exv10w104



 



Exhibit 10.104 


EMPLOYMENT AGREEMENT 


This Employment Agreement (this “Agreement”) is made and entered into this 1st
day of December 2002, by and between Versar, Inc., a Delaware corporation
(“Company”), its successors and assigns, and Theodore M. Prociv (“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 principle 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 $235,000, whichever is greater.
	 
	 	4.2.	 	Incentive Compensation: In addition to the Base Salary, you shall
be eligible to earn incentive compensation in the form of cash or
securities under bonus and incentive programs as may be in effect from
time to time for executive officers of Company generally (“Incentive
Compensation”).
	 
	 	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.



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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 on the date
hereof, and shall continue for a period of one year (1) year. 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 his 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 his performance of your duties hereunder if such permanent
disability is covered by Workers Compensation or long term disability
insurance, or both; or (vi) if you die. For eight weeks following
Company’s termination of this Agreement with cause pursuant to this
Section 7.1, Company shall continue to pay your Base Salary in effect
as of the date of termination and make available the benefits set forth
in Section 5. All other obligations of Company hereunder shall cease as
of the date of termination.
	 
	 	7.2.	 	Termination Without Cause: Company shall be entitled to terminate
your employment and services without cause upon, not less than sixty
(60) days, prior written notice to you specifying the date of
termination. If Company terminates your employment without cause, at
any time during the one-year term, Company shall give you a lump sum
payment equivalent of one year, 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 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



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	 	 	 	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 could 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 65 or because you become unable to work due to serious illness or
injury.


10.     Events That Trigger Severance Benefits 


	 	10.1.	 	     Termination After a Change in Control: You will receive Severance
Benefits under this Agreement if, during the Term of this Agreement and
after a Change in Control has occurred, your employment is terminated
by the Company without Cause (other than on account of your Disability
or death) or you resign for Good Reason.
	 
	 	10.2.	 	     Termination After a Potential Change in Control: You also will
receive Severance Benefits under this Agreement if, during the Term of
this Agreement and after a Potential Change in Control has occurred but
before a Change in Control actually occurs, your employment is
terminated by the Company without Cause or you resign for Good Reason,
but only if either: (i) you are terminated at the direction of a Person
who has entered into an agreement with the Company that will result in
a Change in Control; or (ii) the event constituting Good Reason occurs
at the direction of such Person.
	 
	 	10.3.	 	     Successor Fails to Assume This Agreement: You also will receive
Severance Benefits under this Agreement if, during the Term of this
Agreement, a successor to the Company fails to assume this Agreement,
as provided in Section 20.1.



11.     Events That Do Not Trigger Severance Benefits 

You will not be entitled to Severance Benefits if your employment ends because
you are terminated for Cause or because of Disability or because you resign
without Good Reason, retire, or die. Except as provided in Section 10.3, you
will not be entitled to Severance Benefits while you remain protected by this
Agreement and remain employed by the Company, its affiliates, or their
successors.


12.     Termination Procedures 

If you are terminated by the Company after a Change in Control and during the
Term of this Agreement, the Company shall provide you with 30 days’ advance
written notice of your termination, unless you are


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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 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


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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 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.


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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.



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.



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	 	22.4.	 	      Appeal of Denied Claims: You may appeal the claims official’s
denial of your claim in writing to an appeals official designated by
the Company (which may be a person, committee, or other entity) for a
full and fair appeal. You must appeal a denied claim within fifteen
days after your receipt of written notice denying your claim, or within
60 days after such written notice was due, if the written notice was
not sent. In connection with the appeals proceeding, you (or your duly
authorized representative) may review pertinent documents and may
submit issues and comments in writing. You may only present evidence
and theories during the appeal that you presented during the initial
claims stage, except for information the claims official requested you
to provide to perfect the claim. You will irrevocably waive any
theories you do not in good faith pursue through the appeal stage, such
as by failing to file a timely appeal request.
	 
	 	22.5.	 	      Appeal Decision: The decision by the appeals official will be made
within 10 days after your appeal request, unless special circumstances
require an extension of time, in which case the decision will be
rendered as soon as possible, but not later than fifteen days after
your appeal request, unless you agree to a greater extension of that
deadline. The appeal decision will be in writing, set forth in a manner
calculated to be understood by you; it will include specific reasons
for the decision, as well as specific references to the pertinent
provisions of this Agreement on which the decision is based. If you do
not receive the appeal decision by the date it is due, you may deem
your appeal to have been denied.
	 
	 	22.6.	 	      Procedures: The Company will adopt procedures by which initial
claims and appeals will be considered and resolved; different
procedures may be established for different claims. All procedures will
be designed to afford you full and fair consideration of your claim.



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 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.



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	 	24.3.	 	     Binding Effect: In the event that any part of this Section 24
shall be deemed by a court of competent jurisdiction to be in violation
of applicable law for any reason whatsoever, than such part shall not
be deemed to be void, but shall be deemed to be modified so as to be
valid and enforceable, and the remaining provisions of this Section 24
or of this Agreement shall not be affected. The provisions of Section
24 shall survive the termination of your employment for any reason.



25.     Confidentiality and Non-Disclosure 


	 	25.1.	 	     Prohibition: You understand and acknowledge that the success of
Company’s business is dependent upon the secrecy and non-disclosure of
many confidential plans, procedures and methods. Therefore, you agree
that you will not directly or indirectly disclose to any person or use
for your own purpose any confidential information, records, data,
formulae, specifications, customer lists, ideas, inventions, plans
concerning business or product development, business procedures,
contract proposals or such proprietary information or other trade
secrets of Company, its subsidiaries or affiliates (“Confidential
Information”) provided such information is marked as such or you have
reason to know it is confidential. Upon termination of this Agreement
and employment hereunder, You agree to promptly deliver to Company all
papers, records, files, other documents and Confidential Information
belonging to Company, its subsidiaries and affiliates and to not retain
any copies thereof.
	 
	 	25.2.	 	     Remedies for Breach: You acknowledge that the damage to Company,
its subsidiaries and affiliates resulting from a breach of this Section
25 may cause irreparable injury. Therefore, in the event of any such
breach, Company, its subsidiaries and affiliates shall be entitled to
seek such remedies as are available at law or equity to restrain and
enjoin you from continuing to violate the provisions of this Section
25.
	 
	 	25.3.	 	     Binding Effect: The provisions of Section 25 shall survive the
termination of this Agreement and your employment for any reason.



26.     Results and Proceeds 



	 	26.1.	 	     Ownership: As your employer, Company shall own all rights in and
to the results and proceeds connected with or arising out of, directly
or indirectly, your services hereunder. You hereby assign to Company
all 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 designates and appoints Company, and its duly authorized
officers and agents, as his agent and attorney-in-fact, whose power is
coupled with an interest, to act for and



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	 	 	 	in your behalf and stead, to execute such documents and to do all other
lawful acts to protect Company’s interest in any such copyright,
trademark, patent or other proprietary right with the same legal force
and effect as if executed by you.



27.     Amendments 

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


28.     Validity 

The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.


29.     Counterparts 

This Agreement may be executed in several counterparts, each of which will be
deemed an original, but all of which will constitute one and the same
instrument.


30.     Giving Notice 


	 	30.1.	 	     To the Company: All communications from you to the Company
relating to this Agreement must be sent to the Company to its principal
business office in Springfield, Virginia, in writing, by registered or
certified mail, or delivered personally.
	 
	 	30.2.	 	     To You: All communications from the Company to you relating to
this Agreement must be sent to you in writing, by registered or
certified mail, or delivered personally, addressed as indicated at the
end of this Agreement.



31.     Conformity with the Immigration Reform and Control Act of 1986 

Upon request, you agree to furnish Company with all documentation needed to
satisfy the requirements of the Immigration Reform and Control Act of 1986.


32.     Waiver 

The failure of either party to insist, in anyone 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.     Definitions 


	 	(a)	 	Agreement
	 
	 	 	 	“Agreement” means this contract, as amended.
	 
	 	(b)	 	Base Salary



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	 	 	 	“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, excluding any event that is Management Action:




	 	 	 	 	 
	 	 	
(1)
	 	Acquisition of Controlling Interest: Any Person becomes
the Beneficial Owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power
of the Company’s then outstanding securities. In applying the
preceding sentence, securities acquired directly from the Company
or its affiliates, with the company’s approval by or for the
Person, shall not be taken into account.
	 	 	 	 	 
	 	 	
(2)
	 	Change in Board Control: During the term of this
Agreement, individuals who constituted the Board as of the date
of this Agreement (or their approved replacements, as defined in
the next sentence) cease for any reason to constitute a majority
of the Board. A new director shall be considered an “approved
replacement” director if his or her election (or nomination for
election) was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or were themselves approved replacement
directors.
	 	 	 	 	 
	 	 	
(3)
	 	Merger Approved: The shareholders of the Company
approve a merger or consolidation of the Company with any other
corporation unless: (a) the voting securities of the Company
outstanding immediately before the merger or consolidation would
continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; and (b) no Person
acquires more than 25% of the combined voting power of the
Company’s then outstanding securities.



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(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.




	 	(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 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.



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(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.
	 
	 	(n)	 	Management Action
	 
	 	 	 	“Management Action” means any event, circumstance, or transaction
occurring during the six-month period following a Potential Change in
Control that result from the action of a Management Group.
	 
	 	(o)	 	Management Group
	 
	 	 	 	“Management Group” means any entity or group that includes, is affiliated
with, or is wholly or partly controlled by one or more executive officers
of the Company in office before a Potential Change in Control.
	 
	 	(p)	 	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



38






 





	 	 	 	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.
	 
	 	(q)	 	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.




	 	(r)	 	Severance Benefits
	 
	 	 	 	“Severance Benefits” means your benefits under Section 6 of this
Agreement.
	 
	 	(s)	 	Term of this Agreement
	 
	 	 	 	“Term of this Agreement” means the period that commences on the date of
this Agreement and ends on the earlier of:




	 	 	 	 	 
	 	 	
(1)
	 	Expiration: November 30,2003; 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/ Theodore M. Prociv
	 	 
	 	

	 	Theodore M. Prociv
	 	 
	 	/S/ Benjamin M. Rawls
	 	 
	 	

	 	Benjamin M. Rawls
	 	Chairman of the Board




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