Document:

exv10w121

 

Exhibit 10.121

CHANGE OF CONTROL

SEVERANCE AGREEMENT

87

 

TABLE OF CONTENTS

	 	 	 
	1. Purpose
	 	90
	2. Your Agreement
	 	90
	3. Events That Trigger Severance Benefits
	 	90
	a. Termination After a Change in Control
	 	90
	b. Termination After a Potential Change in Control
	 	90
	c. Successor Fails to Assume This Agreement
	 	90
	4. Events That Do Not Trigger Severance Benefits
	 	90
	5. Termination Procedures
	 	91
	6. Severance Benefits
	 	91
	a. In General
	 	91
	b. Lump-Sum Payment in Lieu of Future Compensation
	 	91
	c. Incentive Compensation and Options
	 	91
	d. Group Insurance Benefit Continuation
	 	91
	7. Time for Payment
	 	92
	8. Payment Explanation
	 	92
	9. Relation to Other Severance Programs
	 	92
	10. Potential Limitations
	 	92
	a. Golden Parachute Limitation
	 	92
	b. Section 162(m) Limitation
	 	93
	11. Disability
	 	93
	12. Effect of Reemployment
	 	93
	13. Successors
	 	93
	a. Assumption Required
	 	93
	b. Heirs and Assigns
	 	93
	14. Amendments
	 	93
	15. Governing Law
	 	94
	16. Claims [ERISA requirement]
	 	94
	a. When Required; Attorneys’ Fees
	 	94
	b. Initial Claim
	 	94
	c. Claim Decision
	 	94
	d. Appeal of Denied Claims
	 	94
	e. Appeal Decision
	 	95
	f. Procedures
	 	95
	17. Limitation on Employee Rights
	 	95
	18. Validity
	 	95
	19. Counterparts
	 	95
	20. Giving Notice
	 	95
	a. To the Company
	 	95
	b. To You
	 	95
	21. Definitions
	 	95
	a. Agreement
	 	95
	b. Beneficial Owner
	 	95
	c. Board
	 	96
	d. Cause
	 	96

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	e. Change in Control
	 	96
	(1) Acquisition of Controlling Interest
	 	96
	(2) Change in Board Control
	 	96
	(3) Merger Approved
	 	96
	(4) Sale of Assets
	 	96
	(5) Liquidation or Dissolution
	 	97
	(6) Private Transaction
	 	97
	f. Code
	 	97
	g. Company
	 	97
	h. Disability
	 	97
	i. Exchange Act
	 	97
	j. Good Reason
	 	97
	(1) Demotion
	 	97
	(2) Pay Cut
	 	97
	(3) Relocation
	 	97
	(4) Breach of Promise
	 	98
	(5) Discontinuance of Compensation Plan Participation
	 	98
	(6) Discontinuance of Benefits
	 	98
	(7) Improper Termination
	 	98
	(8) Notice of Prospective Action
	 	98
	k. Incentive Compensation
	 	98
	l. Management Action
	 	99
	m. Person
	 	99
	n. Potential Change in Control
	 	99
	(1) Agreement Signed
	 	99
	(2) Notice of Intent to Seek Change in Control
	 	99
	(3) Board Declaration
	 	99
	o. Severance Benefits
	 	99
	p. Term of this Agreement
	 	99
	(1) Expiration
	 	99
	(2) Change in Control
	 	99

89

 

CHANGE OF CONTROL

SEVERANCE AGREEMENT

This Agreement between Jeffrey A. Wagonhurst (“you”) and VERSAR, INC.(“Company”) has been entered
into as of March 17, 2006. This Agreement promises you severance benefits if, following a Change of
Control, you are terminated without Cause or resign for Good Reason during the Term of this
Agreement. Capitalized terms are defined in the last section of this Agreement.

1. Purpose

The Company considers a sound and vital management team to be essential. Management
personnel who become concerned about the possibility that the Company may undergo a Change
in Control may terminate employment or become distracted. Accordingly, the Board has
determined that appropriate steps should be taken to minimize the distraction executives may
suffer from the possibility of a Change in Control. One step is to enter into this Agreement
with you.

2. Your Agreement

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

3. Events That Trigger Severance Benefits

	 	a.	 	Termination After a Change in Control

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

	 	b.	 	Termination After a Potential Change in Control

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

	 	c.	 	Successor Fails to Assume This Agreement

You also will receive Severance Benefits under this Agreement if, during the Term of
this Agreement, a successor to the Company fails to assume this Agreement, as
provided in Section 13(a).

4. Events That Do Not Trigger Severance Benefits

You will not be entitled to Severance Benefits if your employment ends because you are
terminated for Cause or on account of Disability or because you resign without Good

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Reason, retire, or die. Except as provided in Section 3(c), you will not be entitled to
Severance Benefits while you remain protected by this Agreement and remain employed by the
Company, its affiliates, or their successors.

5. Termination Procedures

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

6. Severance Benefits

	 	a.	 	In General

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

	 	b.	 	Lump-Sum Payment in Lieu of Future Compensation

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

	 	c.	 	Incentive Compensation and Options

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

	 	d.	 	Group Insurance Benefit Continuation

During the period that begins when you become entitled to Severance Benefits under
this Agreement and ends on the last day of the 24th calendar month

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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.

7. 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)).

8. Payment Explanation

When payments are made to you, the Company will provide you with a written statement
explaining how your payments were calculated and the basis for the calculations. This
statement will include any opinions or other advice the Company has received from auditors
or consultants as to the calculation of your benefits. If your benefit is affected by the
golden parachute limitation in Section 10, the Company will provide you with calculations
relating to that limitation and any supporting materials you reasonably need to permit you
to evaluate those calculations.

9. 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.

10. Potential Limitations

	 	a.	 	Golden Parachute Limitation

Your aggregate payments and benefits under this Agreement and all other contracts,
arrangements, or programs shall not exceed the maximum amount that may be paid
without triggering golden parachute penalties under Section 280G and related
provisions of the Internal Revenue Code, as determined in good faith by the
Company’s independent auditors. The preceding sentence shall not apply to the extent
the shareholder approval requirements of Code Section 280G(b)(5) are satisfied. If
your benefits must be reduced to avoid triggering such penalties, your

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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.

	 	b.	 	Section 162(m) Limitation

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

11. 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 on account of your Disability.

12. Effect of Reemployment

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

13. Successors

	 	a.	 	Assumption Required

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

	 	b.	 	Heirs and Assigns

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

14. 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.

15. 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.

16. Claims [ERISA requirement]

	 	a.	 	When Required; Attorneys’ Fees

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

	 	b.	 	Initial Claim

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

	 	c.	 	Claim Decision

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

	 	d.	 	Appeal of Denied Claims

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

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provide to perfect the claim. You will irrevocably waive any theories you do not in
good faith pursue through the appeal stage, such as by failing to file a timely
appeal request.

	 	e.	 	Appeal Decision

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

	 	f.	 	Procedures

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

17. Limitation on Employee Rights

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

18. 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.

19. 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.

20. Giving Notice

	 	a.	 	To the Company

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

	 	b.	 	To You

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

21. Definitions

	 	a.	 	Agreement

“Agreement” means this contract, as amended.

	 	b.	 	Beneficial Owner

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

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c. Board

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

d. Cause

“Cause” means any of the following:

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

e. Change in Control

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

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

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	 	(5)	 	Liquidation or Dissolution
	 
	 	 	 	A complete liquidation or dissolution of the Company.
	 
	 	(6)	 	Private Transaction
	 
	 	 	 	Any transaction or series of transactions not covered in paragraphs (1) through
(5) above the result of which is the suspension of the Company’s duty to file
reports under the Exchange Act as a result of the remaining number of holders of
the Company’s common stock following such transaction or series

f. Code

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

g. Company

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

h. Disability

“Disability” means that, due to physical or mental illness: (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.

i. Exchange Act

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

j. Good Reason

“Good Reason” means the occurrence of any of the following without your’ express
written consent:

	 	(1)	 	Demotion
	 
	 	 	 	Your duties and responsibilities are substantially and adversely altered from
those in effect immediately before the Change in Control (or, with respect to
Section 3(b), the Potential Change in Control), other than merely as a result of
the Company ceasing to be a public company, a change in your title, or your
transfer to an affiliate.
	 
	 	(2)	 	Pay Cut
	 
	 	 	 	Your annual base salary is reduced.
	 
	 	(3)	 	Relocation
	 
	 	 	 	Your principal office is transferred to another location, which increases your
one-way commute to work by more than 50 miles, based on your residence when the
transfer was announced or, if you consent to the transfer, the Company fails to
pay (or reimburse you) for all reasonable moving expenses you incur in changing
your principal residence in connection with the relocation and to indemnify you
against any loss you may realize when you sell your principal residence in
connection with the relocation in an arm’s- 

97

 

	 	 	 	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.

	 	k.	 	Incentive Compensation

“Incentive Compensation” means the amount of cash and/or securities paid to you
under all bonus, incentive or other programs for performance adopted by the Company
for its executive officers and other key employees.

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l. Management Action

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

m. Person

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

n. Potential Change in Control

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

	 	(1)	 	Agreement Signed

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

	 	(2)	 	Notice of Intent to Seek Change in Control

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

	 	(3)	 	Board Declaration

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

o. Severance Benefits

“Severance Benefits” means your benefits under Section 6 of this Agreement.

p. 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

March 16, 2008; 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. After a
Change in Control occurs, the end of the Term of this Agreement shall solely be
determined under this Section 21 (p )(2).

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

	 	 	 	 	 
	Date
3/20/06       

	 	By: Versar, Inc.	 	 
	 
	 	 	 	 
	 

	 	/S/ Theodore M. Prociv
 

President and CEO
	 	 
	 
	 	 	 	 
	Date 3/20/06       

	 	/S/ Jeffrey A. Wagonhurst
 

Jeffrey A. Wagonhurst
	 	 

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

                                                                     
           

                                                                     
           

                                                                     
           

100exv10w122

 

Exhibit 10.122

CHANGE OF CONTROL

SEVERANCE AGREEMENT

101

 

TABLE OF CONTENTS

	 	 	 	 	 
	1. Purpose
	 	 	104	 
	2. Your Agreement
	 	 	104	 
	3. Events That Trigger Severance Benefits
	 	 	104	 
	a. Termination After a Change in Control
	 	 	104	 
	b. Termination After a Potential Change in Control
	 	 	104	 
	c. Successor Fails to Assume This Agreement
	 	 	104	 
	4. Events That Do Not Trigger Severance Benefits
	 	 	104	 
	5. Termination Procedures
	 	 	105	 
	6. Severance Benefits
	 	 	105	 
	a. In General
	 	 	105	 
	b. Lump-Sum Payment in Lieu of Future Compensation
	 	 	105	 
	c. Incentive Compensation and Options
	 	 	105	 
	d. Group Insurance Benefit Continuation
	 	 	105	 
	7. Time for Payment
	 	 	106	 
	8. Payment Explanation
	 	 	106	 
	9. Relation to Other Severance Programs
	 	 	106	 
	10. Potential Limitations
	 	 	106	 
	a. Golden Parachute Limitation
	 	 	106	 
	b. Section 162(m) Limitation
	 	 	107	 
	11. Disability
	 	 	107	 
	12. Effect of Reemployment
	 	 	107	 
	13. Successors
	 	 	107	 
	a. Assumption Required
	 	 	107	 
	b. Heirs and Assigns
	 	 	107	 
	14. Amendments
	 	 	107	 
	15. Governing Law
	 	 	108	 
	16. Claims [ERISA requirement]
	 	 	108	 
	a. When Required; Attorneys’ Fees
	 	 	108	 
	b. Initial Claim
	 	 	108	 
	c. Claim Decision
	 	 	108	 
	d. Appeal of Denied Claims
	 	 	108	 
	e. Appeal Decision
	 	 	109	 
	f. Procedures
	 	 	109	 
	17. Limitation on Employee Rights
	 	 	109	 
	18. Validity
	 	 	109	 
	19. Counterparts
	 	 	109	 
	20. Giving Notice
	 	 	109	 
	a. To the Company
	 	 	109	 
	b. To You
	 	 	109	 
	21. Definitions
	 	 	109	 
	a. Agreement
	 	 	109	 
	b. Beneficial Owner
	 	 	109	 
	c. Board
	 	 	110	 
	d. Cause
	 	 	110	 

102

 

	 	 	 	 	 
	e. Change in Control
	 	 	110	 
	(1) Acquisition of Controlling Interest
	 	 	110	 
	(2) Change in Board Control
	 	 	110	 
	(3) Merger Approved
	 	 	110	 
	(4) Sale of Assets
	 	 	110	 
	(5) Liquidation or Dissolution
	 	 	111	 
	(6) Private Transaction
	 	 	111	 
	f. Code
	 	 	111	 
	g. Company
	 	 	111	 
	h. Disability
	 	 	111	 
	i. Exchange Act
	 	 	111	 
	j. Good Reason
	 	 	111	 
	(1) Demotion
	 	 	111	 
	(2) Pay Cut
	 	 	111	 
	(3) Relocation
	 	 	111	 
	(4) Breach of Promise
	 	 	112	 
	(5) Discontinuance of Compensation Plan Participation
	 	 	112	 
	(6) Discontinuance of Benefits
	 	 	112	 
	(7) Improper Termination
	 	 	112	 
	(8) Notice of Prospective Action
	 	 	112	 
	k. Incentive Compensation
	 	 	112	 
	l. Management Action
	 	 	113	 
	m. Person
	 	 	113	 
	n. Potential Change in Control
	 	 	113	 
	(1) Agreement Signed
	 	 	113	 
	(2) Notice of Intent to Seek Change in Control
	 	 	113	 
	(3) Board Declaration
	 	 	113	 
	o. Severance Benefits
	 	 	113	 
	p. Term of this Agreement
	 	 	113	 
	(1) Expiration
	 	 	113	 
	(2) Change in Control
	 	 	113	 

103

 

CHANGE OF CONTROL

SEVERANCE AGREEMENT

This Agreement between Michael J. Abram (“you”) and VERSAR, INC.(“Company”) has been entered into
as of March 17, 2006. This Agreement promises you severance benefits if, following a Change of
Control, you are terminated without Cause or resign for Good Reason during the Term of this
Agreement. Capitalized terms are defined in the last section of this Agreement.

1. Purpose

The Company considers a sound and vital management team to be essential. Management
personnel who become concerned about the possibility that the Company may undergo a Change
in Control may terminate employment or become distracted. Accordingly, the Board has
determined that appropriate steps should be taken to minimize the distraction executives may
suffer from the possibility of a Change in Control. One step is to enter into this Agreement
with you.

2. Your Agreement

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

3. Events That Trigger Severance Benefits

a. Termination After a Change in Control

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

b. Termination After a Potential Change in Control

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

c. Successor Fails to Assume This Agreement

You also will receive Severance Benefits under this Agreement if, during the Term of
this Agreement, a successor to the Company fails to assume this Agreement, as
provided in Section 13(a).

4. Events That Do Not Trigger Severance Benefits

You will not be entitled to Severance Benefits if your employment ends because you are
terminated for Cause or on account of Disability or because you resign without Good Reason,
retire, or die. Except as provided in Section 3(c), you will not be entitled to

104

 

Severance Benefits while you remain protected by this Agreement and remain employed by the
Company, its affiliates, or their successors.

5. Termination Procedures

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

6. Severance Benefits

a. In General

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

b. Lump-Sum Payment in Lieu of Future Compensation

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

c. Incentive Compensation and Options

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

d. Group Insurance Benefit Continuation

During the period that begins when you become entitled to Severance Benefits under
this Agreement and ends on the last day of the 24th calendar month beginning
thereafter, the Company shall provide, at no cost to you or your spouse

105

 

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.

7. 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)).

8. Payment Explanation

When payments are made to you, the Company will provide you with a written statement
explaining how your payments were calculated and the basis for the calculations. This
statement will include any opinions or other advice the Company has received from auditors
or consultants as to the calculation of your benefits. If your benefit is affected by the
golden parachute limitation in Section 10, the Company will provide you with calculations
relating to that limitation and any supporting materials you reasonably need to permit you
to evaluate those calculations.

9. 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.

10. Potential Limitations

a. Golden Parachute Limitation

Your aggregate payments and benefits under this Agreement and all other contracts,
arrangements, or programs shall not exceed the maximum amount that may be paid
without triggering golden parachute penalties under Section 280G and related
provisions of the Internal Revenue Code, as determined in good faith by the
Company’s independent auditors. The preceding sentence shall not apply to the extent
the shareholder approval requirements of Code Section 280G(b)(5) are satisfied. If
your benefits must be reduced to avoid triggering such penalties, your benefits will
be reduced in the priority order you designate or, if you fail promptly

106

 

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.

b. Section 162(m) Limitation

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

11. 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 on account of your Disability.

12. Effect of Reemployment

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

13. Successors

a. Assumption Required

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

b. Heirs and Assigns

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

14. Amendments

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

107

 

15. 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.

16. Claims [ERISA requirement]

a. When Required; Attorneys’ Fees

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

b. Initial Claim

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

c. Claim Decision

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

d. Appeal of Denied Claims

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

108

 

in good faith pursue through the appeal stage, such as by failing to file a timely
appeal request.

e. Appeal Decision

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

f. Procedures

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

17. Limitation on Employee Rights

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

18. 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.

19. 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.

20. Giving Notice

a. To the Company

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

b. To You

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

21. Definitions

a. Agreement

“Agreement” means this contract, as amended.

b. Beneficial Owner

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

109

 

c. Board

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

d. Cause

“Cause” means any of the following:

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

e. Change in Control

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

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

110

 

	 	(5)	 	Liquidation or Dissolution
	 
	 	 	 	A complete liquidation or dissolution of the Company.
	 
	 	(6)	 	Private Transaction
	 
	 	 	 	Any transaction or series of transactions not covered in paragraphs (1) through
(5) above the result of which is the suspension of the Company’s duty to file
reports under the Exchange Act as a result of the remaining number of holders of
the Company’s common stock following such transaction or series

f. Code

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

g. Company

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

h. Disability

“Disability” means that, due to physical or mental illness: (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.

i. Exchange Act

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

j. Good Reason

“Good Reason” means the occurrence of any of the following without your’ express
written consent:

	 	(1)	 	Demotion
	 
	 	 	 	Your duties and responsibilities are substantially and adversely altered from
those in effect immediately before the Change in Control (or, with respect to
Section 3(b), the Potential Change in Control), other than merely as a result of
the Company ceasing to be a public company, a change in your title, or your
transfer to an affiliate.
	 
	 	(2)	 	Pay Cut
	 
	 	 	 	Your annual base salary is reduced.
	 
	 	(3)	 	Relocation
	 
	 	 	 	Your principal office is transferred to another location, which increases your
one-way commute to work by more than 50 miles, based on your residence when the
transfer was announced or, if you consent to the transfer, the Company fails to
pay (or reimburse you) for all reasonable moving expenses you incur in changing
your principal residence in connection with the relocation and to indemnify you
against any loss you may realize when you sell your principal residence in
connection with the relocation in an arm’s-

111

 

	 	 	 	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.

k. Incentive Compensation

“Incentive Compensation” means the amount of cash and/or securities paid to you
under all bonus, incentive or other programs for performance adopted by the Company
for its executive officers and other key employees.

112

 

l. Management Action

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

m. Person

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

n. Potential Change in Control

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

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

o. Severance Benefits

“Severance Benefits” means your benefits under Section 6 of this Agreement.

p. 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
	 
	 	 	 	March 16, 2008; 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. After a
Change in Control occurs, the end of the Term of this Agreement shall solely be
determined under this Section 21 (p )(2).

113

 

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

	 	 	 	 	 	 	 	 	 
	Date

	 	3/21/06
 

	 	 	 	By: Versar, Inc. 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	/S/ Theodore M. Prociv	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	President and CEO	 	 
	 
	 	 	 	 	 	 	 	 
	Date

	 	3/22/06
	 	 	 	/S/ Michael J. Abram	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Michael J. Abram	 	 

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

	 	 	 	 	 
	 

	 	5389 Harrow Lane
	 	 
	 

	 	 

	 	 
	 

	 	Fairfax, VA 22030
 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

114

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