35

 
     **EMPLOYMENT AGREEMENT**This Employment Agreement (this “Agreement”) is made and entered into this 8th day of February2005, 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 relationshipand certain severance benefits during the Term of this Agreement. Capitalized terms are defined inthe last section of the Agreement.1. PurposeThe Company considers a sound and vital management team to be essential. The Company desires toassure itself of your services, which you are willing to provide. Further, management personnelwho become concerned about the possibility that the Company may undergo a Change in Control mayterminate employment or become distracted. Accordingly, the Board has determined that appropriatesteps should be taken to minimize the distraction executives may suffer from the possibility of aChange in Control. One step is to enter into this Agreement with you.2. EmploymentCompany hereby employs you, and you accept employment with Company on the terms and conditions setforth in this Agreement.3. DutiesYou shall serve as President and Chief Executive Officer of the Company. Under the direction ofthe Board of Directors, you shall perform all assigned duties reasonably required of an employee insuch positions, shall personally, diligently, and faithfully perform these duties to the best ofyour ability, on a full-time and exclusive basis. Your principal office will be located inSpringfield, Virginia.4. CompensationYour compensation for the services performed under this Agreement shall consist of a Base Salaryand Incentive Compensation, if any, as described below:     4.1. Base Salary: You shall receive the base salary approved by Company’s Board ofDirectors, payable in regular bi-weekly installments (the “Base Salary”). The Base Salary will bereviewed annually by the Board of Directors in accordance with standard salary review procedures ineffect from time to time for executive officers of Company. In no event shall the Base Salary beless than the Base Salary being paid to you on the date of this Agreement, unless you agree to areduction. In the event that your employment with Company is terminated as provided in thisAgreement, the Base Salary shall be deemed your then current Base Salary or $285,000, whichever isgreater.     4.2. Incentive Compensation: In addition to the Base Salary, you shall be eligible to earnincentive compensation in the form of cash or securities under bonus and incentive programs as maybe in effect from time to time for executive officers of Company generally (“IncentiveCompensation”).
36

 
     4.3. Withholding: You agree and acknowledge that Company will withhold from yourcompensation all taxes and other amounts, which Company is required by law to withhold, includingwithout limitation (i) federal income taxes, (ii) state income taxes, (iii) county, city or otherlocal income taxes, and (iv) social security taxes.5. Benefits     5.1. Generally: You shall be entitled to receive any and all benefits made available toexecutive officers of Company generally and such other benefits as the Board of Directors in itsdiscretion 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 executiveofficers of Company generally.     5.3. Personal Leave: You shall be entitled to take five (5) weeks of paid personal leaveannually.     5.4. Reimbursement for Reasonable Business Expenses: Company shall reimburse you forcustomary and reasonable expenses incurred in performing your duties pursuant to this Agreement, inaccordance with Company’s then current reimbursement policy (including appropriate itemization andsubstantiation of expenses incurred).6. TermSubject to early termination of this Agreement in accordance with Section 7 or 8 below, the term ofyour employment hereunder shall commence as of December 1, 2004, and shall continue for a period oftwo (2) years. You agree and acknowledge that Company has no obligation to renew this Agreement orto 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 andservices immediately upon written notice to you, except in the case of death, specifying the dateof termination in the event that: (i) you fail to carry out assigned duties after being given priorwarning and an opportunity to remedy the failure; or (ii) you breach any material term of thisAgreement; (iii) you engage in fraud, dishonesty, willful misconduct, gross negligence or breach offiduciary duty (including without limitation any failure to disclose a conflict of interest), inthe performance of your duties hereunder; (iv) you are convicted of a felony or crime involvingmoral turpitude; (v) you suffer a permanent and total disability which for at least six monthsprevents your performance of your duties hereunder if such permanent disability is covered byWorkers Compensation or long term disability insurance, or both; or (vi) if you die. For eightweeks 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 makeavailable the benefits set forth in Section 5. All other obligations of Company hereunder shallcease as of the date of termination.     7.2. Termination Without Cause: Company shall be entitled to terminate your employment andservices without cause upon, not less than sixty (60) days, prior written notice to you specifyingthe date of termination. If Company terminates your employment without cause, at any time duringthe 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, anydeferred compensation, any accrued personal leave and will continue to make available the benefitsset forth in Section 5 for twelve (12) months. All other obligations of Company hereunder shallcease as of the date of termination. Notwithstanding the foregoing, during the eighteen monthsimmediately following Company’s termination of this Agreement without cause, you shall be entitledto the vesting of any and all stock options issued by Company pursuant to its Incentive StockOption Plan in accordance with the vesting schedule in your grant of options, and vesting of anyand all other options, warrants, or shares, and you shall have the right to exercise such optionsor warrants, or purchase such shares under the same terms and conditions applicable to you prior totermination.
37

 
8. Termination by YouYou may terminate your employment and services at any time and for any reason by giving Company atleast thirty (30) days’ prior written notice specifying the date of termination. If you terminatethe Agreement in accordance with this Section 8.1, then from the date of your notice to the date oftermination (provided that during this notice period, Company does not terminate you for causeunder Section 7.1 above), Company shall continue to pay youthe Base Salary in effect as of the date of termination, and any Incentive Compensation to whichyou would have been entitled as of the date of termination, any deferred compensation, any accruedpersonal leave and continue to make available the benefits set forth in Section 5 until the date oftermination. All other obligations of Company hereunder shall cease as of the date of termination.9. Your Agreement on Change in ControlIf one or more Potential Changes in Control occur during the Term of this Agreement, you agree notto resign for at least six full calendar months after a Potential Change in Control occurs, exceptas follows: (a) you may resign after a Change in Control occurs; (b) you may resign if you aregiven Good Reason to do so; and (c) you may terminate employment on account of retirement on orafter 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 thisAgreement if, during the Term of this Agreement and after a Change in Control has occurred, youremployment is terminated by the Company without Cause (other than on account of your Disability ordeath) or you resign for Good Reason.     10.2. Termination After a Potential Change in Control: You also will receive SeveranceBenefits under this Agreement if, during the Term of this Agreement and after a Potential Change inControl has occurred but before a Change in Control actually occurs, your employment is terminatedby the Company without Cause or you resign for Good Reason, but only if either: (i) you areterminated at the direction of a Person who has entered into anagreement with the Company that will result in a Change in Control; or (ii) the event constitutingGood Reason occurs at the direction of such Person.     10.3. Successor Fails to Assume This Agreement: You also will receive Severance Benefits underthis Agreement if, during the Term of this Agreement, a successor to the Company fails to assumethis Agreement, as provided in Section 20.1.11. Events That Do Not Trigger Severance BenefitsYou will not be entitled to Severance Benefits if your employment ends because you are terminatedfor 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 remainprotected by this Agreement and remain employed by the Company, its affiliates, or theirsuccessors.12. Termination ProceduresIf you are terminated by the Company after a Change in Control and during the Term of thisAgreement, 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 terminatedand, will set forth in reasonable detail,the facts and circumstances claimed to provide a basis for your termination. If you are beingterminated for Cause, your notice of termination will include a copy of a resolution duly adoptedby the affirmative vote 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 reasonablenotice to you and an opportunity for you and your counsel to be heard before the
38

 
Board)) finding that, in the good faith opinion of the Board, Cause for your termination exists andspecifying the basis for that opinion in detail. If you are purportedly terminated without thenotice required by this Section, yourtermination shall not be effective.13. Severance Benefits     13.1. In General: If you become entitled to Severance Benefits under this Agreement, you willreceive all of the Severance Benefits described in this Section.     13.2. Lump-Sum Payment in Lieu of Future Compensation: In lieu of any further cashcompensation for periods after your employment ends, you will be paid a cash lump sum equal to twotimes your Base Salary in effect when your employment ends or, if higher, in effect immediatelybefore the Change in Control, Potential Change in Control or Good Reason event for which youterminate employment. In addition, and without duplication, you will be paid a cash lump sum equalto 2 times the higher of the amounts paid to you (if any) under any existing bonus or incentiveplans in the calendar year preceding the calendar year in which your employment ends or in thecalendar year preceding the calendar year in which the Change in Control occurred (or in which thePotential 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 toany unpaid Incentive Compensation (that is not otherwise paid to you) that you have been allocatedor awarded under any existing bonus or incentive plans for measuring periods completed before youbecame entitled to Severance Benefits under this Agreement. All unvested options to purchaseCompany common stock will 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 period that begins when you becomeentitled to Severance Benefits under this Agreement and ends on the last day of the 24th calendarmonth beginning thereafter, the Company shall provide, at no cost to you or your spouse ordependents, the life, disability, accident, and health and dental insurance benefits (orsubstantially similar benefits) it was providing to you and your spouse and dependents immediatelybefore you became entitled to Severance Benefits under this Agreement (or immediately before abenefit 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 benefitcontinuation under this subsection ends, you and your spouse and dependents will be entitled to anyremaining COBRA rights.14. Time for PaymentYou will be paid your cash Severance Benefits within five days after you become entitled toSeverance Benefits under this Agreement (e.g., within five days following your termination ofemployment). If the amount you are due cannot be finally determined within that period, you willreceive the minimum amount to which you are clearly entitled, as estimated in good faith by theCompany. The Company will pay the balance you are due (together with interest at the rate providedin Internal Revenue Code Section 1274(b) (2) (B)) as soon as the amount can be determined, but inno event later than 30 days after you terminate employment. If your estimated payment exceeds theamount you are due, the excess will be a loan to you, which you must repay to the Company withinfive business days after demand by the Company (together with interest at the rate provided in CodeSection 1274(b)(2)(B)).15. Payment ExplanationWhen payments are made to you, the Company will provide you with a written statement explaining howyour payments were calculated and the basis for the calculations. This statement will include anyopinions or other advice the Company has received from auditors or consultants as to thecalculation of your benefits. If your benefit is affected by the golden parachute limitation inSection 17, the Company will provide you with calculations relating to that limitation and anysupporting materials you reasonably need to permit you to evaluate those calculations.
39

 
16. Relation to Other Severance ProgramsYour Severance Benefits under this Agreement are in lieu of any severance or similar benefits thatmay be payable to you under any other employment agreement or other arrangement; to the extent anysuch 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 affiliateswith respect to such benefits.17. Potential Limitations     17.1. Golden Parachute Limitation: Your aggregate payments and benefits under this Agreementand all other contracts, arrangements, or programs shall not exceed the maximum amount that may bepaid without triggering golden parachute penalties under Section 280G and related provisions of theInternal Revenue Code, as determined in good faith by the Company’s independent auditors. Thepreceding sentence shall not apply to the extent the shareholder approval requirements of CodeSection 280G (b) (5) are satisfied. If your benefits must be reduced to avoid triggering suchpenalties, your benefits will be reduced in the priority order you designate or, if you failpromptly to designate an order, in the priority order designated by the Company. If an amount inexcess of the limit set forth in this Section is paid to you, you must repay the excess amount tothe Company on demand, with interest at the rate provided in Code Section 1274(b)(2)(B). You andthe Company agree to cooperate with each other reasonably in connection with any administrative orjudicial proceedings concerning the existence or amount of golden parachute penalties on paymentsor benefits you receive.     17.2. Section 162(m) Limitation: To the extent payments or benefits under this Agreement wouldnot be deductible under Code Section 162(m) if made or provided when otherwise due under thisAgreement, they shall be made or provided later, immediately after Section 162(m) ceases topreclude their deduction, with interest thereon at the rate provided in Code Section 1274(b)(2)(B).18. DisabilityFollowing a Change in Control, while you are absent from work as a result of physical or mentalillness, the Company will continue to pay you your full salary and provide you all othercompensation 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 bythe 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 yourDisability.19. Effect of ReemploymentYour Severance Benefits will not be reduced by any other compensation you earn or could have earnedfrom another source.20. Successors     20.1. Assumption Required: In addition to obligations imposed by law on a successor to theCompany, during the Term of this Agreement the Company will require any successor to all orsubstantially all of the business or assets of the Company expressly to assume and to agree toperform this Agreement in the same manner and to the same extent that the Company was required toperform. If the Company fails to obtain such an assumption and agreement before the effective dateof a succession, you will be entitled to Severance Benefits as if you were terminated by theCompany 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.
40

 
21. Governing LawThis Agreement creates a “top hat” employee benefit plan subject to the Employee Retirement IncomeSecurity Act of 1974, and it shall be interpreted, administered, and enforced in accordance withthat law; the Company is the “plan administrator.” To the extent that state law is applicable, thestatutes and common law of the State of Virginia (excluding its choice of laws statutes or commonlaw) shall apply.22. Claims (ERISA requirement)     22.1. When Required Attorneys’ Fees: You do not need to present a formal claim to receivebenefits payable under this Agreement. However, if you believe that your rights under thisAgreement are being violated, you must file a formal claim with the Company in accordance with theprocedures set forth in this Section. The Company will pay your reasonable attorneys’ fees andrelated costs in enforcing your rights under this Agreement.     22.2. Initial Claim: Your claim must be presented to the Company in writing. Within 30 daysafter receiving the claim, a claims official appointed by the Company will consider your claim andissue his or her determination thereon in writing. With your consent, the initial claimdetermination period can be extended further. If you can establish that the claims official failedto respond to your claim in a timely manner, you may treat the claim as having been denied by theclaims official.     22.3. Claim Decision: If your claim is granted, the benefits or relief you are seeking will beprovided. If your claim is wholly or partially denied, the claims official shall, within threedays, provide you with written notice of the denial, setting forth, in a manner calculated to beunderstood by you: (i) the specific reason or reasons for the denial; (ii) specific references tothe provisions on which the denial is based; (iii) a description of any additional material orinformation necessary for you to perfect your claim, together with an explanation of why thematerial or information is necessary; and (iv) an explanation of the procedures for appealingdenied claims. If you establish that the claims official has failed to respond to your claim in atimely 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 inwriting to an appeals official designated by the Company (which may be a person, committee, orother entity) for a full and fair appeal. You must appeal a denied claim within fifteen days afteryour receipt of written notice denying your claim, or within 60 days after such written notice wasdue, if the written notice was not sent. In connection with the appeals proceeding, you (or yourduly authorized representative) may review pertinent documents and may submit issues and commentsin writing. You may only present evidence and theories during the appeal that you presented duringthe initial claims stage, except for information the claims official requested you to provide toperfect the claim. You will irrevocably waive any theories you do not in good faith pursue throughthe 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 afteryour appeal request, unless special circumstances require an extension of time, in which case thedecision will be rendered as soon as possible, but not later than fifteen days after your appealrequest, unless you agree to a greater extension of that deadline. The appeal decision will be inwriting, set forth in a manner calculated to be understood by you; it will include specific reasonsfor the decision, as well as specific references to the pertinent provisions of this Agreement onwhich 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 which initial claims and appeals willbe considered and resolved; different procedures may be established for different claims. Allprocedures will be designed to afford you full and fair consideration of your claim.
41

 
23. SurvivalThis Agreement shall survive any Changes in Control, change in management of Company, and anymerger, 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 aremaintained at great expense and effort. You further acknowledge that, by virtue of your employmentunder this Agreement, you will have an extensive and unique opportunity to establish and maintainvaluable contacts with Company’s customers and employees and the opportunity both during and afteremployment to unfairly compete with Company, its subsidiaries and affiliates. Therefore, you agreethat during the term of your employment with Company and for a period of the balance of the term ofthis Agreement or twelve (12) months following termination of such employment, whichever isgreater, you shall not compete with the business of Company, its subsidiaries or affiliates. Forthe 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 ofyou or of any other person except through normal competitive bidding; or (ii) encouraging anyemployee of Company, its subsidiaries or affiliates to become your employee or employee of anyother person.     24.2. Remedies for Breach: You acknowledge that the damage to Company, its subsidiaries andaffiliates resulting from a breach of this Section 24 may cause irreparable injury. Therefore, inthe event of any such breach, Company, its subsidiaries and affiliates shall be entitled to seeksuch remedies as are available at law or equity to restrain and enjoin you from continuing toviolate 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 courtof competent jurisdiction to be in violation of applicable law for any reason whatsoever, than suchpart shall not be deemed to be void, but shall be deemed to be modified so as to be valid andenforceable, and the remaining provisions of this Section 24 or of this Agreement shall not beaffected. The provisions of Section 24 shall survive the termination of your employment for anyreason.25. Confidentiality and Non-Disclosure     25.1. Prohibition: You understand and acknowledge that the success of Company’s business isdependent 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 foryour own purpose any confidential information, records, data, formulae, specifications, customerlists, ideas, inventions, plans concerning business or product development, business procedures,contract proposals or such proprietary information or other trade secrets of Company, itssubsidiaries or affiliates (“Confidential Information”) provided such information is marked as suchor you have reason to know it is confidential. Upon termination of this Agreement and employmenthereunder, you agree to promptly deliver to Company all papers, records, files, other documents andConfidential Information belonging to Company, its subsidiaries and affiliates and to not retainany copies thereof.     25.2. Remedies for Breach: You acknowledge that the damage to Company, its subsidiaries andaffiliates resulting from a breach of this Section 25 may cause irreparable injury. Therefore, inthe event of any such breach, Company, its subsidiaries and affiliates shall be entitled to seeksuch remedies as are available at law or equity to restrain and enjoin you from continuing toviolate the provisions of this Section 25.     25.3. Binding Effect: The provisions of Section 25 shall survive the termination of thisAgreement 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 andproceeds connected with or arising out of, directly or indirectly, your services hereunder. Youhereby assign to Company all
42

 
right, title and interest in and to all intellectual property, discoveries and trade secrets whichyou 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 toyour employment or Company’s business. For purposes of this Agreement, the term “intellectualproperty” shall include, without limitation, any ideas, concepts, literary material, designs,drawings, illustrations, photographs, patentable ideas and musical compositions. To the extentthat any such intellectual property may be protected pursuant to applicable copyright law, youacknowledge 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 evidenceCompany’s proprietary interest in any intellectual property, discovery or trade secrets referred toSection 26.1 above. In the event Company is unable, for any reason whatsoever, to secure yoursignature to any lawful and necessary document required to apply for protection of, or enforce anyrights with respect to, any copyrights, trademark, patent or other proprietary rights, you herebyirrevocably designate and appoint Company, and its duly authorized officers and agents, as youragent and attorney-in-fact, whose power is coupled with an interest, to act for and in your behalfand stead, to execute such documents and to do all other lawful acts to protect Company’s interestin any such copyright, trademark, patent or other proprietary right with the same legal force andeffect as if executed by you.27. AmendmentsThis Agreement may be modified only by a written agreement executed by you and an authorizedofficer of the Company.28. ValidityThe invalidity or unenforceability of any provision of this Agreement shall not affect the validityor enforceability of any other provision of this Agreement.29. CounterpartsThis 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 Agreementmust 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 besent to you in writing, by registered or certified mail, or delivered personally, addressed asindicated at the end of this Agreement.31. Conformity with the Immigration Reform and Control Act of 1986Upon request, you agree to furnish Company with all documentation needed to satisfy therequirements of the Immigration Reform and Control Act of 1986.32. WaiverThe failure of either party to insist, in any one or more instances, upon performance of the termsor conditions of thisAgreement shall not be construed as a waiver or a relinquishment of any right granted hereunder orof the future performance of any term or condition.
43

 
33. Resignation from OfficesUpon termination of your employment, you shall be deemed to have resigned as an officer anddirector of Company, its subsidiaries and affiliates, if then so acting, as of the date of suchtermination.34. BenefitThis Agreement shall be binding upon and inure to the benefit of and shall be enforceable by andagainst Company, its successors and assigns and you, your heirs, beneficiaries and legalrepresentatives. This Agreement may be assigned by Company but may not be assigned by you.35. Success BonusThe Company’s Board of Director’s may, from time to time, direct you to identify and proceed with atransaction 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 successfulin completing such a transaction, the Company will pay you a success fee to be negotiated based onthe size of the transaction and other industry standards.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 basiccompensation. 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 opportunityto 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 breachof fiduciary duty (including without limitation any failure to disclose aconflict 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 thedate of this Agreement:
44

 
               (1) Acquisition of Controlling Interest: Any Person becomes the Beneficial Owner, directly orindirectly, of securities of the Company representing 25% or more of the combined voting power ofthe Company’s then outstanding securities. In applying the preceding sentence, securities acquireddirectly 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 constitutedthe Board as of the date of this Agreement (or their approved replacements, as defined in the nextsentence) cease for any reason to constitute a majority of the Board. A new director shall beconsidered 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 weredirectors 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 theCompany with any other corporation unless: (a) the voting securities of the Company outstandingimmediately before the merger or consolidation would continue to represent (either by remainingoutstanding or by being converted into voting securities of the surviving entity) at least 75% ofthe combined voting power of the voting securities of the Company or such surviving entityoutstanding immediately after such merger or consolidation; and (b) no Person acquires more than25% 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 ordisposition 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 inparagraphs (1) through (5) above the result of which is the suspension of the Company’s duty tofile reports under the Exchange Act as a result of the remaining number of holders of the Company’scommon 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 orother 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 (byoperation of law, or otherwise) assumes and agrees to perform this Agreement.However, for purposes of determining whether a Change in Control hasoccurred in connection with such a succession, the successor shall not be consideredto be the Company.  (j) Disability    “Disability” means that, due to physical or mental illness: (i) you have been absent fromthe full-time performance of your duties with the Company for substantially all of aperiod of six consecutive months; (ii) the Company has notified you that itintends to terminate you on account of Disability; and (iii) you do not resume thefull-time performance of your duties within 30 days after receiving notice of yourintended termination on account of Disability.  (k) Exchange Act    “Exchange Act” means the Securities Exchange Act of 1934, as amended.
45

 
 (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 effect immediately beforethe Change in Control (or, with respect to Section 3(b), the PotentialChange in Control), other than merely as a result of the Company ceasing tobe a public company, a change in your title, or your transfer to anaffiliate.  (2) Pay Cut: Your annual Base Salary is reduced.  (3) Relocation: Your principal office is transferred toanother location, which increases yourone-way commute to work by more than 50 miles, based on your residence twhenthe transfer was announced or, if you consent to the transfer, the Companyfails to pay (or reimburse you) for all reasonable moving expenses you incurin changing your principal residence in connection with the relocation andto indemnify you against any loss you may realize when you sell yourprincipal residence in connection with the relocation in an arm’s-lengthsale for adequate consideration. For purposes of the preceding sentence,your “loss” will be the difference between the actual sales price of yourresidence and the higher of: (a) your aggregate investment in the residence;or (b) the fair market value of the residence, as determined by a realestate appraiser designated by you and satisfactory to the Company.  (4) Breach of Promise: The Company fails to pay you any present or deferred compensationwithin seven days after it is due.  (5) Discontinuance of Compensation Plan Participation: TheCompany fails to continue, orcontinue your participation in, any compensation plan in which youparticipatedimmediately before the Change in Control (or, with respect to Section 3(b),the PotentialChange in Control) that is material to your total compensation, unless anequitablesubstitute arrangement has been adopted or made available on a basis notmaterially lessfavorable to you than the plan in effect immediately before the Change inControl(or the Potential Change in Control, if applicable), both as to thebenefits you receiveand your level of participation relative to other participants.  (6) Discontinuance of Benefits: The Company stops providingyou with benefits that, in theaggregate, are substantially as valuable to you as those you enjoyedimmediately beforethe Change in Control (or, with respect to Section 3(b), the PotentialChange in Control)under the Company’s pension, savings, deferred compensation, lifeinsurance, medical,health, disability, accident, vacation, and fringe benefit plans, programs,and arrangements.  (7) Improper Termination: You are purportedly terminated,other than pursuant to a noticeof termination satisfying the requirements of Section 5.  (8) Notice of Prospective Action: You are officiallynotified or it is officially announcedthat the Company will take any of the actions listed above during the Term ofthis Agreement.However, an event that is or would constitute Good Reason shall cease to be Good Reason if: (a) youdo not terminate employment within 180 days after the event occurs; (b) the Company reverses theaction 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 inappropriatefor you to receive benefits under this Agreement(e.g., you agree temporarily to relinquish your position on the occurrence of a merger transactionyou negotiate). If
46

 
you have Good Reason to terminate employment, you may do so even if you are on a leave of absencedue 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 allbonus, incentive or other programs for performance adopted by Company for its executiveofficers or other key employees.  (n) Person    “Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and usedin Section 13( d) of that Act, and shall include a “group,” as defined in Rule 13d-5promulgated thereunder. However, a Person shall not include: (i) the Company or any of itssubsidiaries; (ii) a trustee or other fiduciary holding securities under an employee benefitplanof the Company or any of its subsidiaries; (iii) an underwriter temporarily holding securitiespursuant to an offering of such securities; or (iv) a corporation owned, directly orindirectly,by the stockholders of the Company in substantially the same proportions as their ownershipof stock of the Company.  (o) Potential Change in Control    “Potential Change in Control” means that any of the following has occurred during the termof this Agreement, [excluding any event that is Management Action]: (1) Agreement Signed: The Company enters into an agreement that will result in a Change inControl.  (2) Notice of Intent to Seek Change in Control: The Companyor any Person publiclyannounces an intention to take or to consider taking actions that will result in a Changein Control.  (3) Board Declaration: With respect to this Agreement, theBoard adopts a resolutiondeclaring 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 December 1, 2004 and endson the earlier of: (1) Expiration: November 30, 2006; or  (2) Change in Control: The last day of the 24th calendarmonth beginning after the calendarmonth in which a Change in Control occurred during the Term of thisAgreement.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   
47