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EXHIBIT 10.93
CHANGE OF CONTROL
SEVERANCE AGREEMENT
This Agreement between Xxxxxxxx X. Xxxxxxx ( "you") and VERSAR,
INC.("Company")has been entered into as of January 30, 1999. This Agreement
promises you severance benefits if, following a Change of Control, you are
terminated without Cause or resign for Good Reason during the Term of this
Agreement. Capitalized terms are defined in the last section of this Agreement.
1. PURPOSE
The Company considers a sound and vital management team to be
essential. 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. YOUR AGREEMENT
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.
3. EVENTS THAT TRIGGER SEVERANCE BENEFITS
(a) 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.
(b) 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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(c) 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 13(a).
4. 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
3(c), 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.
5. 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.
6. SEVERANCE BENEFITS
(a) In General
If you become entitled to Severance Benefits under this Agreement,
you will receive all of the Severance Benefits described in this Section.
(b) 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 2 times your annual
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 the calendar
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year in which the Change in Control occurred (or in which the Potential Change
in Control occurred, if benefits are payable under Section 3(b)hereof).
(c) 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.
(d) 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.
7. 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)).
8. 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
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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 10, 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.
9. 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.
10. POTENTIAL LIMITATIONS
(a) 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.
(b) 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).
(c) 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
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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.
11. 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.
12. EFFECT OF REEMPLOYMENT
Your Severance Benefits will not be reduced by any other
compensation you earn or could have earned from another source.
13. SUCCESSORS
(a) 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.
(b) 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.
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14. AMENDMENTS
This Agreement may be modified only by a written agreement
executed by you and an authorized officer of the Company.
15. 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.
16. CLAIMS [ERISA REQUIREMENT]
(a) 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.
(b) 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.
(c) 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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(d) 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 five 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.
(e) Appeal Decision
The decision by the appeals official will be made within 60 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 ten 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.
(f) 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.
17. LIMITATION ON EMPLOYEE RIGHTS
This Agreement does not give you the right to be retained in the
service of the Company.
18. 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.
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19. 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.
20. GIVING NOTICE
(a) 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.
(b) 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.
21. DEFINITIONS
(a) Agreement
"Agreement" means this contract, as amended.
(b) Beneficial Owner
"Beneficial Owner" has the meaning set forth in Rule 13d-3 under
the Exchange Act.
(c) Board
"Board" means the Board of Directors of the Company.
(d) 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 any failure to
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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.
(e) 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.
(f) Code
"Code" means the Internal Revenue Code of 1986, as amended.
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(g) 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.
(h) 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.
(i) Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) 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
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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 (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.
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(k) 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.
(l) 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.
(m) 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 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.
(n) 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.
(o) Severance Benefits
"Severance Benefits" means your benefits under Section 6 of this
Agreement.
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(p) 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. January 31, 2,002; 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. After a
Change in Control occurs, the end of the Term of this
Agreement shall solely be determined under this Section
21(p)(2).
IN WITNESS WHEREOF, the parties have executed this Agreement as if the date set
forth above.
1/30/99
Date By: Versar, Inc.
----------------------
/S/ Xxxxxxxx X. Xxxxx
Name:
-----------------------------
Chairman & CEO
Title:
-----------------------------
1/30/99 /S/ Xxxxxxxx X. Xxxxxxx
Date
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Xxxxxxxx X. Xxxxxxx
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