exv10w108



 





Exhibit 10.108




EMPLOYMENT AGREEMENT




This Employment Agreement (this “Agreement”) is made and entered into this 1st
day of December 2003, 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 principal office will be located in
Springfield, Virginia.




4. Compensation




Your compensation for the services performed under this Agreement shall consist
of a Base Salary and Incentive Compensation, if any, as described below:





	 	4.1.	 	Base Salary: You shall receive the base salary approved by
Company’s Board of Directors, payable in regular bi-weekly installments
(the “Base Salary”). The Base Salary will be reviewed annually by the
Board of Directors in accordance with standard salary review procedures
in effect from time to time for executive officers of Company. In no
event shall the Base Salary be less than the Base Salary being paid to
you on the date of this Agreement, unless you agree to a reduction. In
the event that your employment with Company is terminated as provided
in this Agreement, the Base Salary shall be deemed your then current
Base Salary or $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




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	 	 	 	programs as may be in effect from time to time for executive officers
of Company generally (“Incentive Compensation”).
	 
	 	4.3.	 	Withholding: You agree and acknowledge that Company will
withhold from your compensation all taxes and other amounts, which
Company is required by law to withhold, including without limitation
(i) federal income taxes, (ii) state income taxes, (iii) county, city
or other local income taxes, and (iv) social security taxes.





5. Benefits





	 	5.1.	 	Generally: You shall be entitled to receive any and all
benefits made available to executive officers of Company generally and
such other benefits as the Board of Directors in its discretion may
make available to you from time to time.
	 
	 	5.2.	 	Insurance: You shall be eligible to participate in all
medical, hospitalization, dental, life, disability and other insurance
plans as are in effect from time to time for executive officers of
Company generally.
	 
	 	5.3.	 	Personal Leave: You shall be entitled to take five (5) weeks
of paid personal leave annually.
	 
	 	5.4.	 	Reimbursement for Reasonable Business Expenses: Company
shall reimburse you for customary and reasonable expenses incurred in
performing your duties pursuant to this Agreement, in accordance with
Company’s then current reimbursement policy (including appropriate
itemization and substantiation of expenses incurred).





6. Term




Subject to early termination of this Agreement in accordance with Section 7 or
8 below, the term of your employment hereunder shall commence 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 your duties hereunder;
(iv) you are convicted of a felony or crime involving moral turpitude;
(v) you suffer a permanent and total disability which for at least six
months prevents your performance of your duties hereunder if such
permanent disability is covered by Workers Compensation or long term
disability insurance, or both; or (vi) if you die. For eight weeks
following Company’s termination of this Agreement with cause pursuant
to this Section 7.1, Company shall continue to pay your Base Salary in
effect as of the date of termination and make available the benefits
set forth in Section 5. All other obligations of Company hereunder
shall cease as of the date of termination.




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	 	7.2.	 	Termination Without Cause: Company shall be entitled to
terminate your employment and services without cause upon, not less
than sixty (60) days, prior written notice to you specifying the date
of termination. If Company terminates your employment without cause,
at any time during the one-year term, Company shall give you a lump sum
payment equivalent of one year’s Base Salary, any Incentive
Compensation to which you would have been entitled as of the date of
termination, any deferred compensation, any accrued personal leave and
will continue to make available the benefits set forth in Section 5 for
twelve (12) months. All other obligations of Company hereunder shall
cease as of the date of termination. Notwithstanding the foregoing,
during the eighteen months immediately following Company’s termination
of this Agreement without cause, you shall be entitled to the vesting
of any and all stock options issued by Company pursuant to its
Incentive Stock Option Plan in accordance with the vesting schedule in
your grant of options, and vesting of any and all other options,
warrants, or shares, and you shall have the right to exercise such
options or warrants, or purchase such shares under the same terms and
conditions applicable to you prior to termination.





8. Termination by You




You may terminate your employment and services at any time and for any reason
by giving Company at least thirty (30) days’ prior written notice specifying
the date of termination. If you terminate the Agreement in accordance with
this Section 8.1, then from the date of your notice to the date of termination
(provided that during this notice period, Company does not terminate you for
cause under Section 7.1 above), Company shall continue to pay you the Base
Salary in effect as of the date of termination, and any Incentive Compensation
to which you would have been entitled as of the date of termination, any
deferred compensation, any accrued personal leave and continue to make
available the benefits set forth in Section 5 until the date of termination.
All other obligations of Company hereunder shall cease as of the date of
termination.




9. Your Agreement on Change in Control




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




10. Events That Trigger Severance Benefits





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




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	 	 	 	Control; or (ii) the event constituting Good Reason occurs at the
direction of such Person.
	 
	 	10.3.	 	Successor Fails to Assume This Agreement: You also will
receive Severance Benefits under this Agreement if, during the Term of
this Agreement, a successor to the Company fails to assume this
Agreement, as provided in Section 20.1.





11. Events That Do Not Trigger Severance Benefits




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




12. Termination Procedures




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




13. Severance Benefits





	 	13.1.	 	In General: If you become entitled to Severance Benefits
under this Agreement, you will receive all of the Severance Benefits
described in this Section.
	 
	 	13.2.	 	Lump-Sum Payment in Lieu of Future Compensation: In lieu of
any further cash compensation for periods after your employment ends,
you will be paid a cash lump sum equal to two times your Base Salary in
effect when your employment ends or, if higher, in effect immediately
before the Change in Control, Potential Change in Control or Good
Reason event for which you terminate employment. In addition, and
without duplication, you will be paid a cash lump sum equal to 2 times
the higher of the amounts paid to you (if any) under any existing bonus
or incentive plans in the calendar year preceding the calendar year in
which your employment ends or in the calendar year preceding the
calendar year in which the Change in Control occurred (or in which the
Potential Change in Control occurred, if benefits are payable under
Section 10.2 hereof).
	 
	 	13.3.	 	Incentive Compensation and Options: The Company will pay
you a cash lump sum equal to any unpaid Incentive Compensation (that is
not otherwise paid to you) that you have been allocated or awarded
under any existing bonus or incentive plans for measuring periods
completed before you became entitled to Severance Benefits under this
Agreement. All unvested options to purchase Company common stock will




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	 	 	 	immediately vest and remain exercisable for the longest period of time
permitted under the applicable stock option plan.
	 
	 	13.4.	 	Group Insurance Benefit Continuation: During the period
that begins when you become entitled to Severance Benefits under this
Agreement and ends on the last day of the 24th calendar month beginning
thereafter, the Company shall provide, at no cost to you or your spouse
or dependents, the life, disability, accident, and health and dental
insurance benefits (or substantially similar benefits) it was providing
to you and your spouse and dependents immediately before you became
entitled to Severance Benefits under this Agreement (or immediately
before a benefit reduction that constitutes Good Reason, if you
terminate employment for that Good Reason). These benefits shall be
treated as satisfying the Company’s COBRA obligations. After benefit
continuation under this subsection ends, you and your spouse and
dependents will be entitled to any remaining COBRA rights.





14. Time for Payment




You will be paid your cash Severance Benefits within five days after you become
entitled to Severance Benefits under this Agreement (e.g., within five days
following your termination of employment). If the amount you are due cannot be
finally determined within that period, you will receive the minimum amount to
which you are clearly entitled, as estimated in good faith by the Company. The
Company will pay the balance you are due (together with interest at the rate
provided in Internal Revenue Code Section 1274(b) (2) (B)) as soon as the
amount can be determined, but in no event later than 30 days after you
terminate employment. If your estimated payment exceeds the amount you are
due, the excess will be a loan to you, which you must repay to the Company
within five business days after demand by the Company (together with interest
at the rate provided in Code Section 1274(b)(2)(B)).




15. Payment Explanation




When payments are made to you, the Company will provide you with a written
statement explaining how your payments were calculated and the basis for the
calculations. This statement will include any opinions or other advice the
Company has received from auditors or consultants as to the calculation of your
benefits. If your benefit is affected by the golden parachute limitation in
Section 17, the Company will provide you with calculations relating to that
limitation and any supporting materials you reasonably need to permit you to
evaluate those calculations.




16. Relation to Other Severance Programs




Your Severance Benefits under this Agreement are in lieu of any severance or
similar benefits that may be payable to you under any other employment
agreement or other arrangement; to the extent any such benefits are paid to
you, they shall be applied to reduce the amount due under this Agreement. This
Agreement constitutes the entire agreement between you and the Company and its
affiliates with respect to such benefits.




17. Potential Limitations





	 	17.1.	 	Golden Parachute Limitation: Your aggregate payments and
benefits under this Agreement and all other contracts, arrangements, or
programs shall not exceed the maximum amount that may be paid without
triggering golden parachute penalties




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	 	 	 	under Section 280G and related provisions of the Internal Revenue
Code, as determined in good faith by the Company’s independent
auditors. The preceding sentence shall not apply to the extent the
shareholder approval requirements of Code Section 280G (b) (5) are
satisfied. If your benefits must be reduced to avoid triggering such
penalties, your benefits will be reduced in the priority order you
designate or, if you fail promptly to designate an order, in the
priority order designated by the Company. If an amount in excess of
the limit set forth in this Section is paid to you, you must repay the
excess amount to the Company on demand, with interest at the rate
provided in Code Section 1274(b)(2)(B). You and the Company agree to
cooperate with each other reasonably in connection with any
administrative or judicial proceedings concerning the existence or
amount of golden parachute penalties on payments or benefits you
receive.
	 
	 	17.2.	 	Section 162(m) Limitation: To the extent payments or
benefits under this Agreement would not be deductible under Code
Section 162(m) if made or provided when otherwise due under this
Agreement, they shall be made or provided later, immediately after
Section 162(m) ceases to preclude their deduction, with interest
thereon at the rate provided in Code Section 1274(b)(2)(B).





18. Disability




Following a Change in Control, while you are absent from work as a result of
physical or mental illness, the Company will continue to pay you your full
salary and provide you all other compensation and benefits payable to you under
the Company’s compensation or benefit plans, programs, or arrangements. These
payments will stop if and when your employment is terminated by the Company for
Disability or at the end of the Term of this Agreement, whichever is earlier.
Severance Benefits under this Agreement are not payable if you are terminated
because of your Disability.




19. Effect of Reemployment




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




20. Successors





	 	20.1.	 	Assumption Required: In addition to obligations imposed by
law on a successor to the Company, during the Term of this Agreement
the Company will require any successor to all or substantially all of
the business or assets of the Company expressly to assume and to agree
to perform this Agreement in the same manner and to the same extent
that the Company was required to perform. If the Company fails to
obtain such an assumption and agreement before the effective date of a
succession, you will be entitled to Severance Benefits as if you were
terminated by the Company without Cause on the effective date of that
succession.
	 
	 	20.2.	 	Heirs and Assigns: This Agreement will inure to the benefit
of, and be enforceable by, your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees,
and legatees. If you die while any amount is still payable to you
under this Agreement, that amount will be paid to the executor,
personal representative, or administrator of your estate.




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21. Governing Law




This Agreement creates a “top hat” employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, and it shall be interpreted,
administered, and enforced in accordance with that law; the Company is the
“plan administrator.” To the extent that state law is applicable, the statutes
and common law of the State of Virginia (excluding its choice of laws statutes
or common law) shall apply.




22. Claims (ERISA requirement)





	 	22.1.	 	When Required Attorneys’ Fees: You do not need to present a
formal claim to receive benefits payable under this Agreement.
However, if you believe that your rights under this Agreement are being
violated, you must file a formal claim with the Company in accordance
with the procedures set forth in this Section. The Company will pay
your reasonable attorneys’ fees and related costs in enforcing your
rights under this Agreement.
	 
	 	22.2.	 	Initial Claim: Your claim must be presented to the Company
in writing. Within 30 days after receiving the claim, a claims
official appointed by the Company will consider your claim and issue
his or her determination thereon in writing. With your consent, the
initial claim determination period can be extended further. If you can
establish that the claims official failed to respond to your claim in a
timely manner, you may treat the claim as having been denied by the
claims official.
	 
	 	22.3.	 	Claim Decision: If your claim is granted, the benefits or
relief you are seeking will be provided. If your claim is wholly or
partially denied, the claims official shall, within three days, provide
you with written notice of the denial, setting forth, in a manner
calculated to be understood by you: (i) the specific reason or reasons
for the denial; (ii) specific references to the provisions on which the
denial is based; (iii) a description of any additional material or
information necessary for you to perfect your claim, together with an
explanation of why the material or information is necessary; and (iv)
an explanation of the procedures for appealing denied claims. If you
establish that the claims official has failed to respond to your claim
in a timely manner, you may treat the claim as having been denied by
the claims official.
	 
	 	22.4.	 	Appeal of Denied Claims: You may appeal the claims
official’s denial of your claim in writing to an appeals official
designated by the Company (which may be a person, committee, or other
entity) for a full and fair appeal. You must appeal a denied claim
within fifteen days after your receipt of written notice denying your
claim, or within 60 days after such written notice was due, if the
written notice was not sent. In connection with the appeals
proceeding, you (or your duly authorized representative) may review
pertinent documents and may submit issues and comments in writing. You
may only present evidence and theories during the appeal that you
presented during the initial claims stage, except for information the
claims official requested you to provide to perfect the claim. You
will irrevocably waive any theories you do not in good faith pursue
through the appeal stage, such as by failing to file a timely appeal
request.
	 
	 	22.5.	 	Appeal Decision: The decision by the appeals official will
be made within 10 days after your appeal request, unless special
circumstances require an extension of time, in which case the decision
will be rendered as soon as possible, but not later than fifteen days
after your appeal request, unless you agree to a greater extension of
that




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	 	 	 	deadline. The appeal decision will be in writing, set forth in a
manner calculated to be understood by you; it will include specific
reasons for the decision, as well as specific references to the
pertinent provisions of this Agreement on which the decision is based.
If you do not receive the appeal decision by the date it is due, you
may deem your appeal to have been denied.






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





23. Survival




This Agreement shall survive any Changes in Control, change in management of
Company, and any merger, consolidation, reorganization, sale of assets or sale
of stock of Company.




24. Non-Competition and Non-Solicitation





	 	24.1.	 	Prohibition: You acknowledge that Company’s business and
employee relationships are maintained at great expense and effort. You
further acknowledge that, by virtue of your employment under this
Agreement, you will have an extensive and unique opportunity to
establish and maintain valuable contacts with Company’s customers and
employees and the opportunity both during and after employment to
unfairly compete with Company, its subsidiaries and affiliates.
Therefore, you agree that during the term of your employment with
Company and for a period of the balance of the term of this Agreement
or twelve (12) months following termination of such employment,
whichever is greater, you shall not compete with the business of
Company, its subsidiaries or affiliates. For the purpose of this
Agreement, activities among others which shall be deemed competitive
include: (i) encouraging any customers of Company, its subsidiaries or
affiliates to become a customer of you or of any other person except
through normal competitive bidding; or (ii) encouraging any employee of
Company, its subsidiaries or affiliates to become your employee or
employee of any other person.
	 
	 	24.2.	 	Remedies for Breach: You acknowledge that the damage to
Company, its subsidiaries and affiliates resulting from a breach of
this Section 24 may cause irreparable injury. Therefore, in the event
of any such breach, Company, its subsidiaries and affiliates shall be
entitled to seek such remedies as are available at law or equity to
restrain and enjoin you from continuing to violate the provisions of
this Section 24.
	 
	 	24.3.	 	Binding Effect: In the event that any part of this Section
24 shall be deemed by a court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, than such part
shall not be deemed to be void, but shall be deemed to be modified so
as to be valid and enforceable, and the remaining provisions of this
Section 24 or of this Agreement shall not be affected. The provisions
of Section 24 shall survive the termination of your employment for any
reason.





25. Confidentiality and Non-Disclosure





	 	25.1.	 	Prohibition: You understand and acknowledge that the
success of Company’s business is dependent upon the secrecy and
non-disclosure of many confidential




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





26. Results and Proceeds





	 	26.1.	 	Ownership: As your employer, Company shall own all rights
in and to the results and proceeds connected with or arising out of,
directly or indirectly, your services hereunder. You hereby assign to
Company all right, title and interest in and to all intellectual
property, discoveries and trade secrets which you may solely or jointly
conceive, design, develop, create or suggest or cause to be conceived,
designed or developed or created during the term of your employment by
Company, which relate to your employment or Company’s business. For
purposes of this Agreement, the term “intellectual property” shall
include, without limitation, any ideas, concepts, literary material,
designs, drawings, illustrations, photographs, patentable ideas and
musical compositions. To the extent that any such intellectual
property may be protected pursuant to applicable copyright law, you
acknowledge that such property is a work for hire within the meaning of
such law.
	 
	 	26.2.	 	Further Assurances: You hereby agree to execute any
documents necessary to evidence Company’s proprietary interest in any
intellectual property, discovery or trade secrets referred to Section
26.1 above. In the event Company is unable, for any reason whatsoever,
to secure your signature to any lawful and necessary document required
to apply for protection of, or enforce any rights with respect to, any
copyrights, trademark, patent or other proprietary rights, you hereby
irrevocably designate and appoint Company, and its duly authorized
officers and agents, as your agent and attorney-in-fact, whose power is
coupled with an interest, to act for and in your behalf and stead, to
execute such documents and to do all other lawful acts to protect
Company’s interest in any such copyright, trademark, patent or other
proprietary right with the same legal force and effect as if executed
by you.





27. Amendments




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




28. Validity




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




29. Counterparts




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




30. Giving Notice





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





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




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




32. Waiver




The failure of either party to insist, in any one or more instances, upon
performance of the terms or conditions of this Agreement shall not be construed
as a waiver or a relinquishment of any right granted hereunder or of the future
performance of any term or condition.




33. Resignation from Offices




Upon termination of your employment, you shall be deemed to have resigned as an
officer and director of Company, its subsidiaries and affiliates, if then so
acting, as of the date of such termination.




34. Benefit




This Agreement shall be binding upon and inure to the benefit of and shall be
enforceable by and against Company, its successors and assigns and you, your
heirs, beneficiaries and legal representatives. This Agreement may be assigned
by Company but may not be assigned by you.




35. Success Bonus




The Company’s Board of Director’s may, from time to time, direct you to
identify and proceed with a transaction to secure a sustainable future for the
Company for example, a financial partner, buyer, merger or acquisition
candidate. If so directed by the Board of Directors and you are successful in
completing such a transaction, the Company will pay you a success fee to be
negotiated based on the size of the transaction and other industry standards.




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36. Definitions





	 	(a)	 	Agreement
	 
	 	 	 	“Agreement” means this contract, as amended.
	 
	 	(b)	 	Base Salary
	 
	 	 	 	“Base Salary” means the gross amount of money paid you annually as your
basic compensation. This amount is paid in regular bi-weekly
installments.
	 
	 	(c)	 	Beneficial Owner
	 
	 	 	 	“Beneficial Owner” has the meaning set forth in Rule 13d-3 under the
Exchange Act.
	 
	 	(d)	 	Board
	 
	 	 	 	“Board” means the Board of Directors of the Company.
	 
	 	(e)	 	Cause
	 
	 	 	 	“Cause” means any of the following:






	 	(1)	 	you fail to carry out assigned duties after being given
prior warning and an opportunity to remedy the failure,
	 
	 	(2)	 	you breach any material term of any employment
agreement with the Company,
	 
	 	(3)	 	you engage in fraud, dishonesty, willful misconduct,
gross negligence, or breach of fiduciary duty (including without
limitation any failure to disclose a conflict of interest)in the
performance of your duties for the Company, or
	 
	 	(4)	 	you are convicted of a felony or crime involving moral
turpitude.






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






	 	(1)	 	Acquisition of Controlling Interest: Any Person becomes
the Beneficial Owner, directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power
of the Company’s then outstanding securities. In applying the
preceding sentence, securities acquired directly from the Company
or its affiliates, with the company’s approval by or for the
Person, shall not be taken into account.
	 
	 	(2)	 	Change in Board Control: During the term of this
Agreement, individuals who constituted the Board as of the date
of this Agreement (or their approved replacements, as defined in
the next sentence) cease for any reason to constitute a majority
of the Board. A new director shall be considered an “approved
replacement” director if his or her election (or nomination for
election) was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or were themselves approved replacement
directors.
	 
	 	(3)	 	Merger Approved: The shareholders of the Company
approve a merger or consolidation of the Company with any other
corporation unless: (a) the voting securities of the Company
outstanding immediately before the merger or consolidation would
continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least 75% of the combined voting power of the voting
securities of the Company or such surviving




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	 	 	 	entity outstanding immediately after such merger or consolidation;
and (b) no Person acquires more than 25% of the combined voting
power of the Company’s then outstanding securities.






	 	(4)	 	Sale of Assets: The shareholders of the Company approve
an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.
	 
	 	(5)	 	Liquidation or Dissolution: A complete liquidation or
dissolution of the Company
	 
	 	(6)	 	Going Private Transaction: Any transaction or series
of transactions not covered in paragraphs (1) through (5) above
the result of which is the suspension of the Company’s duty to
file reports under the Exchange Act as a result of the remaining
number of holders of the Company’s common stock following such
transaction or series.






	 	(g)	 	Code
	 
	 	 	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(h)	 	Confidential Information
	 
	 	 	 	“Confidential Information” means any and all Company proprietary, trade
secret or other information identified in Section 25, whether written,
electronic or oral.
	 
	 	(i)	 	Company
	 
	 	 	 	“Company” means Versar, Inc. and any successor to its business or assets
that (by operation of law, or otherwise) assumes and agrees to perform
this Agreement. However, for purposes of determining whether a Change in
Control has occurred in connection with such a succession, the successor
shall not be considered to be the Company.
	 
	 	(j)	 	Disability
	 
	 	 	 	“Disability” means that, due to physical or mental illness: (i) you have
been absent from the full-time performance of your duties with the
Company for substantially all of a period of six consecutive months; (ii)
the Company has notified you that it intends to terminate you on account
of Disability; and (iii) you do not resume the full-time performance of
your duties within 30 days after receiving notice of your intended
termination on account of Disability.
	 
	 	(k)	 	Exchange Act
	 
	 	 	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended.
	 
	 	(l)	 	Good Reason
	 
	 	 	 	“Good Reason” means the occurrence of any of the following without your
express written consent:






	 	(1)	 	Demotion: Your duties and responsibilities are
substantially and adversely altered from those in effect
immediately before the Change in Control (or, with respect to
Section 3(b), the Potential Change in Control), other than merely
as a result of the Company ceasing to be a public company, a
change in your title, or your transfer to an affiliate.
	 
	 	(2)	 	Pay Cut: Your annual Base Salary is reduced.
	 
	 	(3)	 	Relocation: Your principal office is transferred to
another location, which increases your one-way commute to work by
more than 50 miles, based on your




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	 	 	 	residence when the transfer was announced or, if you consent to the
transfer, the Company fails to pay (or reimburse you) for all
reasonable moving expenses you incur in changing your principal
residence in connection with the relocation and to indemnify you
against any loss you may realize when you sell your principal
residence in connection with the relocation in an arm’s-length sale
for adequate consideration. For purposes of the preceding sentence,
your “loss” will be the difference between the actual sales price
of your residence and the higher of: (a) your aggregate investment
in the residence; or (b) the fair market value of the residence, as
determined by a real estate appraiser designated by you and
satisfactory to the Company.






	 	(4)	 	Breach of Promise: The Company fails to pay you any
present or deferred compensation within seven days after it is
due.
	 
	 	(5)	 	Discontinuance of Compensation Plan Participation: The
Company fails to continue, or continue your participation in, any
compensation plan in which you participated immediately before
the Change in Control (or, with respect to Section 3(b), the
Potential Change in Control) that is material to your total
compensation, unless an equitable substitute arrangement has been
adopted or made available on a basis not materially less
favorable to you than the plan in effect immediately before the
Change in Control (or the Potential Change in Control, if
applicable), both as to the benefits you receive and your level
of participation relative to other participants.
	 
	 	(6)	 	Discontinuance of Benefits: The Company stops providing
you with benefits that, in the aggregate, are substantially as
valuable to you as those you enjoyed immediately before the
Change in Control (or, with respect to Section 3(b), the
Potential Change in Control) under the Company’s pension,
savings, deferred compensation, life insurance, medical, health,
disability, accident, vacation, and fringe benefit plans,
programs, and arrangements.
	 
	 	(7)	 	Improper Termination: You are purportedly terminated,
other than pursuant to a notice of termination satisfying the
requirements of Section 5.
	 
	 	(8)	 	Notice of Prospective Action: You are officially
notified or it is officially announced that the Company will take
any of the actions listed above during the Term of this
Agreement.






	 	 	 	However, an event that is or would constitute Good Reason shall cease to
be Good Reason if: (a) you do not terminate employment within 180 days
after the event occurs; (b) the Company reverses the action or cures the
default that constitutes Good Reason before you terminate employment; or
(c) you were a primary instigator of the Good Reason event and the
circumstances make it inappropriate for you to receive benefits under
this Agreement (e.g., you agree temporarily to relinquish your position
on the occurrence of a merger transaction you negotiate). If you have
Good Reason to terminate employment, you may do so even if you are on a
leave of absence due to physical or mental illness or any other reason.
	 
	 	(m)	 	Incentive Compensation
	 
	 	 	 	“Incentive Compensation” means the amount of cash and/or securities paid
to you under all bonus, incentive or other programs for performance
adopted by Company for its executive officers or other key employees.




40









 













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






	 	(1)	 	Agreement Signed: The Company enters into an agreement
that will result in a Change in Control.
	 
	 	(2)	 	Notice of Intent to Seek Change in Control: The Company
or any Person publicly announces an intention to take or to
consider taking actions that will result in a Change in Control.
	 
	 	(3)	 	Board Declaration: With respect to this Agreement, the
Board adopts a resolution declaring that a Potential Change in
Control has occurred.






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






	 	(1)	 	Expiration: November 30, 2004; 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/ Amir A. Metry


Amir A. Metry

Compensation Committee Chairman








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