breach of this
Section 25 may cause irreparable injury. Therefore, in the event of any such
breach, Company, its subsidiaries and affiliates shall be entitled to seek such
remedies as are available at law or equity to restrain and enjoin you from
continuing to violate the provisions of this Section 25.
25.3 Binding Effect. The provisions of Section 25 shall
survive the termination of this Agreement and your employment for any reason.
26. RESULTS AND PROCEEDS.
26.1 Ownership. As your employer, Company shall own all rights
in and to the results and proceeds connected with or arising out of, directly
or indirectly, your services hereunder. You hereby assign to Company all right,
title and interest in and to all intellectual property, discoveries and trade
secrets which you may solely or jointly conceive, design, develop, create or
suggest or cause to be conceived, designed or developed or created during the
term of your employment by Company, which relate to your employment or
Company's business. For purposes of this Agreement, the term "intellectual
property" shall include, without limitation, any ideas, concepts, literary
material, designs, drawings, illustrations, photographs, patentable ideas and
musical compositions. To the extent that any such intellectual property may be
protectable pursuant to applicable copyright law, you acknowledge that such
property is a work for hire within the meaning of such law.
26.2 Further Assurances. You hereby agree to execute any
documents necessary to evidence Company's proprietary interest in any
intellectual property, discovery or trade secrets referred to Section 26.1
above. In the event Company is unable, for any reason whatsoever, to secure
your signature to any lawful and necessary document required to apply for
protection of, or enforce any rights with respect to, any copyrights,
trademark, patent or other proprietary rights, you hereby irrevocably
designates and appoints Company, and its duly authorized officers and agents,
as his agent and attorney-in-fact, whose power is coupled with an interest, to
act for and in your behalf and stead, to execute such documents and to do all
other lawful acts to protect Company's interest in any such copyright,
trademark, patent or other proprietary right with the same legal force and
effect as if executed by you.
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27. AMENDMENTS.
This Agreement may be modified only by a written agreement executed by
you and an authorized officer of the Company.
28. VALIDITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
29. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
will be deemed an original, but all of which will constitute one and the same
instrument.
30. GIVING NOTICE
30.1 To the Company. All communications from you to the Company relating
to this Agreement must be sent to the Company to its principal business office
in Springfield, Virginia, in writing, by registered or certified mail, or
delivered personally.
30.2 To You. All communications from the Company to you relating to this
Agreement must be sent to you in writing, by registered or certified mail, or
delivered personally, addressed as indicated at the end of this Agreement.
31. CONFORMITY WITH THE IMMIGRATION REFORM AND CONTROL ACT OF 1986.
Upon request, You agree to furnish Company with all documentation needed
to satisfy the requirements of the Immigration Reform and Control Act of 1986.
32. WAIVER.
The failure of either party to insist, in any one or more instances,
upon performance of the terms or conditions of this Agreement shall not be
construed as a waiver or a relinquishment of any right granted hereunder or of
the future performance of any term or condition.
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33. RESIGNATION FROM OFFICES.
Upon termination of your employment, you shall be deemed to have
resigned as an officer and director of Company, its subsidiaries and
affiliates, if then so acting, as of the date of such termination.
34. BENEFIT.
This Agreement shall be binding upon and inure to the benefit of and
shall be enforceable by and against Company, its successors and assigns and
you, your heirs, beneficiaries and legal representatives. This Agreement may be
assigned by Company but may not be assigned by you.
35. DEFINITIONS
(a) Agreement
"Agreement" means this contract, as amended.
(b) Base Salary
"Base Salary" means the gross amount of money paid you annually as your
basic compensation. This amount is paid in regular bi-weekly installments.
(c) Beneficial Owner
"Beneficial Owner" has the meaning set forth in Rule 13d-3 under the
Exchange Act.
(d) Board
"Board" means the Board of Directors of the Company.
(e) Cause
"Cause" means any of the following:
(1) you fail to carry out assigned duties after being given prior
warning and an opportunity to remedy the failure,
(2) you breach any material term of any employment agreement with the
Company,
(3) you engage in fraud, dishonesty, willful misconduct, gross
negligence, or breach of fiduciary duty (including without
limitation
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any failure to disclose a conflict of interest)in the performance
of your duties for the Company, or
(4) you are convicted of a felony or crime involving moral turpitude.
(f) Change in Control
"Change in Control" means the first of the following to occur after the
date of this Agreement, excluding any event that is Management Action:
(1) Acquisition of Controlling Interest. Any Person becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of
the Company's then outstanding securities. In applying the
preceding sentence, securities acquired directly from the Company
or its affiliates with the company's approval by or for the
Person shall not be taken into account.
(2) Change in Board Control. During the term of this Agreement,
individuals who constituted the Board as of the date of this
Agreement (or their approved replacements, as defined in the next
sentence) cease for any reason to constitute a majority of the
Board. A new director shall be considered an "approved
replacement" director if his or her election (or nomination for
election) was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or were themselves approved replacement
directors.
(3) Merger Approved. The shareholders of the Company approve a merger
or consolidation of the Company with any other corporation
unless: (a) the voting securities of the Company outstanding
immediately before the merger or consolidation would continue to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 75% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation; and (b) no Person acquires more than 25%
of the combined voting power of the Company's then outstanding
securities.
(4) Sale of Assets. The shareholders of the Company approve an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(g) Code
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"Code" means the Internal Revenue Code of 1986, as amended.
(h) Confidential Information
"Confidential Information" means any and all Company proprietary, trade
secret or other information identified in Section 25, whether written,
electronic or oral.
(i) Company
"Company" means Versar, Inc. and any successor to its business or assets
that (by operation of law, or otherwise) assumes and agrees to perform this
Agreement. However, for purposes of determining whether a Change in Control has
occurred in connection with such a succession, the successor shall not be
considered to be the Company.
(j) Disability
"Disability" means that, due to physical or mental illness: (i) you have
been absent from the full-time performance of your duties with the Company for
substantially all of a period of six consecutive months; (ii) the Company has
notified you that it intends to terminate you on account of Disability; and
(iii) you do not resume the full-time performance of your duties within 30 days
after receiving notice of your intended termination on account of Disability.
(k) Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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(l) Good Reason
"Good Reason" means the occurrence of any of the following without your
express written consent:
(1) Demotion. Your duties and responsibilities are substantially and
adversely altered from those in effect immediately before the
Change in Control (or, with respect to Section 3(b), the
Potential Change in Control), other than merely as a result of
the Company ceasing to be a public company, a change in your
title, or your transfer to an affiliate.
(2) Pay Cut. Your annual Base Salary is reduced.
(3) Relocation. Your principal office is transferred to another
location, which increases your one-way commute to work by more
than 50 miles, based on your residence when the transfer was
announced or, if you consent to the transfer, the Company fails
to pay (or reimburse you) for all reasonable moving expenses you
incur in changing your principal residence in connection with the
relocation and to indemnify you against any loss you may realize
when you sell your principal residence in connection with the
relocation in an arm's-length sale for adequate consideration.
For purposes of the preceding sentence, your "loss" will be the
difference between the actual sales price of your residence and
the higher of: (a) your aggregate investment in the residence; or
(b) the fair market value of the residence, as determined by a
real estate appraiser designated by you and satisfactory to the
Company.
(4) Breach of Promise. The Company fails to pay you any present or
deferred compensation within seven days after it is due.
(5) Discontinuance of Compensation Plan Participation. The Company
fails to continue, or continue your participation in, any
compensation plan in which you participated immediately before
the Change in Control (or, with respect to Section 3(b), the
Potential Change in Control) that is material to your total
compensation, unless an equitable substitute arrangement has been
adopted or made available on a basis not materially less
favorable to you than the plan in effect immediately before the
Change in Control (or the Potential Change in Control, if
applicable), both as to the benefits you receive and your level
of participation relative to other participants.
(6) Discontinuance of Benefits. The Company stops providing you with
benefits that, in the aggregate, are substantially as valuable to
you as those you enjoyed immediately before the Change in Control
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(or, with respect to Section 3(b), the Potential Change in
Control) under the Company's pension, savings, deferred
compensation, life insurance, medical, health, disability,
accident, vacation, and fringe benefit plans, programs, and
arrangements.
(7) Improper Termination. You are purportedly terminated, other than
pursuant to a notice of termination satisfying the requirements
of Section 5.
(8) Notice of Prospective Action. You are officially notified or it
is officially announced that the Company will take any of the
actions listed above during the Term of this Agreement.
However, an event that is or would constitute Good Reason shall cease to be
Good Reason if: (a) you do not terminate employment within 180 days after the
event occurs; (b) the Company reverses the action or cures the default that
constitutes Good Reason before you terminate employment; or (c) you were a
primary instigator of the Good Reason event and the circumstances make it
inappropriate for you to receive benefits under this Agreement (e.g., you agree
temporarily to relinquish your position on the occurrence of a merger
transaction you negotiate). If you have Good Reason to terminate employment,
you may do so even if you are on a leave of absence due to physical or mental
illness or any other reason.
(m) Incentive Compensation
"Incentive Compensation" means the amount of cash and/or securities paid
to you under all bonus, incentive or other programs for performance adopted by
Company for its executive officers or other key employees.
(n) Management Action
"Management Action" means any event, circumstance, or transaction
occurring during the six-month period following a Potential Change in Control
that results from the action of a Management Group.
(o) Management Group
"Management Group" means any entity or group that includes, is
affiliated with, or is wholly or partly controlled by one or more executive
officers of the Company in office before a Potential Change in Control.
(p) Person
"Person" has the meaning given in Section 3(a)(9) of the Exchange Act,
as modified and used in Section 13(d) of that Act, and shall include a "group,"
as
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defined in Rule 13d-5 promulgated thereunder. However, a Person shall not
include: (i) the Company or any of its subsidiaries; (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any of its subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.
(q) Potential Change in Control
"Potential Change in Control" means that any of the following has
occurred during the term of this Agreement, excluding any event that is
Management Action:
(1) Agreement Signed. The Company enters into an agreement that will
result in a Change in Control.
(2) Notice of Intent to Seek Change in Control. The Company or any
Person publicly announces an intention to take or to consider
taking actions that will result in a Change in Control.
(3) Board Declaration. With respect to this Agreement, the Board
adopts a resolution declaring that a Potential Change in Control
has occurred.
(r) Severance Benefits
"Severance Benefits" means your benefits under Section 6 of this
Agreement.
(s) Term of this Agreement
"Term of this Agreement" means the period that commences on the date of
this Agreement and ends on the earlier of:
(1) Expiration. October 31, 2002; or
(2) Change in Control. The last day of the 24th calendar month
beginning after the calendar month in which a Change in Control
occurred during the Term of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date above written.
VERSAR, INC.
By: /S/ Benjamin M. Rawls
---------------------------------
Benjamin M. Rawls
Chairman and CEO
---------------------------------
/S/ Theodore M. Prociv
---------------------------------
Theodore M. Prociv
78
