Exhibit 10.108
**EMPLOYMENT AGREEMENT**
This Employment Agreement (this “Agreement”) is made and entered into this 1stday 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 certainseverance benefits during the Term of this Agreement. Capitalized terms aredefined in the last section of the Agreement.
**1. Purpose**
The Company considers a sound and vital management team to be essential. TheCompany desires to assure itself of your services, which you are willing toprovide. Further, management personnel who become concerned about thepossibility that the Company may undergo a Change in Control may terminateemployment or become distracted. Accordingly, the Board has determined thatappropriate steps should be taken to minimize the distraction executives maysuffer from the possibility of a Change in Control. One step is to enter intothis Agreement with you.
**2. Employment**
Company hereby employs you, and you accept employment with Company on the termsand conditions set forth in this Agreement.
**3. Duties**
You shall serve as President and Chief Executive Officer of the Company. Underthe direction of the Board of Directors, you shall perform all assigned dutiesreasonably required of an employee in such positions, shall personally,diligently, and faithfully perform these duties to the best of your ability, ona full-time and exclusive basis. Your principal office will be located inSpringfield, Virginia.
**4. Compensation**
Your compensation for the services performed under this Agreement shall consistof a Base Salary and Incentive Compensation, if any, as described below:
 **4.1.** **Base Salary**: You shall receive the base salary approved byCompany’s Board of Directors, payable in regular bi-weekly installments(the “Base Salary”). The Base Salary will be reviewed annually by theBoard of Directors in accordance with standard salary review proceduresin effect from time to time for executive officers of Company. In noevent shall the Base Salary be less than the Base Salary being paid toyou on the date of this Agreement, unless you agree to a reduction. Inthe event that your employment with Company is terminated as providedin this Agreement, the Base Salary shall be deemed your then currentBase Salary or $235,000, whichever is greater.  **4.2.** **Incentive Compensation**: In addition to the Base Salary, youshall be eligible to earn incentive compensation in the form of cash orsecurities under bonus and incentive
28

 

   programs as may be in effect from time to time for executive officersof Company generally (“Incentive Compensation”).  **4.3.** **Withholding**: You agree and acknowledge that Company willwithhold from your compensation all taxes and other amounts, whichCompany is required by law to withhold, including without limitation(i) federal income taxes, (ii) state income taxes, (iii) county, cityor other local income taxes, and (iv) social security taxes.
**5. Benefits**
 **5.1.** **Generally**: You shall be entitled to receive any and allbenefits made available to executive officers of Company generally andsuch other benefits as the Board of Directors in its discretion maymake available to you from time to time.  **5.2.** **Insurance**: You shall be eligible to participate in allmedical, hospitalization, dental, life, disability and other insuranceplans as are in effect from time to time for executive officers ofCompany generally.  **5.3.** **Personal Leave**: You shall be entitled to take five (5) weeksof paid personal leave annually.  **5.4.** **Reimbursement for Reasonable Business Expenses**: Companyshall reimburse you for customary and reasonable expenses incurred inperforming your duties pursuant to this Agreement, in accordance withCompany’s then current reimbursement policy (including appropriateitemization and substantiation of expenses incurred).
**6. Term**
Subject to early termination of this Agreement in accordance with Section 7 or8 below, the term of your employment hereunder shall commence on the datehereof, and shall continue for a period of one year (1) year. You agree andacknowledge that Company has no obligation to renew this Agreement or tocontinue your employment after the one-year term.
**7. Termination by Company**
 **7.1.** **Termination with Cause**: Company shall be entitled toterminate your employment and services immediately upon written noticeto you, except in the case of death, specifying the date of terminationin the event that: (i) you fail to carry out assigned duties afterbeing given prior warning and an opportunity to remedy the failure; or(ii) you breach any material term of this Agreement; (iii) you engagein fraud, dishonesty, willful misconduct, gross negligence or breach offiduciary duty (including without limitation any failure to disclose aconflict 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 sixmonths prevents your performance of your duties hereunder if suchpermanent disability is covered by Workers Compensation or long termdisability insurance, or both; or (vi) if you die. For eight weeksfollowing Company’s termination of this Agreement with cause pursuantto this Section 7.1, Company shall continue to pay your Base Salary ineffect as of the date of termination and make available the benefitsset forth in Section 5. All other obligations of Company hereundershall cease as of the date of termination.
29

 

 **7.2.** **Termination Without Cause**: Company shall be entitled toterminate your employment and services without cause upon, not lessthan sixty (60) days, prior written notice to you specifying the dateof termination. If Company terminates your employment without cause,at any time during the one-year term, Company shall give you a lump sumpayment equivalent of one year’s Base Salary, any IncentiveCompensation to which you would have been entitled as of the date oftermination, any deferred compensation, any accrued personal leave andwill continue to make available the benefits set forth in Section 5 fortwelve (12) months. All other obligations of Company hereunder shallcease as of the date of termination. Notwithstanding the foregoing,during the eighteen months immediately following Company’s terminationof this Agreement without cause, you shall be entitled to the vestingof any and all stock options issued by Company pursuant to itsIncentive Stock Option Plan in accordance with the vesting schedule inyour grant of options, and vesting of any and all other options,warrants, or shares, and you shall have the right to exercise suchoptions or warrants, or purchase such shares under the same terms andconditions applicable to you prior to termination.
**8. Termination by You**
You may terminate your employment and services at any time and for any reasonby giving Company at least thirty (30) days’ prior written notice specifyingthe date of termination. If you terminate the Agreement in accordance withthis 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 forcause under Section 7.1 above), Company shall continue to pay you the BaseSalary in effect as of the date of termination, and any Incentive Compensationto which you would have been entitled as of the date of termination, anydeferred compensation, any accrued personal leave and continue to makeavailable the benefits set forth in Section 5 until the date of termination.All other obligations of Company hereunder shall cease as of the date oftermination.
**9. Your Agreement on Change in Control**
If one or more Potential Changes in Control occur during the Term of thisAgreement, you agree not to resign for at least six full calendar months aftera Potential Change in Control occurs, except as follows: (a) you may resignafter a Change in Control occurs; (b) you may resign if you are given GoodReason to do so; and (c) you may terminate employment on account of retirementon or after age 65 or because you become unable to work due to serious illnessor injury.
**10. Events That Trigger Severance Benefits**
 **10.1.** **Termination After a Change in Control**: You will receiveSeverance Benefits under this Agreement if, during the Term of thisAgreement and after a Change in Control has occurred, your employmentis terminated by the Company without Cause (other than on account ofyour Disability or death) or you resign for Good Reason.  **10.2.** **Termination After a Potential Change in Control**: You alsowill receive Severance Benefits under this Agreement if, during theTerm of this Agreement and after a Potential Change in Control hasoccurred but before a Change in Control actually occurs, youremployment is terminated by the Company without Cause or you resign forGood Reason, but only if either: (i) you are terminated at thedirection of a Person who has entered into an agreement with theCompany that will result in a Change in
30

 

   Control; or (ii) the event constituting Good Reason occurs at thedirection of such Person.  **10.3.** **Successor Fails to Assume This Agreement**: You also willreceive Severance Benefits under this Agreement if, during the Term ofthis Agreement, a successor to the Company fails to assume thisAgreement, 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 becauseyou are terminated for Cause or because of Disability or because you resignwithout Good Reason, retire, or die. Except as provided in Section 10.3, youwill not be entitled to Severance Benefits while you remain protected by thisAgreement and remain employed by the Company, its affiliates, or theirsuccessors.
**12. Termination Procedures**
If you are terminated by the Company after a Change in Control and during theTerm of this Agreement, the Company shall provide you with 30 days’ advancewritten notice of your termination, unless you are being terminated for Cause.The notice will indicate why you are being terminated and, will set forth inreasonable detail, the facts and circumstances claimed to provide a basis foryour termination. If you are being terminated for Cause, your notice oftermination will include a copy of a resolution duly adopted by the affirmativevote of not less than 51 % of the entire membership of the Board (at a meetingof 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 tobe heard before the Board)) finding that, in the good faith opinion of theBoard, Cause for your termination exists and specifying the basis for thatopinion in detail. If you are purportedly terminated without the noticerequired by this Section, your termination shall not be effective.
**13. Severance Benefits**
 **13.1.** **In General**: If you become entitled to Severance Benefitsunder this Agreement, you will receive all of the Severance Benefitsdescribed in this Section.  **13.2.** **Lump-Sum Payment in Lieu of Future Compensation**: In lieu ofany further cash compensation for periods after your employment ends,you will be paid a cash lump sum equal to two times your Base Salary ineffect when your employment ends or*,*if higher, in effect immediatelybefore the Change in Control, Potential Change in Control or GoodReason event for which you terminate employment. In addition, andwithout duplication, you will be paid a cash lump sum equal to 2 timesthe higher of the amounts paid to you (if any) under any existing bonusor incentive plans in the calendar year preceding the calendar year inwhich your employment ends or in the calendar year preceding thecalendar year in which the Change in Control occurred (or in which thePotential Change in Control occurred, if benefits are payable underSection 10.2 hereof).  **13.3.** **Incentive Compensation and Options**: The Company will payyou a cash lump sum equal to any unpaid Incentive Compensation (that isnot otherwise paid to you) that you have been allocated or awardedunder any existing bonus or incentive plans for measuring periodscompleted before you became entitled to Severance Benefits under thisAgreement. All unvested options to purchase Company common stock will
31

 

   immediately vest and remain exercisable for the longest period of timepermitted under the applicable stock option plan.  **13.4.** **Group Insurance Benefit Continuation**: During the periodthat begins when you become entitled to Severance Benefits under thisAgreement and ends on the last day of the 24th calendar month beginningthereafter, the Company shall provide, at no cost to you or your spouseor dependents, the life, disability, accident, and health and dentalinsurance benefits (or substantially similar benefits) it was providingto you and your spouse and dependents immediately before you becameentitled to Severance Benefits under this Agreement (or immediatelybefore a benefit reduction that constitutes Good Reason, if youterminate employment for that Good Reason). These benefits shall betreated as satisfying the Company’s COBRA obligations. After benefitcontinuation under this subsection ends, you and your spouse anddependents 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 becomeentitled to Severance Benefits under this Agreement (e.g., within five daysfollowing your termination of employment). If the amount you are due cannot befinally determined within that period, you will receive the minimum amount towhich you are clearly entitled, as estimated in good faith by the Company. TheCompany will pay the balance you are due (together with interest at the rateprovided in Internal Revenue Code Section 1274(b) (2) (B)) as soon as theamount can be determined, but in no event later than 30 days after youterminate employment. If your estimated payment exceeds the amount you aredue, the excess will be a loan to you, which you must repay to the Companywithin five business days after demand by the Company (together with interestat 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 writtenstatement explaining how your payments were calculated and the basis for thecalculations. This statement will include any opinions or other advice theCompany has received from auditors or consultants as to the calculation of yourbenefits. If your benefit is affected by the golden parachute limitation inSection 17, the Company will provide you with calculations relating to thatlimitation and any supporting materials you reasonably need to permit you toevaluate those calculations.
**16. Relation to Other Severance Programs**
Your Severance Benefits under this Agreement are in lieu of any severance orsimilar benefits that may be payable to you under any other employmentagreement or other arrangement; to the extent any such benefits are paid toyou, they shall be applied to reduce the amount due under this Agreement. ThisAgreement constitutes the entire agreement between you and the Company and itsaffiliates with respect to such benefits.
**17. Potential Limitations**
 **17.1.** **Golden Parachute Limitation**: Your aggregate payments andbenefits under this Agreement and all other contracts, arrangements, orprograms shall not exceed the maximum amount that may be paid withouttriggering golden parachute penalties
32

 

   under Section 280G and related provisions of the Internal RevenueCode, as determined in good faith by the Company’s independentauditors. The preceding sentence shall not apply to the extent theshareholder approval requirements of Code Section 280G (b) (5) aresatisfied. If your benefits must be reduced to avoid triggering suchpenalties, your benefits will be reduced in the priority order youdesignate or, if you fail promptly to designate an order, in thepriority order designated by the Company. If an amount in excess ofthe limit set forth in this Section is paid to you, you must repay theexcess amount to the Company on demand, with interest at the rateprovided in Code Section 1274(b)(2)(B). You and the Company agree tocooperate with each other reasonably in connection with anyadministrative or judicial proceedings concerning the existence oramount of golden parachute penalties on payments or benefits youreceive.  **17.2.** **Section ****162(m)****Limitation**: To the extent payments orbenefits under this Agreement would not be deductible under CodeSection 162(m) if made or provided when otherwise due under thisAgreement, they shall be made or provided later, immediately afterSection 162(m) ceases to preclude their deduction, with interestthereon 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 ofphysical or mental illness, the Company will continue to pay you your fullsalary and provide you all other compensation and benefits payable to you underthe Company’s compensation or benefit plans, programs, or arrangements. Thesepayments will stop if and when your employment is terminated by the Company forDisability or at the end of the Term of this Agreement, whichever is earlier.Severance Benefits under this Agreement are not payable if you are terminatedbecause of your Disability.
**19. Effect of Reemployment**
Your Severance Benefits will not be reduced by any other compensation you earnor could have earned from another source.
**20. Successors**
 **20.1.** **Assumption Required**: In addition to obligations imposed bylaw on a successor to the Company, during the Term of this Agreementthe Company will require any successor to all or substantially all ofthe business or assets of the Company expressly to assume and to agreeto perform this Agreement in the same manner and to the same extentthat the Company was required to perform. If the Company fails toobtain such an assumption and agreement before the effective date of asuccession, you will be entitled to Severance Benefits as if you wereterminated by the Company without Cause on the effective date of thatsuccession.  **20.2.** **Heirs and Assigns**: This Agreement will inure to the benefitof, 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 youunder this Agreement, that amount will be paid to the executor,personal representative, or administrator of your estate.
33

 

**21. Governing Law**
This Agreement creates a “top hat” employee benefit plan subject to theEmployee 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 statutesand common law of the State of Virginia (excluding its choice of laws statutesor common law) shall apply.
**22. Claims (ERISA requirement)**
 **22.1.** **When Required Attorneys’ Fees**: You do not need to present aformal claim to receive benefits payable under this Agreement.However, if you believe that your rights under this Agreement are beingviolated, you must file a formal claim with the Company in accordancewith the procedures set forth in this Section. The Company will payyour reasonable attorneys’ fees and related costs in enforcing yourrights under this Agreement.  **22.2.** **Initial Claim**: Your claim must be presented to the Companyin writing. Within 30 days after receiving the claim, a claimsofficial appointed by the Company will consider your claim and issuehis or her determination thereon in writing. With your consent, theinitial claim determination period can be extended further. If you canestablish that the claims official failed to respond to your claim in atimely manner, you may treat the claim as having been denied by theclaims official.  **22.3.** **Claim Decision**: If your claim is granted, the benefits orrelief you are seeking will be provided. If your claim is wholly orpartially denied, the claims official shall, within three days, provideyou with written notice of the denial, setting forth, in a mannercalculated to be understood by you: (i) the specific reason or reasonsfor the denial; (ii) specific references to the provisions on which thedenial is based; (iii) a description of any additional material orinformation necessary for you to perfect your claim, together with anexplanation of why the material or information is necessary; and (iv)an explanation of the procedures for appealing denied claims. If youestablish that the claims official has failed to respond to your claimin a timely manner, you may treat the claim as having been denied bythe claims official.  **22.4.** **Appeal of Denied Claims**: You may appeal the claimsofficial’s denial of your claim in writing to an appeals officialdesignated by the Company (which may be a person, committee, or otherentity) for a full and fair appeal. You must appeal a denied claimwithin fifteen days after your receipt of written notice denying yourclaim, or within 60 days after such written notice was due, if thewritten notice was not sent. In connection with the appealsproceeding, you (or your duly authorized representative) may reviewpertinent documents and may submit issues and comments in writing. Youmay only present evidence and theories during the appeal that youpresented during the initial claims stage, except for information theclaims official requested you to provide to perfect the claim. Youwill irrevocably waive any theories you do not in good faith pursuethrough the appeal stage, such as by failing to file a timely appealrequest.  **22.5.** **Appeal Decision**: The decision by the appeals official willbe made within 10 days after your appeal request, unless specialcircumstances require an extension of time, in which case the decisionwill be rendered as soon as possible, but not later than fifteen daysafter your appeal request, unless you agree to a greater extension ofthat
34

 

   deadline. The appeal decision will be in writing, set forth in amanner calculated to be understood by you; it will include specificreasons for the decision, as well as specific references to thepertinent provisions of this Agreement on which the decision is based.If you do not receive the appeal decision by the date it is due, youmay deem your appeal to have been denied.
 **22.6.** **Procedures**: The Company will adopt procedures by whichinitial claims and appeals will be considered and resolved; differentprocedures may be established for different claims. All procedureswill be designed to afford you full and fair consideration of yourclaim.
**23. Survival**
This Agreement shall survive any Changes in Control, change in management ofCompany, and any merger, consolidation, reorganization, sale of assets or saleof stock of Company.
**24. Non-Competition and Non-Solicitation**
 **24.1.** **Prohibition**: You acknowledge that Company’s business andemployee relationships are maintained at great expense and effort. Youfurther acknowledge that, by virtue of your employment under thisAgreement, you will have an extensive and unique opportunity toestablish and maintain valuable contacts with Company’s customers andemployees and the opportunity both during and after employment tounfairly compete with Company, its subsidiaries and affiliates.Therefore, you agree that during the term of your employment withCompany and for a period of the balance of the term of this Agreementor twelve (12) months following termination of such employment,whichever is greater, you shall not compete with the business ofCompany, its subsidiaries or affiliates. For the purpose of thisAgreement, activities among others which shall be deemed competitiveinclude: (i) encouraging any customers of Company, its subsidiaries oraffiliates to become a customer of you or of any other person exceptthrough normal competitive bidding; or (ii) encouraging any employee ofCompany, its subsidiaries or affiliates to become your employee oremployee of any other person.  **24.2.** **Remedies for Breach**: You acknowledge that the damage toCompany, its subsidiaries and affiliates resulting from a breach ofthis Section 24 may cause irreparable injury. Therefore, in the eventof any such breach, Company, its subsidiaries and affiliates shall beentitled to seek such remedies as are available at law or equity torestrain and enjoin you from continuing to violate the provisions ofthis Section 24.  **24.3.** **Binding Effect**: In the event that any part of this Section24 shall be deemed by a court of competent jurisdiction to be inviolation of applicable law for any reason whatsoever, than such partshall not be deemed to be void, but shall be deemed to be modified soas to be valid and enforceable, and the remaining provisions of thisSection 24 or of this Agreement shall not be affected. The provisionsof Section 24 shall survive the termination of your employment for anyreason.
**25. Confidentiality and Non-Disclosure**
 **25.1.** **Prohibition**: You understand and acknowledge that thesuccess of Company’s business is dependent upon the secrecy andnon-disclosure of many confidential
35

 

   plans, procedures and methods. Therefore, you agree that you will notdirectly or indirectly disclose to any person or use for your ownpurpose any confidential information, records, data, formulae,specifications, customer lists, ideas, inventions, plans concerningbusiness or product development, business procedures, contractproposals or such proprietary information or other trade secrets ofCompany, its subsidiaries or affiliates (“Confidential Information”)provided such information is marked as such or you have reason to knowit is confidential. Upon termination of this Agreement and employmenthereunder, you agree to promptly deliver to Company all papers,records, files, other documents and Confidential Information belongingto Company, its subsidiaries and affiliates and to not retain anycopies thereof.  **25.2.** **Remedies for Breach**: You acknowledge that the damage toCompany, its subsidiaries and affiliates resulting from a breach ofthis Section 25 may cause irreparable injury. Therefore, in the eventof any such breach, Company, its subsidiaries and affiliates shall beentitled to seek such remedies as are available at law or equity torestrain and enjoin you from continuing to violate the provisions ofthis Section 25.  **25.3.** **Binding Effect**: The provisions of Section 25 shall survivethe termination of this Agreement and your employment for any reason.
**26. Results and Proceeds**
 **26.1.** **Ownership**: As your employer, Company shall own all rightsin and to the results and proceeds connected with or arising out of,directly or indirectly, your services hereunder. You hereby assign toCompany all right, title and interest in and to all intellectualproperty, discoveries and trade secrets which you may solely or jointlyconceive, design, develop, create or suggest or cause to be conceived,designed or developed or created during the term of your employment byCompany, which relate to your employment or Company’s business. Forpurposes of this Agreement, the term “intellectual property” shallinclude, without limitation, any ideas, concepts, literary material,designs, drawings, illustrations, photographs, patentable ideas andmusical compositions. To the extent that any such intellectualproperty may be protected pursuant to applicable copyright law, youacknowledge that such property is a work for hire within the meaning ofsuch law.  **26.2.** **Further Assurances**: You hereby agree to execute anydocuments necessary to evidence Company’s proprietary interest in anyintellectual property, discovery or trade secrets referred to Section26.1 above. In the event Company is unable, for any reason whatsoever,to secure your signature to any lawful and necessary document requiredto apply for protection of, or enforce any rights with respect to, anycopyrights, trademark, patent or other proprietary rights, you herebyirrevocably designate and appoint Company, and its duly authorizedofficers and agents, as your agent and attorney-in-fact, whose power iscoupled with an interest, to act for and in your behalf and stead, toexecute such documents and to do all other lawful acts to protectCompany’s interest in any such copyright, trademark, patent or otherproprietary right with the same legal force and effect as if executedby you.
**27. Amendments**
36

 

This Agreement may be modified only by a written agreement executed by you andan authorized officer of the Company.
**28. Validity**
The invalidity or unenforceability of any provision of this Agreement shall notaffect 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 bedeemed an original, but all of which will constitute one and the sameinstrument.
**30. Giving Notice**
 **30.1.** **To the Company**: All communications from you to the Companyrelating to this Agreement must be sent to the Company to its principalbusiness office in Springfield, Virginia, in writing, by registered orcertified mail, or delivered personally.  **30.2.** **To You**: All communications from the Company to you relatingto this Agreement must be sent to you in writing, by registered orcertified mail, or delivered personally, addressed as indicated at theend 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 tosatisfy 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, uponperformance of the terms or conditions of this Agreement shall not be construedas a waiver or a relinquishment of any right granted hereunder or of the futureperformance of any term or condition.
**33. Resignation from Offices**
Upon termination of your employment, you shall be deemed to have resigned as anofficer and director of Company, its subsidiaries and affiliates, if then soacting, as of the date of such termination.
**34. Benefit**
This Agreement shall be binding upon and inure to the benefit of and shall beenforceable by and against Company, its successors and assigns and you, yourheirs, beneficiaries and legal representatives. This Agreement may be assignedby 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 toidentify and proceed with a transaction to secure a sustainable future for theCompany for example, a financial partner, buyer, merger or acquisitioncandidate. If so directed by the Board of Directors and you are successful incompleting such a transaction, the Company will pay you a success fee to benegotiated based on the size of the transaction and other industry standards.
37

 

**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 yourbasic compensation. This amount is paid in regular bi-weeklyinstallments.  **(c)** ***Beneficial Owner***    “Beneficial Owner” has the meaning set forth in Rule 13d-3 under theExchange 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 givenprior warning and an opportunity to remedy the failure,  **(2)** you breach any material term *of*any employmentagreement with the Company,  **(3)** you engage in fraud, dishonesty, willful misconduct,gross negligence, or breach of fiduciary duty (including withoutlimitation any failure to disclose a conflict of interest)in theperformance of your duties for the Company, or  **(4)** you are convicted of a felony or crime involving moralturpitude.
 **(f)** ***Change in Control***    “Change in Control” means the first of the following to occur after thedate of this Agreement:
 **(1)** *Acquisition of Controlling Interest:*Any Person becomesthe Beneficial Owner, directly or indirectly, of securities ofthe Company representing 25% or more of the combined voting powerof the Company’s then outstanding securities. In applying thepreceding sentence, securities acquired directly from the Companyor its affiliates, with the company’s approval by or for thePerson, shall not be taken into account.  **(2)** *Change in Board Control:*During the term of thisAgreement, individuals who constituted the Board as of the dateof this Agreement (or their approved replacements, as defined inthe next sentence) cease for any reason to constitute a majorityof the Board. A new director shall be considered an “approvedreplacement” director if his or her election (or nomination forelection) was approved by a vote of at least two-thirds of thedirectors then still in office who either were directors at thebeginning of the period or were themselves approved replacementdirectors.  **(3)** *Merger Approved:*The shareholders of the Companyapprove a merger or consolidation of the Company with any othercorporation unless: (a) the voting securities of the Companyoutstanding immediately before the merger or consolidation wouldcontinue to represent (either by remaining outstanding or bybeing converted into voting securities of the surviving entity)at least 75% of the combined voting power of the votingsecurities of the Company or such surviving
38

 

   entity outstanding immediately after such merger or consolidation;and (b) no Person acquires more than 25% of the combined votingpower of the Company’s then outstanding securities.
 **(4)** *Sale of Assets:*The shareholders of the Company approvean agreement for the sale or disposition by the Company of all orsubstantially all of the Company’s assets.  **(5)** *Liquidation or Dissolution:*A complete liquidation ordissolution of the Company  **(6)** *Going Private Transaction:*Any transaction or seriesof transactions not covered in paragraphs (1) through (5) abovethe result of which is the suspension of the Company’s duty tofile reports under the Exchange Act as a result of the remainingnumber of holders of the Company’s common stock following suchtransaction 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, tradesecret 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 assetsthat (by operation of law, or otherwise) assumes and agrees to performthis Agreement. However, for purposes of determining whether a Change inControl has occurred in connection with such a succession, the successorshall not be considered to be the Company.  **(j)** ***Disability***    “Disability” means that, due to physical or mental illness: (i) you havebeen absent from the full-time performance of your duties with theCompany for substantially all of a period of six consecutive months; (ii)the Company has notified you that it intends to terminate you on accountof Disability; and (iii) you do not resume the full-time performance ofyour duties within 30 days after receiving notice of your intendedtermination 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 yourexpress written consent:
 **(1)** *Demotion:*Your duties and responsibilities aresubstantially and adversely altered from those in effectimmediately before the Change in Control (or, with respect toSection 3(b), the Potential Change in Control), other than merelyas a result of the Company ceasing to be a public company, achange 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 toanother location, which increases your one-way commute to work bymore than 50 miles, based on your
39

 

   residence when the transfer was announced or, if you consent to thetransfer, the Company fails to pay (or reimburse you) for allreasonable moving expenses you incur in changing your principalresidence in connection with the relocation and to indemnify youagainst any loss you may realize when you sell your principalresidence in connection with the relocation in an arm’s-length salefor adequate consideration. For purposes of the preceding sentence,your “loss” will be the difference between the actual sales priceof your residence and the higher of: (a) your aggregate investmentin the residence; or (b) the fair market value of the residence, asdetermined by a real estate appraiser designated by you andsatisfactory to the Company.
 **(4)** *Breach of Promise:*The Company fails to pay you anypresent or deferred compensation within seven days after it isdue.  **(5)** *Discontinuance of Compensation Plan Participation:*TheCompany fails to continue, or continue your participation in, anycompensation plan in which you participated immediately beforethe Change in Control (or, with respect to Section 3(b), thePotential Change in Control) that is material to your totalcompensation, unless an equitable substitute arrangement has beenadopted or made available on a basis not materially lessfavorable to you than the plan in effect immediately before theChange in Control (or the Potential Change in Control, ifapplicable), both as to the benefits you receive and your levelof participation relative to other participants.  **(6)** *Discontinuance of Benefits:*The Company stops providingyou with benefits that, in the aggregate, are substantially asvaluable to you as those you enjoyed immediately before theChange in Control (or, with respect to Section 3(b), thePotential 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 therequirements of Section 5.  **(8)** *Notice of Prospective Action:*You are officiallynotified or it is officially announced that the Company will takeany of the actions listed above during the Term of thisAgreement.
   However, an event that is or would constitute Good Reason shall cease tobe Good Reason if: (a) you do not terminate employment within 180 daysafter the event *occurs;*(b) the Company reverses the action or cures thedefault that constitutes Good Reason before you terminate employment; or(c) you were a primary instigator of the Good Reason event and thecircumstances make it inappropriate for you to receive benefits underthis Agreement (e.g., you agree temporarily to relinquish your positionon the occurrence of a merger transaction you negotiate). If you haveGood Reason to terminate employment, you may do so even if you are on aleave 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 paidto you under all bonus, incentive or other programs for performanceadopted 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, asmodified and used in Section 13( d) of that Act, and shall include a“group,” as defined in Rule 13d-5 promulgated thereunder. However, aPerson shall not include: (i) the Company or any of its subsidiaries;(ii) a trustee or other fiduciary holding securities under an employeebenefit plan of the Company or any of its subsidiaries; (iii) anunderwriter temporarily holding securities pursuant to an offering ofsuch securities; or (iv) a corporation owned, directly or indirectly, bythe stockholders of the Company in substantially the same proportions astheir ownership of stock of the Company.  **(o)** ***Potential Change*****in*****Control***    “Potential Change in Control” means that any of the following hasoccurred during the term of this Agreement, [excluding any event that isManagement Action]:
 **(1)** *Agreement Signed:*The Company enters into an agreementthat will result in a Change in Control.  **(2)** *Notice of Intent to Seek Change*in *Control:*The Companyor any Person publicly announces an intention to take or toconsider taking actions that will result in a Change in Control.  **(3)** *Board Declaration:*With respect to this Agreement, theBoard adopts a resolution declaring that a Potential Change inControl has occurred.
 **(p)** ***Severance Benefits***    “Severance Benefits” means your benefits under Section 6 of thisAgreement.  **(q)** ***Term of this Agreement***    “Term of this Agreement” means the period that commences on the date ofthis Agreement and ends on the earlier of:
 **(1)** *Expiration:*November 30, 2004; or  **(2)** *Change*in *Control:*The last day of the 24th calendarmonth beginning after the calendar month in which a Change inControl occurred during the Term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of thedate above written.    /S/ Theodore M. ProcivTheodore M. Prociv    /S/ Amir A. MetryAmir A. MetryCompensation Committee Chairman
41