Exhibit 10.1





EXHIBIT 10.1




CHANGE IN CONTROL




SEVERANCE AGREEMENT




 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	1. Purpose
	 	 	1	 
	2. Your Agreement
	 	 	1	 
	3. Events That Trigger Severance Benefits
	 	 	1	 
	a. Termination After a Change in Control
	 	 	1	 
	b. Termination After a Potential Change in Control
	 	 	1	 
	c. Successor Fails to Assume This Agreement
	 	 	1	 
	4. Events That Do Not Trigger Severance Benefits
	 	 	2	 
	5. Termination Procedures
	 	 	2	 
	6. Severance Benefits
	 	 	2	 
	a. In General
	 	 	2	 
	b. Lump-Sum Payment in Lieu of Future Compensation
	 	 	2	 
	c. Incentive Compensation and Options
	 	 	2	 
	d. Group Insurance Benefit Continuation
	 	 	3	 
	e. Group Benefit Continuation
	 	 	3	 
	f. Officer Benefits
	 	 	3	 
	g. Medical Benefits
	 	 	3	 
	7. Time for Payment
	 	 	3	 
	8. Payment Explanation
	 	 	4	 
	9. Potential Limitations
	 	 	4	 
	a. Golden Parachute Limitation
	 	 	4	 
	b. Section 162(m) Limitation
	 	 	4	 
	10. Disability
	 	 	4	 
	11. Effect of Reemployment
	 	 	5	 
	12. Successors
	 	 	5	 
	a. Assumption Required
	 	 	5	 
	b. Heirs and Assigns
	 	 	5	 
	13. Amendments
	 	 	5	 
	14. Governing Law
	 	 	5	 
	15. Claims
	 	 	5	 
	a. When Required; Attorneys’ Fees
	 	 	5	 
	b. Initial Claim
	 	 	5	 
	c. Claim Decision
	 	 	6	 
	d. Appeal of Denied Claims
	 	 	6	 
	e. Appeal Decision
	 	 	6	 
	f. Procedures
	 	 	6	 
	g. Arbitration
	 	 	7	 
	16. Limitation on Employee Rights
	 	 	7	 
	17. Validity
	 	 	7	 
	18. Counterparts
	 	 	7	 
	19. Giving Notice
	 	 	7	 
	a. To the Company
	 	 	7	 
	b. To You
	 	 	7	 





 


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	20. Definitions
	 	 	8	 
	a. Agreement
	 	 	8	 
	b. Beneficial Owner
	 	 	8	 
	c. Board
	 	 	8	 
	d. Cause
	 	 	8	 
	e. Change in Control
	 	 	8	 
	(1) Acquisition of Controlling Interest
	 	 	8	 
	(2) Change in Board Control
	 	 	8	 
	(3) Merger Approved
	 	 	9	 
	(4) Sale of Assets
	 	 	9	 
	(5) Liquidation or Dissolution
	 	 	9	 
	(6) Private Transaction
	 	 	9	 
	f. Code
	 	 	9	 
	g. Company
	 	 	9	 
	h. Disability
	 	 	9	 
	i. Exchange Act
	 	 	9	 
	j. Good Reason
	 	 	10	 
	(1) Demotion
	 	 	10	 
	(2) Pay Cut
	 	 	10	 
	(3) Relocation
	 	 	10	 
	(4) Breach of Contract
	 	 	10	 
	(5) Improper Termination
	 	 	10	 
	k. Incentive Compensation
	 	 	10	 
	l. Management Action
	 	 	11	 
	m. Person
	 	 	11	 
	n. Potential Change in Control
	 	 	11	 
	(1) Agreement Signed
	 	 	11	 
	(2) Notice of Intent to Seek Change in Control
	 	 	11	 
	(3) Board Declaration
	 	 	11	 
	o. Separation from Service
	 	 	11	 
	p. Severance Benefits
	 	 	11	 
	q. Term of this Agreement
	 	 	11	 
	(2) Change in Control
	 	 	12	 
	21. Section 409A
	 	 	12	 






 


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CHANGE IN CONTROL

SEVERANCE AGREEMENT




This Agreement between Anthony L. Otten (“you”) and VERSAR, INC.(“Company”) has been entered into
as of May 24, 2010. This Agreement promises you severance benefits if, following a Change of
Control, you are terminated without Cause or resign for Good Reason during the Term of this
Agreement. Capitalized terms are defined in the last section of this Agreement.



1. Purpose





The Company considers a sound and vital management team to be essential. Management
personnel who become concerned about the possibility that the Company may undergo a Change
in Control may terminate employment or become distracted. Accordingly, the Board has
determined that appropriate steps should be taken to minimize the distraction certain
executives may suffer from the possibility of a Change in Control. One step is to enter into
this Agreement with you while you hold the position as Chief Executive Officer. Once you no
longer hold this position, except following or in connection with the triggering of
severance benefits as set forth in Section 3 below, this Severance Agreement shall
immediately terminate and be null and void as set forth in Section 20q hereof.



2. Your Agreement





If one or more Potential Changes in Control occur during the Term of this Agreement, you
agree not to resign for at least six full calendar months after a Potential Change in
Control occurs, except as follows: (a) you may resign after a Change in Control occurs; (b)
you may resign if you are given Good Reason to do so; and (c) you may terminate employment
on account of retirement on or after age 65 or because you become unable to work due to
serious illness or injury.



3. Events That Trigger Severance Benefits





	 	a.	 	Termination After a Change in Control







You will receive Severance Benefits under this Agreement if, during the Term of this
Agreement and after a Change in Control has occurred, your employment is terminated
by the Company without Cause (other than on account of your Disability or death) or
you resign for Good Reason.




	 	b.	 	Termination After a Potential Change in Control







You also will receive Severance Benefits under this Agreement if, during the Term of
this Agreement and after a Potential Change in Control has occurred but before a
Change in Control actually occurs, your employment is terminated by the Company
without Cause or you resign for Good Reason, but only if either: (i) you are
terminated at the direction of a Person who has entered into an agreement with the
Company that will result in a Change in Control; or (ii) the event constituting Good
Reason occurs at the direction of such Person.




	 	c.	 	Successor Fails to Assume This Agreement







You also will receive Severance Benefits under this Agreement if, during the Term of
this Agreement, a successor to the Company fails to assume this Agreement, as
provided in Section 12(a).


 


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4. Events That Do Not Trigger Severance Benefits





You will not be entitled to Severance Benefits if your employment ends because you are
terminated for Cause or on account of Disability or because you resign without Good Reason,
retire, or die. Except as provided in Section 3(c), you will not be entitled to Severance
Benefits while you remain protected by this Agreement and remain employed by the Company,
its affiliates, or their successors.



5. Termination Procedures





If you are terminated by the Company after a Change in Control and during the Term of this
Agreement, the Company shall provide you with 30 days’ advance written notice of your
termination, unless you are being terminated for Cause. The notice will indicate why you are
being terminated and will set forth in reasonable detail the facts and circumstances claimed
to provide a basis for your termination. If you are being terminated for Cause, your notice
of termination will include a copy of a resolution duly adopted by the affirmative vote of
not less than 51 % of the entire membership of the Board (at a meeting of the Board called
and held for the purpose of considering your termination (after reasonable notice to you and
an opportunity for you and your counsel to be heard before the Board)) finding that, in the
good faith opinion of the Board, Cause for your termination exists and specifying the basis
for that opinion in detail. If you are purportedly terminated without the notice required by
this Section, your termination shall not be effective.



6. Severance Benefits





	 	a.	 	In General







If you become entitled to Severance Benefits under this Agreement, you will receive
all of the Severance Benefits described in this Section.




	 	b.	 	Lump-Sum Payment in Lieu of Future Compensation







In lieu of any further cash compensation for periods after your employment ends,
other than cash compensation paid pursuant to any agreement governing the terms of a
Change in Control payable to all similarly situated persons, you will be paid a cash
lump sum equal to 2 times your annual base salary in effect when your employment
ends or, if higher, in effect immediately before the Change in Control, Potential
Change in Control, or Good Reason event for which you terminate employment. In
addition, and without duplication, you will be paid a cash lump sum equal to 2 times
the higher of the amounts paid to you (if any) under any existing bonus or incentive
plans in the calendar year preceding the calendar year in which your employment ends
or in the calendar year preceding the calendar year in which the Change in Control
occurred (or in which the Potential Change in Control occurred, if benefits are
payable under Section 3(b)hereof).




	 	c.	 	Incentive Compensation and Options







The Company will pay you a cash lump sum equal to any unpaid incentive compensation
(that is not otherwise paid to you) that you have been allocated or awarded under
any existing bonus or incentive plans for measuring periods completed before you
became entitled to Severance Benefits under this Agreement. All unvested options to
purchase Company common stock will immediately vest and remain exercisable for the
longest period of time permitted
under the applicable stock option plan. All unvested restricted stock awards
awarded to you will immediately vest.


 


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	 	d.	 	Group Insurance Benefit Continuation







During the period that begins when you become entitled to Severance Benefits under
this Agreement and ends on the last day of the 18th calendar month beginning
thereafter, the Company shall provide, at no cost to you or your spouse or
dependents, 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. The Company subsidized health
and dental insurance coverage shall be treated as satisfying the Company’s COBRA
obligations. After this subsidized coverage ends, you, your spouse and dependents
may continue any remaining COBRA coverage at your sole cost and expense.




	 	e.	 	Group 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 and accident benefits (or substantially similar
benefits) it was providing to you and your spouse and dependents 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).




	 	f.	 	Officer Benefits







In lieu of the medical and tax accounting benefits available to the Company’s
officers, you will be entitled to a lump sum payment of $16,000.00.




	 	g.	 	Medical Benefits







The Company provides certain medical benefits to retired CEO’s and Vice Presidents.
If you become entitled to Severance Benefits under this Agreement, then you are
deemed to have retired for purposes of this benefit and the Company shall provide,
at no cost to you, continued medical benefits it was providing you and your spouse
and dependents immediately before you became entitled to Severance Benefits under
this Agreement.



7. Time for Payment





Subject to the provisions of Section 21 hereof, 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)). In no
event will any cash Severance Benefits be paid to you later than March 15 of the calendar
year following the calendar year in which you become entitled to such Severance Benefits.


 


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8. Payment Explanation





When payments are made to you, the Company will provide you with a written statement
explaining how your payments were calculated and the basis for the calculations. This
statement will include any opinions or other advice the 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 9, the Company will provide you with calculations
relating to that limitation and any supporting materials you reasonably need to permit you
to evaluate those calculations.



9. Potential Limitations





	 	a.	 	Golden Parachute Limitation







Your aggregate payments and benefits under this Agreement and all other contracts,
arrangements, or programs shall not exceed the maximum amount that may be paid
without triggering golden parachute penalties under Section 280G and related
provisions of the Internal Revenue Code, as determined in good faith by the
Company’s independent auditors. The preceding sentence shall not apply to the extent
the shareholder approval requirements of Code Section 280G(b)(5) are satisfied. If
your benefits must be reduced to avoid triggering such penalties, the Company shall
reduce your benefits that are not considered deferred compensation subject to Code
Section 409A before it reduces any benefits that are considered deferred
compensation subject to Code Section 409A. If an amount in excess of the limit set
forth in this Section is paid to you, you must repay the excess amount to the
Company on demand, with interest at the rate provided in Code Section 1274(b)(2)(B).
You and the Company agree to cooperate with each other reasonably in connection with
any administrative or judicial proceedings concerning the existence or amount of
golden parachute penalties on payments or benefits you receive.




	 	b.	 	Section 162(m) Limitation







To the extent payments or benefits under this Agreement would not be deductible
under Code Section 162(m) if made or provided when otherwise due under this
Agreement, they shall be made or provided later, immediately after Section 162(m)
ceases to preclude their deduction, with interest thereon at the rate provided in
Code Section 1274(b)(2)(B).



10. 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 as described in Section 20(h) hereof or at the end
of the Term of this Agreement, whichever is earlier. Severance
Benefits under this Agreement are not payable if you are terminated on account of your
Disability.


 


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11. Effect of Reemployment





Your Severance Benefits will not be reduced by any other compensation you earn or could have
earned from another source.



12. Successors





	 	a.	 	Assumption Required







In addition to obligations imposed by law on a successor to the Company, during the
Term of this Agreement the Company will require any successor to all or
substantially all of the business or assets of the Company expressly to assume and
to agree to perform this Agreement in the same manner and to the same extent that
the Company was required to perform. If the Company fails to obtain such an
assumption and agreement before the effective date of a succession, you will be
entitled to Severance Benefits as if you were terminated by the Company without
Cause on the effective date of that succession.




	 	b.	 	Heirs and Assigns







This Agreement will inure to the benefit of, and be enforceable by, your personal or
legal representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If you die while any amount is still payable to you under
this Agreement, that amount will be paid to the executor, personal representative,
or administrator of your estate.



13. Amendments





This Agreement may be modified only by a written agreement executed by you and an authorized
officer of the Company.



14. 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.



15. Claims





	 	a.	 	When Required; Attorneys’ Fees







You do not need to present a formal claim to receive benefits payable under this
Agreement. However, if you believe that your rights under this Agreement are being
violated, you must file a formal claim with the Company in accordance with the
procedures set forth in this Section. The Company will pay your reasonable
attorneys’ fees and related costs in enforcing your rights under this Agreement.




	 	b.	 	Initial Claim







Your claim must be presented to the Company in writing. Within 30 days after
receiving the claim, a claims official appointed by the Company will consider your
claim and issue his or her determination thereon in writing. With your consent, the
initial claim determination period can be extended further. If you can
establish that the claims official failed to respond to your claim in a timely
manner, you may treat the claim as having been denied by the claims official.


 


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	 	c.	 	Claim Decision







If your claim is granted, the benefits or relief you are seeking will be provided.
If your claim is wholly or partially denied, the claims official shall, within three
days, provide you with written notice of the denial, setting forth, in a manner
calculated to be understood by you: (i) the specific reason or reasons for the
denial; (ii) specific references to the provisions on which the denial is based;
(iii) a description of any additional material or information necessary for you to
perfect your claim, together with an explanation of why the material or information
is necessary; and (iv) an explanation of the procedures for appealing denied claims.
If you establish that the claims official has failed to respond to your claim in a
timely manner, you may treat the claim as having been denied by the claims official.




	 	d.	 	Appeal of Denied Claims







You may appeal the claims official’s denial of your claim in writing to an appeals
official designated by the Company (which may be a person, committee, or other
entity) for a full and fair appeal. You must appeal a denied claim within five days
after your receipt of written notice denying your claim, or within 60 days after
such written notice was due, if the written notice was not sent. In connection with
the appeals proceeding, you (or your duly authorized representative) may review
pertinent documents and may submit issues and comments in writing. You may only
present evidence and theories during the appeal that you presented during the
initial claims stage, except for information the claims official requested you to
provide to perfect the claim. You will irrevocably waive any theories you do not in
good faith pursue through the appeal stage, such as by failing to file a timely
appeal request.




	 	e.	 	Appeal Decision







The decision by the appeals official will be made within 60 days after your appeal
request, unless special circumstances require an extension of time, in which case
the decision will be rendered as soon as possible, but not later than ten days after
your appeal request, unless you agree to a greater extension of that deadline. The
appeal decision will be in writing, set forth in a manner calculated to be
understood by you; it will include specific reasons for the decision, as well as
specific references to the pertinent provisions of this Agreement on which the
decision is based.




	 	f.	 	Procedures







The Company will adopt procedures by which initial claims and appeals will be
considered and resolved; different procedures may be established for different
claims. All procedures will be designed to afford you full and fair consideration of
your claim.


 


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	 	g.	 	Arbitration







In the event that any dispute arises, following satisfaction of the claim procedures
outlined in this Section 15, related to the validity, interpretation, enforcement or
performance of this Agreement, the dispute shall be submitted to binding arbitration
in accordance with the Employment Rules of the American Arbitration Association.
The aggrieved party must give written notice of any claim to the other party no
later than the expiration of the statute of limitations (deadline for filing) that
the law prescribes for the claim. Otherwise, the claim shall be void and deemed
waived. The arbitrator may award any remedy that would otherwise be available to a
court of competent jurisdiction. The decision of the arbitrator shall be final and
binding and shall be fully enforceable in any court having jurisdiction and venue
over the parties. The arbitrator shall have no power to alter, modify, ignore, or
otherwise deviate from the express terms of this Agreement, and the arbitrator shall
be bound by controlling law. The arbitrator’s decision shall be provided to the
parties in writing and shall succinctly set forth the arbitrator’s findings of fact,
conclusions of law, and remedy, if any. The cost of such arbitration shall be paid
by the Company, except you shall pay an administrative fee equivalent to the filing
fee to initiate a similar claim in the local court of general jurisdiction if you
are the party initiating the claim. The parties hereto agree that any action to
compel arbitration pursuant to this Agreement may be brought in the appropriate
Virginia state court, and in connection with such action to compel, the laws of
Virginia shall control. Application may also be made to such court for confirmation
of any decision or award of the arbitrator, for an order of enforcement and for any
other remedies which may be necessary to effectuate such decision or award. The
parties hereto hereby consent to the jurisdiction of the arbitrator and of such
court and waive any objection to the jurisdiction of such arbitrator and court.



16. Limitation on Employee Rights





This Agreement does not give you the right to be retained in the service of the Company.



17. 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.



18. 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.



19. Giving Notice





	 	a.	 	To the Company







All communications from you to the Company relating to this Agreement must be sent
to the Company to its principal business office in Springfield, Virginia, in
writing, by registered or certified mail, or delivered personally.




	 	b.	 	To You







All communications from the Company to you relating to this Agreement must be sent
to you in writing, by registered or certified mail, or delivered personally,
addressed as indicated at the end of this Agreement.


 


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20. Definitions





	 	a.	 	Agreement







“Agreement” means this contract, as amended.




	 	b.	 	Beneficial Owner







“Beneficial Owner” has the meaning set “forth in Rule 13d-3 under the Exchange Act.




	 	c.	 	Board







“Board” means the Board of Directors of the Company.




	 	d.	 	Cause







“Cause” means any of the following:




	 	(1)	 	you fail to carry out assigned duties after being given prior
warning and an opportunity to remedy the failure,







	 	(2)	 	you breach any material term of any employment agreement with
the Company,







	 	(3)	 	you engage in fraud, dishonesty, willful misconduct, gross
negligence, or breach of fiduciary duty (including without limitation any
failure to disclose a conflict of interest)in the performance of your duties
for the Company, or







	 	(4)	 	you are convicted of a felony or crime involving moral
turpitude.







	 	e.	 	Change in Control







“Change in Control” means the first of the following to occur after the date of this
Agreement:




	 	(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;
provided that any individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (as the term is used in Rule
14a-11 of Regulation 14A issued under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board shall not be considered an “approved replacement”.


 


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	 	(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)	 	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 of transactions.




	 	f.	 	Code







“Code” means the Internal Revenue Code of 1986, as amended.




	 	g.	 	Company







“Company” means Versar, Inc. and any successor to its business or assets that (by
operation of law, or otherwise) assumes and agrees to perform this Agreement.
However, for purposes of determining whether a Change in Control has occurred in
connection with such a succession, the successor shall not be considered to be the
Company.




	 	h.	 	Disability







“Disability” means that, due to physical or mental illness which is determined to be
total and permanent by a physician selected by the Company or its insurer and
acceptable to you or your legal representative: (i) you have been absent on a
full-time basis from your duties with the Company for 180 consecutive business days;
(ii) the Company has notified you more than 30 days prior to your intended
termination date 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.
Following the expiration of the 30 day period specified above, unless you have
resumed full- time performance of your duties, your employment with the Company
shall terminate immediately.




	 	i.	 	Exchange Act







“Exchange Act” means the Securities Exchange Act of 1934, as amended.


 


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	 	j.	 	Good Reason







“Good Reason” means the occurrence of any of the following events arising without
your consent:




	 	(1)	 	Demotion







Your duties and responsibilities are materially 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), or there is a material and adverse
change in your reporting responsibilities or in the size of the budget you
administer in effect immediately before the Change in Control (or, with respect
to Section 3(b), the Potential Change in Control), provided that no demotion
will be deemed to occur solely 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 materially reduced.




	 	(3)	 	Relocation







Your principal office is materially relocated, which increases your one-way
commute to work by more than 50 miles, based on your residence when the transfer
was announced.




	 	(4)	 	Breach of Contract







The Company materially breaches this Agreement, your employment agreement or any
other agreement between you and the Company pursuant to which you perform
services for the Company or compensation and benefits are provided to you.




	 	(5)	 	Improper Termination







The Company terminates your employment, other than pursuant to a notice of
termination satisfying the requirements of Section 5 hereof.




However, an event that is or would constitute Good Reason shall cease to be Good Reason if:
(a) you fail to provide written notice to the Company within 90 days following the initial
existence of the event described in paragraphs (1) through (4) above; (b) the Company
reverses or otherwise cures the event within 30 days of receiving such notice; (c) you do
not terminate employment within 180 days after the event occurs; or (d) 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.




	 	k.	 	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 the Company
for its executive officers and other key employees.


 


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	 	l.	 	Management Action







“Management Action” means any event, circumstance, or transaction occurring during
the six-month period following a Potential Change in Control that results from the
action of a Management Group.




	 	m.	 	Person







“Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified
and used in Section 13(d) of that Act, and shall include a “group,” as defined in
Rule 13d-5 promulgated thereunder. However, a Person shall not include: (i) the
Company or any of its subsidiaries; (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its subsidiaries;
(iii) an underwriter temporarily holding securities pursuant to an offering of such
securities; or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock of
the Company.




	 	n.	 	Potential Change in Control







“Potential Change in Control” means that any of the following has occurred during
the term of this Agreement, excluding any event that is Management Action:




	 	(1)	 	Agreement Signed







The Company enters into an agreement that will result in a Change in Control.




	 	(2)	 	Notice of Intent to Seek Change in Control







The Company or any Person publicly announces an intention to take or to consider
taking actions that will result in a Change in Control.




	 	(3)	 	Board Declaration







With respect to this Agreement, the Board adopts a resolution declaring that a
Potential Change in Control has occurred.




	 	o.	 	Separation from Service







“Separation from Service” shall have the meaning set forth in Treas. Reg. §
1.409A-1(h).




	 	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 the date of this
Agreement and ends on the




	 	(1)	 	earlier of:







	 	a.	 	May 23, 2012; or







	 	b.	 	Your ceasing to serve in the position of Chief
Executive Officer prior to the occurrence of a Potential Change in
Control or Change in Control; or




 


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	 	(2)	 	Change in Control







The last day of the 24th calendar month beginning after the calendar month in
which a Change in Control occurred during the Term of this Agreement. After a
Change in Control occurs, the end of the Term of this Agreement shall solely be
determined under this Section 20 (q)(2).



21. Section 409A





	 	a.	 	Notwithstanding anything in this Agreement to the contrary, if any amounts that
become due under this Agreement on account of your termination of employment constitute
“nonqualified deferred compensation” within the meaning of Code Section 409A, payment
of such amounts shall not commence until you incur a Separation from Service.







	 	b.	 	Notwithstanding any provision to the contrary in this Agreement (other than
Section 21(c) below) no payments to which you become entitled under this Agreement
shall be made or paid to you prior to the earlier of (1) the expiration of the
six-month period measured from the date of your Separation from Service with the
Company or (2) the date of your death, if you are deemed at the time of the Separation
from Service a “specified employee” within the meaning of Code Section 409A, and such
delayed commencement is otherwise required in order to avoid a prohibited distribution
under Code Section 409A(a)(2). Upon expiration of the applicable deferral period, all
payments deferred pursuant to this Section 21(b) shall be paid to you in a lump sum,
and any remaining payments due under this Agreement shall be paid in accordance with
the remaining payment dates specified herein.







	 	c.	 	The six-month holdback set forth in Section 21(b) above shall not be applicable
to any cash Severance Benefits under Section 6 that are paid to you by March 15 of the
calendar year following the calendar year in which you become entitled to Severance
Benefits.




 


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IN WITNESS WHEREOF, the parties have executed this Agreement as if the date set forth above.



	 	 	 	 	 
	Date June 29, 2010

	 	By: Versar, Inc.	 	 
	 
	 	 	 	 
	 

	 	/s/ Paul J. Hoeper
 

Chairman of the Board
	 	 
	 
	 	 	 	 
	Date July 2, 2010

	 	/s/ Anthony L. Otten
 

Anthony L. Otten
	 	 






Company notices to you shall be addressed as follows (or in any other manner you notify the Company
to use):



4821 Woodway Lane, N.W.




Washington, DC 20016





 


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