**Exhibit10.16**

 

PEC SOLUTIONS,INC.

 

KEY EXECUTIVESEVERANCE PLAN

 

I.  Preamble and Statement of Purpose.

 

The purpose of this Plan is to assure PEC Solutions,Inc. (“PEC”) and its subsidiaries (PEC, together with its subsidiaries, the “Corporation”)of the continued dedication, loyalty, and service of, and the availability ofobjective advice and counsel from, key employees of the Corporationnotwithstanding the possibility, threat or occurrence of a bid or other actionto take over control of the Corporation.

 

In the event PEC receives any proposals from a thirdparty concerning a possible business combination with PEC, or acquisition ofPEC’s equity securities, the Board of Directors of PEC (the “Board”) believesthat it would be imperative that the Board, the Corporation and its seniormanagement be able to rely on the Corporation’s key employees to continue intheir positions and be available for advice, if requested, without concern thatthose individuals might be distracted by the personal uncertainties and riskscreated by such a proposal, or be influenced to consider other employmentopportunities or prospects because of such uncertainties or risks.

 

Should PEC receive any such proposals, in addition totheir regular duties, such key employees, in light of their experience andknowledge gained within that portion of the business in which they areprincipally engaged, may be called upon to assist in the assessment ofproposals, advise senior management and the Board as to whether such proposalswould be in the best interest of PEC and its shareholders, and take such otheractions as the Board might determine to be appropriate.

 

II.  Eligible Executives.

 

The following individuals are eligible to participatein this Plan: (i) the executives of PEC (Grade 11 and above), and (ii) thosekey employees of the Corporation who are from time to time designated by theCompensation Committee of the Board (the “Compensation Committee”) as eligibleto participate in this Plan.

 

----

 

Each eligible employee shall become a Participant inthe Plan upon his or her execution of a letter agreement in the form, orsubstantially in the form, of Exhibit A, attached to and incorporated in thisPlan (the “Letter Agreement”).  Theexecuted Letter Agreement shall constitute the Participant’s agreement to theterms and conditions of participation in this Plan and shall set forth theamount of the Lump Sum Cash Payment under Section 3.2.2, the length of theCoverage Period for welfare benefit continuation under Section 3.2.3, and suchother terms and conditions as the Compensation Committee may determineapplicable to the Participant.

 

A Participant who is no longer employed by theCorporation shall cease to be a Participant in the Plan, unless the Participant’semployment ceases (i) within six (6) months after the Effective Date (asdefined in Section 3.1.3) or (ii) during any period of time when the Board hasknowledge that any third person has taken steps reasonably calculated to effecta Change of Control (as defined in Section 3.1.2) until, in the opinion of theBoard, the third party has abandoned or terminated its efforts to effect aChange of Control.  Any decision by theBoard that, in its opinion, a third party has or has not taken steps reasonablycalculated to effect a Change of Control, or that, in its opinion, the thirdperson has abandoned or terminated its efforts to effect a Change of Control,shall be conclusive and binding on the Participants.

 

III.  Plan Provisions.

 

3.1                                 Definitions.  The following terms, as used in this Planwith capitalized first letters, shall have the meanings as provided in thisSection 3.1:

 

3.1.1.                     “Cause”.  “Cause” means (i) the Participant’s willfuland continued failure substantially to perform the duties of his or herposition (other than as a result of disability, as defined in Section 72(m)(7)of the Internal Revenue Code of 1986, as amended (the “Code”), or as a resultof termination by the Participant for Good Reason) after written notice to theParticipant by the Board specifying such failure, provided that such “Cause”shall have been found by a majority vote of the Board after at least ten (10)days’ written notice to the Participant specifying the failure on the part ofthe Participant and after an opportunity for the Participant to be heard at ameeting of the Board; (ii) any willful act or omission by the Participantconstituting dishonesty, fraud or other malfeasance, and any act or omission bythe Participant constituting immoral conduct, which in any such case isinjurious to the financial condition or business reputation of the Corporation;or (iii) the Participant’s indictment of a felony under the laws of the UnitedStates or any state thereof or any other jurisdiction in which the Corporationconducts

 

2

----

 

business.  For purposes of this definition, no act orfailure to act shall be deemed “willful” unless effected by the Participant notin good faith and without a reasonable belief that such action or failure toact was in or not opposed to the best interests of the Corporation.

 

3.1.2.                     “Changeof Control”.  “Change of Control”means the occurrence of any of the following:

 

(i)                                     Any“person” (as defined in this Section 3.1.2) is or becomes the “beneficial owner”(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended(the “Exchange Act”)), directly or indirectly, of securities of PEC (notincluding in the securities beneficially owned by such person any securitiesacquired directly from PEC other than in connection with PEC’s acquisition of abusiness) representing more than fifty percent (50%) of the combined votingpower of PEC’s then outstanding securities; or

 

(ii)                                  Asa result of, or in connection with, any cash tender or exchange offer, mergeror other business combination, sale of assets, or contested election, or anycombination of the foregoing transactions, the individuals who were directorsof PEC prior thereto shall cease to constitute a majority of the Board ofDirectors of PEC or any successor thereto.

 

As used in this Section, the term “person” has themeaning ascribed thereto in Section 3(a)(9) of the Exchange Act, asmodified and used in Sections 13(d)(3) and 14(d)(2) thereof, except thatsuch term shall not include (A) the Corporation, (B) any trustee or otherfiduciary holding securities under an employee benefit plan of the Corporation,(C) an underwriter temporarily holding securities pursuant to an offering ofsuch securities, or (D) any corporation owned, directly or indirectly, by thestockholders of PEC in substantially the same proportions as their ownership ofcommon stock of PEC.

 

3.1.3.                     “EffectiveDate”.  “Effective Date” means thedate on which a Change of Control occurs. In the event of a Change of Control occurring within six (6) months aftera prior Change of Control, “Effective Date” shall mean the date on which thesubsequent Change of Control occurs. Notwithstanding anything in this Plan to the contrary, if a Participant’semployment with the Corporation had terminated prior to the date on which theChange of Control occurred, and if it is reasonably demonstrated by theParticipant to the Board that such termination of employment either was at therequest of a third party who had taken steps reasonably calculated to effectthe Change of Control or otherwise arose in connection with or in anticipationof the

 

3

----

 

Change of Control,then, for all purposes of this Plan, “Effective Date” shall mean, with respectto such Participant only, the date immediately prior to the date of suchtermination of employment.

 

3.1.4.                     “GoodReason”.  “Good Reason” means (i)removal from, or failure to be reappointed or reelected to, the Participant’sprincipal positions in existence immediately prior to Change of Control (otherthan as a result of a promotion); (ii) diminution in the Participant’s title,position, duties or responsibilities, or the assignment to the Participant ofduties that are inconsistent, in a material respect, with the scope of dutiesand responsibilities associated with the Participant’s position in existenceimmediately prior to the Change of Control; (iii) reduction in the Participant’scompensation as in effect immediately preceding the Effective Date; (iv)relocation of the Participant’s principal workplace without his or her consentto a location which is more than fifty (50) miles from the Participant’sprincipal workplace in existence on the Effective Date; or (v) any failure byPEC to comply with and satisfy the requirements of Section 3.5.7, provided thatthe successor shall have received at least ten (10) days’ prior written noticefrom PEC or the Participant of the requirements of Section 3.5.7.  For purposes of clauses (i), (ii) or (iii) ofthe preceding sentence, an isolated, insubstantial and inadvertent action nottaken in bad faith and which is remedied by PEC promptly after receipt ofnotice thereof given by the Participant shall be excluded.  For purposes of clause (ii), no diminution oftitle, position, duties or responsibilities shall be deemed to occur solelybecause PEC becomes a subsidiary of another corporation or change in thereporting hierarchy incident thereto.

 

3.2                                 Benefits.

 

3.2.1.                     TriggeringEvent.  In the event the Participant’semployment with the Corporation is terminated without Cause by the Corporation,or for Good Reason by the Participant, on or within six (6) months after theEffective Date, PEC shall (in addition to any compensation or benefits to whichthe Participant may otherwise be entitled under any other agreement, plan orarrangement with the Corporation, other than amounts excluded bySection 3.5.2) make the payments and provide the benefits to theParticipant as specified under Sections 3.2.2 and 3.2.3.  For purposes of this Section 3.2.1, a Participant’semployment with the Corporation will be deemed to have terminated on theearlier of the date the Participant’s employment with the Corporation ceases orthe date that written notice of any such termination is received by theParticipant or by the Corporation, as the case may be, even though the partiesmay agree in connection therewith that the Participant’s employment with theCorporation will continue for a

 

4

----

 

specified periodthereafter.  The failure by theParticipant or the Corporation to set forth in any such notice sufficient factsor circumstances showing Good Reason or Cause, as the case may be, shall notwaive any right of the Participant or the Corporation or preclude either partyfrom asserting such facts or circumstances in the enforcement of any suchright.

 

3.2.2.                     LumpSum Cash Payment.  On or before theParticipant’s last day of employment with the Corporation, PEC shall pay to theParticipant as compensation for services rendered to the Corporation a Lump SumCash Payment (subject to any applicable payroll or other taxes required to bewithheld) in the amount determined in accordance with the Letter Agreement,subject to Section 3.4.

 

3.2.3.                     WelfareBenefit Continuation.  TheParticipant’s (and, where applicable, members of the Participant’s family’s)participation in the group medical, dental, life (including split dollar, ifany) and disability plans maintained by the Corporation shall be continued onsubstantially the same basis as if the Participant were an employee of theCorporation until the end of the Coverage Period as set forth in the LetterAgreement.  In the event that PEC isunable for any reason to provide for the Participant’s (and, where applicable,the Participant’s family’s) continued participation in one or more of suchplans during the Coverage Period, PEC shall pay or provide at its expenseequivalent benefit coverage for the remainder of the Coverage Period.  The Coverage Period shall, to the extentallowed by law, be taken into account as a period of continuation coverage forpurposes of Part 6 of Title I of the Employee Retirement Income Security Act of1974, as amended, and for purposes of any other obligation of the Corporationto provide any continued coverage to the Participant (and, where applicable,members of the Participant’s family) under any group medical, dental, life ordisability plan.  The Corporation shallalso pay to the Participant at least annually an amount which shall besufficient on an after tax basis to compensate the Participant for alladditional taxes incurred by reason of any income realized as a result of thecontinued coverage under this Section, to the extent such taxes result from theParticipant’s status as a non-employee and would not be incurred if Participantwas an employee of the Corporation, on a grossed-up basis, at the highestmarginal income tax rate for individuals.

 

3.2.4.                     AcceleratedVesting of Options.  All optionsgranted to a Participant to purchase common stock of PEC under any plan,program or arrangement maintained by PEC, shall become fully vested andexercisable as of the Effective Date of a Change of Control as defined inSection 3.1.2(ii), to the extent such options are then outstanding.  The preceding sentence shall

 

5

----

 

not apply withrespect to any option if: (i) in connection with the Change of Control, anotherentity (a) shall have assumed or will assume the obligations of PEC withrespect to such option, or (b) shall have issued or will issue one or moreoptions of equivalent economic value with equivalent vesting conditions toreplace such option; and (ii) the assumed or replacement option as set forth inclause (i), pursuant to its terms, shall vest as of the date the Participant’semployment with the Corporation is terminated without Cause by the Corporation,or for Good Reason by the Participant, on or within six (6) months after theEffective Date.  The Board shall havesole discretion in the determination of whether a replacement option is ofequivalent economic value to the replaced option.

 

3.2.5                        Exercisabilityof Options After Termination.  If anyaccounting requirements with respect to a Change of Control restrict aParticipant’s sale or transfer of stock subject to an option described inSection 3.2.4 which is not an “incentive stock option” within the meaning ofSection 422 of the Code, then the period during which the Participant mayexercise such option following his or her termination of employment with theCorporation shall be determined by excluding the period during which theParticipant is subject to that restriction.

 

3.3                                 Adjustmentof Lump Sum Cash Payment.

 

3.3.1.                     Adjustment.  Notwithstanding anything in this Plan or anyLetter Agreement to the contrary, in the event the Law or Accounting Firm (asdefined in Section 3.3.2) shall determine that the Lump Sum Cash Payment andany other payment or distribution in the nature of compensation by theCorporation to or for the benefit of the Participant, whether paid or payableor distributed or distributable pursuant to the terms of this Plan or otherwise(the Lump Sum Cash Payment, together with such other payments anddistributions, the “Payments”), would cause any portion of such Payments to besubject to the excise tax imposed by Section 4999 (or any successor provision)of the Code (the “Parachute Payments”), the Participant’s Lump Sum Cash Paymentshall be reduced to an amount (not less than zero) which shall not cause anyportion of the Payments to constitute Parachute Payments, provided that no suchreduction shall be made if the Participant’s Payments, after the reduction andafter the application of Federal income tax at the highest rate applicable toindividual taxpayers, shall not be greater than the present value (determinedin accordance with Section 280G of the Code) of the Payments before thereduction but after the application of (i) excise tax under Section 4999 of theCode and (ii) Federal income tax at the highest rate applicable to individual taxpayers.

 

6

----

 

3.3.2.                     Determination.  All determinations required to be made underthis Section 3.3, including the assumptions to be utilized in arriving at suchdetermination, shall be made by Piper Rudnick L.L.P. or other nationallyrecognized law or accounting firm (the “Law or Accounting Firm”), which shallprovide detailed supporting calculations both to PEC and the Participant (i)within fifteen (15) business days after the receipt of a notice from the Participantthat he or she may have a Parachute Payment, or (ii) at such earlier time asmay be requested by PEC.  The Law orAccounting Firm may employ and rely upon the opinions of actuarial oraccounting professionals to the extent it deems necessary or advisable.  In the event that the Law or Accounting Firmdetermines, for any reason, that it is unable to perform such services, ordeclines to do so, PEC shall select another nationally recognized law oraccounting firm to make the determinations required under this Section (whichlaw or accounting firm shall then be referred to as the Law or Accounting Firmhereunder).  Any Accounting Firmproviding services to the Corporation or to any person (within the meaning of3.1.2, above) with respect to the Change in Control shall not serve as theAccounting Firm under this Section 3.3. All fees and expenses of the Law or Accounting Firm shall be bornesolely by PEC.  Any determination by theLaw or Accounting Firm shall be binding upon PEC and the Participant.

 

3.4                                 Termsand Conditions of Participation

 

3.4.1.                     Conditionsof Participation.  As a condition tobeing covered by the Plan, each Participant, by executing the Letter Agreement,shall acknowledge and agree that (i) except as may otherwise be expressly providedunder any other executed agreement between the Participant and the Corporation,nothing contained in this Plan (including, but not limited to, using the term “Cause”to determine benefits under this Plan) is intended to change the fact that theemployment of the Participant by the Corporation is “at will” and, prior to theEffective Date, may be terminated by either the Participant or the Corporationat any time, (ii) the Participant shall be bound by, and comply with, therequirements of Sections 3.5.3 and 3.5.4, and (iii) the Participant consents tothe modifications to the options as provided in Sections 3.2.4 and 3.2.5.  Moreover, if prior to the Effective Date, theParticipant’s employment with the Corporation terminates, then the Participantshall have no further rights under this Plan.

 

7

----

 

3.4.2.                     Non-Duplication.  As a condition to being covered by this Plan,and notwithstanding any other prior agreement to the contrary, eachParticipant, by executing the Letter Agreement, shall agree that, ifParticipant is eligible to receive salary continuation, severance or similarcash payments from the Corporation under any other plan, program, policy oragreement, then Participant shall be entitled to receive the severance payableunder Section 3.2.2 of this Agreement (the “Severance Payment”) only if (a) theSeverance Payment results in a greater financial benefit to Participant thanthe aggregate net present value of the payments payable under such other plans,programs, policies and agreements and (b) Participant waives in writing allrights to receive the salary continuation, severance or similar cash paymentsunder such other plans, programs, policies and agreements.  For purposes of the immediately preceedingsentence, the net present value of a payment shall be determined by the Law orAccounting Firm as defined in 3.3.2, above, measured as of the date that theSeverance Payment would otherwise be payable and based upon a discount factordetermined to be reasonable by the Law or Accounting Firm in good faith.  If Participant is eligible to continueparticipation in the welfare benefit plans of the Corporation after terminationof employment pursuant to the provisions of any plan, program, policy oragreement on terms that are different from the terms for continuedparticipation provided under Section 3.2.3 of this Agreement, Participant shallbe entitled to select whether the terms of this Agreement or the terms of suchother plan, program, policy or agreement shall govern Participant’s continuedparticipation in such welfare benefit plans; provided, however, that noparticipation in or receipt of benefits under this Plan or any other plan,program, policy or agreement shall be deemed to waive or diminish any rightthat Participant or Participant’s eligible dependents has under theConsolidated Omnibus Budget Reconciliation Act of 1985.

 

3.4.3.                     Amendmentand Termination.  The Plan may not beamended or terminated after the Effective Date. Prior to the Effective Date, the Board may, in its sole discretion,modify or amend this Plan in any respect, or terminate the Plan (including withrespect to individuals then participating in the Plan), provided (i) suchaction is taken and becomes effective at least one (1) year prior to theEffective Date and such action is communicated to the Participants prior to theEffective Date, (ii) the Board, in its sole discretion, determines that suchactions are necessary, in its opinion, to permit any business combination that isauthorized by the Board to comply with requirements for treatment as a poolingof interests transaction for accounting purposes under generally acceptedaccounting principles, if such transaction is intended to meet, and isconditioned upon compliance with, such requirements, or (iii) such actions donot reduce the amount or defer the receipt of any payment or benefit providedunder this Plan.

 

8

----

 

3.5                                 General.

 

3.5.1.                     Indemnification.  If litigation or arbitration shall be broughtto enforce or interpret any provision of this Plan which relates to PEC’sobligation to make payments hereunder, then PEC, to the extent permitted byapplicable law and PEC’s Charter, shall indemnify the Participant for his orher reasonable attorneys’ fees and disbursements incurred in such proceedings,and shall pay pre-judgment interest on any money judgment obtained by theParticipant calculated at the prime rate of interest published from time totime by The Wall Street Journal (“Prime Rate”) from the date that payment(s) tohim or her should have been made under this Plan.

 

3.5.2.                     PaymentObligations; Overdue Payments.  TheCorporation’s obligations to make the payments and provide the benefits to theParticipant under this Plan shall be absolute and unconditional and shall notbe affected in any way by any circumstances, including, without limitation, anyoffset, counterclaim, recoupment, defense or other right which PEC may haveagainst the Participant or anyone else, provided, however, thatas a condition to payment of amounts under this Plan, the Participant shallexecute a general release and waiver (the “Waiver”), in form and substancereasonably satisfactory to PEC, of all claims relating to the Participant’semployment by the Corporation and the termination of such employment,including, but not limited to, discrimination claims, employment-related tortclaims, contract claims and claims under this Plan (other than claims withrespect to benefits under the Corporation’s tax-qualified retirement plans,continuation of coverage or benefits solely as required by Part 6 of Title I ofthe Employee Retirement Income Security Act of 1974, or any obligation of PECto provide future performance under Section 3.2.3).  All amounts payable by PEC hereunder shall bepaid without notice or demand, except as may be required with respect to theWaiver.  Each and every payment madehereunder by PEC shall be final.  TheCorporation shall not seek to recover all or any part of such payment from theParticipant or from whosoever may be entitled thereto, for any reasonwhatsoever.  The Participant shall not beobligated to seek other employment in mitigation of the amounts payable orarrangements made under any provision of this Plan, and the obtaining of anysuch other employment shall in no event effect any reduction of PEC’sobligations to pay the Lump Sum Cash Payment. The Participant shall be entitled to receive interest at the Prime Rateon any payments under this Plan that are overdue, provided, however,that no payments shall be deemed to be overdue until the Participant executesthe Waiver and any rescission period with respect to such Waiver has expired.

 

9

----

 

3.5.3.                     ConfidentialInformation.  The Participant shallat all times hold in a fiduciary capacity for the benefit of the Corporationall secret, confidential or proprietary information, knowledge or data relatingto the Corporation, and its respective businesses, which shall have been obtainedby the Participant during the Participant’s employment by the Corporation andwhich shall not be or become public knowledge (other than by acts by theParticipant or representatives of the Participant in violation of this Plan)including, but not limited to, information regarding the technology,proprietary methodologies and products, software, other trade secrets, clients,customers, consultants and agents of the Corporation (the “ConfidentialInformation”).  During the Participant’semployment with the Corporation and after termination of such employment at anytime or for any reason, and regardless of whether any payments are made to theParticipant under this Plan as a result of such termination, the Participantshall not, without the prior written consent of the Corporation or as mayotherwise be required by law or legal process, communicate or divulge anyConfidential Information to any person other than the Corporation and thosedesignated by it or use any Confidential Information except for the benefit ofthe Corporation.  Immediately upontermination of the Participant’s employment with the Corporation at any time orfor any reason, the Participant shall return to the Corporation allConfidential Information, including, but not limited to, any and all copies,reproductions, notes or extracts of Confidential Information.  The terms of this Section shall be inaddition to, and not a replacement of, the provisions of the Corporation’s “EmployeeConfidentiality and Inventions Agreement”.

 

3.5.4.                     Solicitationof Employees.  During the Participant’semployment with the Corporation and for a period of twelve (12) months aftertermination of such employment at any time and for any reason, and regardlessof whether any payments are made to the Participant under this Plan as a resultof such termination, the Participant shall not solicit, participate in orpromote the solicitation of any person who was employed by the Corporation atthe time of the Participant’s termination of employment with the Corporation toleave the employ of the Corporation, or, on behalf of himself or any otherperson, hire, employ or engage any such person. The Participant further agrees that, during such time, if an employee ofthe Corporation contacts the Participant about prospective employment, theParticipant will inform such employee that he or she cannot discuss the matterfurther without informing the Corporation.

 

3.5.5.                     Applicationof Restrictions Respecting Confidential Information and Solicitation ofEmployees.  The requirements andobligations of the Participant under Sections 3.5.3 and 3.5.4 shall be inaddition to, and not a limitation under, any other requirements and obligationsof

 

10

----

 

the Participant,at law or otherwise.  The term “person”for purposes of Sections 3.5.3 and 3.5.4 shall include any individual orentity, including any corporation, trust or partnership.

 

3.5.7.                     Successors.  All right under this Plan are personal to theParticipant and without the prior written consent of PEC shall not beassignable by the Participant otherwise than by will or the laws of descent anddistribution.  This Plan shall inure tothe benefit of and be enforceable by the Participant’s legalrepresentative.  This Plan shall inure tothe benefit of and be binding upon PEC and its successors and assigns.  PEC will require any successor (whetherdirect or indirect, by purchase, merger, consolidation or otherwise) to all orsubstantially all of the business and/or assets of PEC to assume expressly andagree to perform this Plan in the same manner and to the same extent that PECwould be required to perform it if no such event resulting in a successor hadtaken place.

 

3.5.8.                     ControllingLaw; Jurisdiction.  This Plan shallin all respects be governed by, and construed in accordance with, the laws ofthe Commonwealth of Virginia (without regard to the principles of conflicts oflaws).  The Corporation and theParticipants irrevocably consent and submit to the jurisdiction of the FairfaxCounty Circuit Court, or in any Federal court sitting in the Commonwealth ofVirginia, for the purposes of any controversy, claim, dispute or action arisingout of or related to this Plan, and hereby waive any defense of an inconvenientforum and any right of jurisdiction on account of the parties’ place ofresidence or domicile.

 

3.5.9.                     Severability.  Any provision in this Plan which isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective only to the extent of such prohibition or unenforceabilitywithout invalidating or affecting the remaining provisions hereof, and any suchprohibition or unenforceability in any jurisdiction shall not invalidate orrender unenforceable such provision in any other jurisdiction.

 

 

Date:  July 14, 2003

 

11

----

 

**EXHIBIT A**

 

KEY EXECUTIVESEVERANCE PLAN

 

March 29, 2005

 

 

Robert L. Veschi

 

 

Dear Bob:

 

 

On July 14, 2003, the Compensation Committee of theBoard of Director of PEC Solutions, Inc. approved the enclosed PEC, Inc. KeyExecutive Severance Plan (the “Plan”). You are eligible to participate in the Plan and will become aParticipant therein upon signing this letter agreement.  As used in this letter, each capitalizedterm, if not defined herein, has the meaning ascribed to it under the Plan.

 

For purposes of Section 3.2.2 of the Plan, the amountof the Lump Sum Cash Payment, in the event you become entitled to benefitsunder the Plan, will be equal to the product of (a) 0.5 and (b) the sum of (i)your actual annual rate of base salary as in effect immediately prior to eitherthe date of your termination of employment with the Corporation or theEffective Date, whichever is higher, and (ii) the average of your annual bonuspayments under the Corporation’s annual bonus plan for the last three (3) yearsending before either the Effective Date or the date your employment with theCorporation terminates, whichever is higher.

 

If you will not have been eligible to participate inthe annual bonus plan for all three (3) years ending before either theEffective Date or the date of your termination, your average annual bonuspayment (with respect to the years ending before the Effective Date or the dateof termination, as applicable) shall be determined only for the years withrespect to which you shall have been eligible to participate.  For purposes of the Plan, your base salarywill include (i) your cash allowances reportable as wages in Form W-2, and (ii)the dollar value of any compensation that would have been paid to you but wasdeferred or excluded for Federal income tax purposes under a deferredcompensation plan, program or arrangement.

 

For purposes of Section 3.2.3, the Coverage Period, inthe event you become entitled to benefits under the Plan, will begin on thedate immediately following the termination of your employment with theCorporation and shall end on the date six (6) months thereafter.

 

Please review the provisions of the Plan and itsstated purposes carefully, including particularly the terms and conditionsstated in Sections 3.4 (Terms and Conditions of Participation), 3.5.3(Confidential Information), and 3.5.4 (Solicitation of Employees), to which

 

----

 

you will agree byexecuting this letter agreement.  Inorder to be entitled to the benefits and agree to your obligations provided inthe Plan, please execute the enclosed copy of this letter and return it toPeter Fish, General Counsel of PEC, whereupon the Plan and this letter willbecome a legally binding agreement between you and PEC.

 

 
|   | Very truly  yours,   |
|--------|----------------------|
|   |                 |
|   | PEC SOLUTIONS,  INC. |
|   |                 |
|   |                 |
|   | By:                  | /s/ DAVID C.  KARLGAARD |   |

 

 

I hereby confirmmy agreement

with theforegoing:

 
| /s/ ROBERT L. VESCHI |   |
|----------------------|--------|
|                 |
| Date: April 4,  2005 |

 

----