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Exhibit 10.1
CHANGE IN CONTROL
SEVERANCE AGREEMENT
TABLE
OF CONTENTS
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1.
Purpose
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1
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2.
Your Agreement
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1
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3.
Events That Trigger Severance Benefits
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1
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a. Termination
After a Change in Control
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1
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b. Termination
After a Potential Change in Control
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1
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c. Successor
Fails to Assume This Agreement
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1
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4.
Events That Do Not Trigger Severance Benefits
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2
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5.
Termination Procedures
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2
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6.
Severance Benefits
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2
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a. In
General
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2
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b. Lump-Sum
Payment in Lieu of Future Compensation
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2
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c. Incentive
Compensation and Options
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2
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d. Group
Insurance Benefit Continuation
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3
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e. Group
Benefit Continuation
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3
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f. Officer
Benefits
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3
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g. Medical
Benefits
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3
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7.
Time for Payment
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3
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8.
Payment Explanation
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4
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9.
Potential Limitations
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4
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a.Golden
Parachute Limitation
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4
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b. Section
162(m) Limitation
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4
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10. Disability
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4
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11. Effect
of Reemployment
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5
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12. Successors
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5
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a. Assumption
Required
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5
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b.Heirs and
Assigns
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5
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13. Amendments
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5
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14. Governing
Law
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5
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15. Claims
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5
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a. When
Required; Attorneys' Fees
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5
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b. Initial
Claim
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5
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c. Claim
Decision
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6
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d. Appeal
of Denied Claims
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6
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e. Appeal
Decision
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6
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f. Procedures
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6
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g. Arbitration
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7
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17. Validity
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7
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18. Counterparts
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7
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19. Giving
Notice
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7
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a. To
the Company
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7
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b. To
You
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7
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20. Definitions
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8
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a. Agreement
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8
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b. Beneficial
Owner
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8
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c. Board
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8
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d. Cause
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8
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e. Change
in Control
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8
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(1) Acquisition
of Controlling Interest
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8
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(2) Change
in Board Control
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8
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(3) Merger
Approved
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9
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(4) Sale
of Assets
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9
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(5) Liquidation
or Dissolution
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9
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(6) Private
Transaction
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9
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f. Code
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9
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g. Company
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9
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h. Disability
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9
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i. Exchange
Act
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9
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j. Good
Reason
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10
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(1) Demotion
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10
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(2) Pay
Cut
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10
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(3) Relocation
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10
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(4) Breach
of Contract
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10
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(5) Improper
Termination
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10
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k. Incentive
Compensation
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10
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l. Management
Action
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11
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m. Person
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11
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n. Potential
Change in Control
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11
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(1) Agreement
Signed
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11
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(2) Notice
of Intent to Seek Change in Control
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11
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(3) Board
Declaration
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11
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o. Separation
from Service
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11
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p. Severance
Benefits
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11
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q. Term
of this Agreement
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11
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(2) Change
in Control
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11
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21. Section
409A
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12
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CHANGE IN CONTROL
SEVERANCE AGREEMENT
This
Agreement between _________________ ("you") and VERSAR,
INC.("Company") has been entered into as of ________________.
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.
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 certain executives may
suffer from the possibility of a Change in Control. One step
is to enter into this Agreement with you while you hold the
position as________________. Once you no longer hold this
position, except following or in connection with the
triggering of severance benefits as set forth in Section 3
below, this Severance Agreement shall immediately terminate
and be null and void as set forth in Section 20q
hereof.
If
one or more Potential Changes in Control occur during the Term
of this Agreement, you agree not to resign for at least six
full calendar months after a Potential Change in Control
occurs, except as follows: (a) you may resign after a Change
in Control occurs; (b) you may resign if you are given Good
Reason to do so; and (c) you may terminate employment on
account of retirement on or after age 65 or because you become
unable to work due to serious illness or injury.
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3.
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Events That Trigger Severance Benefits
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a.
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Termination After a Change in
Control
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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.
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b.
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Termination After a Potential Change in
Control
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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.
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c.
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Successor Fails to Assume This Agreement
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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
12(a).
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4.
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Events That Do Not Trigger Severance Benefits
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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 Severance Benefits while you remain protected by
this Agreement and remain employed by the Company, its
affiliates, or their successors.
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5.
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Termination Procedures
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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.
If
you become entitled to Severance Benefits under this
Agreement, you will receive all of the Severance Benefits
described in this Section.
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b.
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Lump-Sum Payment in Lieu of Future
Compensation
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In
lieu of any further cash compensation for periods after your
employment ends, other than cash compensation paid pursuant to
any agreement governing the terms of a Change in Control
payable to all similarly situated persons, 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).
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c.
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Incentive Compensation and Options
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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. All unvested restricted stock awards awarded
to you will immediately vest.
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d.
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Group Insurance Benefit Continuation
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During
the period that begins when you become entitled to Severance
Benefits under this Agreement and ends on the last day of the
18th calendar month beginning thereafter, the Company shall
provide, at no cost to you or your spouse or dependents,
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. The Company subsidized health
and dental insurance coverage shall be treated as satisfying
the Company's COBRA obligations. After this subsidized
coverage ends, you, your spouse and dependents may continue
any remaining COBRA coverage at your sole cost and
expense.
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e.
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Group Benefit Continuation
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During
the period that begins when you become entitled to Severance
Benefits under this Agreement and ends on the last day of the
24 th
calendar month beginning thereafter, the Company shall
provide, at no cost to you or your spouse or dependents, the
life, disability and accident benefits (or substantially
similar benefits) it was providing to you and your spouse and
dependents 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).
In
lieu of the medical and tax accounting benefits available to
the Company’s officers, you will be entitled to a lump
sum payment of $16,000.00.
The Company provides certain medical benefits to retired
CEO’s and Vice Presidents. If you become entitled
to Severance Benefits under this Agreement, then you are deemed to
have retired for purposes of this benefit and the Company shall
provide, at no cost to you, continued medical benefits it was
providing you and your spouse and dependents immediately before you
became entitled to Severance Benefits under this Agreement
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Subject
to the provisions of Section 21 hereof, 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)). In no
event will any cash Severance Benefits be paid to you later
than March 15 of the calendar year following the calendar year
in which you become entitled to such Severance
Benefits.
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 9, 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.
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a.
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Golden Parachute Limitation
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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 penaltie
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