AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.127
AMENDMENT TO EMPLOYMENT AGREEMENT
This amendment to the Employment Agreement dated February 8, 2005 as amended November 15, 2007,
between Versar, Inc. and Xxxxxxxx X. Xxxxxx is entered into this 1st day December, 2008
as follows:
| 1. | The term of this Agreement is extended to November 30, 2009; | ||
| 2. | The base salary set forth in Section 4.1 shall be $355,000 per annum beginning on September 27, 2008; | ||
| 3. | The personal leave set forth in Section 5.3 shall be six (6) weeks annually; and | ||
| 4. | All other terms of the Agreement shall remain unchanged. |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above written.
| /S/ Xxxxxxxx X. Xxxxxx | ||||
| Xxxxxxxx X. Xxxxxx | ||||
| /S/ Xxxx X. Xxxxx | ||||
| Xxxx X. Xxxxx | ||||
| Compensation Committee Chairman | ||||
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This Employment Agreement (this “Agreement”) is made and entered into this 8th day of February
2005, by and between Versar, Inc., a Delaware corporation (“Company”), its successors and assigns,
and Xxxxxxxx X. Xxxxxx (“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 and Chief Executive Officer 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, shall personally, diligently, and faithfully perform these duties to the best of
your ability, on a full-time and exclusive basis. Your principal 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 your then current Base Salary or $285,000, whichever is
greater.
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”).
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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 as of December 1, 2004, and shall continue for a period of
two (2) years. You agree and acknowledge that Company has no obligation to renew this Agreement or
to continue your employment after the one-year term.
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 your 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 your 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 one-year term, Company shall give you a lump sum payment equivalent of one year’s Base Salary,
any Incentive Compensation to which you would have been entitled as of the date of termination, any
deferred compensation, any accrued personal leave and will 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.
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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 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 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 age 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.
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 because 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
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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 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)).
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.
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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).
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 because 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.
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.
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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.
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.
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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.
24. Non-Competition and Non-Solicitation
24.1. Prohibition: You acknowledge that Company’s business and employee relationships are
maintained at great expense and effort. You further acknowledge 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 employee 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 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
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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 protected 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 designate and appoint Company, and its duly authorized officers and agents, as your
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.
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. Success Bonus
The Company’s Board of Director’s may, from time to time, direct you to identify and proceed with a
transaction to secure a sustainable future for the Company for example, a financial partner, buyer,
merger or acquisition candidate. If so directed by the Board of Directors and you are successful
in completing such a transaction, the Company will pay you a success fee to be negotiated based on
the size of the transaction and other industry standards.
36. 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 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: |
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(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.
(5) Liquidation or Dissolution: A complete liquidation or dissolution of the Company
(6) Going Private Transaction: Any transaction or series of transactions not covered in
paragraphs (1) through (5) above the result of which is the suspension of the Company’s duty to
file reports under the Exchange Act as a result of the remaining number of holders of the Company’s
common stock following such transaction or series.
| (g) | Code | ||
| “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 twhen 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 (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
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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) | 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. | |||
| (o) | 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. |
| (p) | Severance Benefits | ||
| “Severance Benefits” means your benefits under Section 6 of this Agreement. | |||
| (q) | Term of this Agreement | ||
| “Term of this Agreement” means the period that commences on December 1, 2004 and ends on the earlier of: |
| (1) | Expiration: November 30, 2006; 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. |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above written.
| /S/ Xxxxxxxx X. Xxxxxx | ||||
| Xxxxxxxx X. Xxxxxx | ||||
| /S/ Xxxx X. Xxxxx | ||||
| Xxxx X. Xxxxx | ||||
| Compensation Committee Chairman | ||||
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