Exhibit 10.113
EMPLOYMENT AGREEMENT
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
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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 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.
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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.
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
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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 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
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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.
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
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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
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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.
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
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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 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
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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.
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.
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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:
(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
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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.
(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
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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 (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.
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(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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