AMENDMENT TO EMPLOYMENT
AGREEMENT
This amendment
to the Employment Agreement dated February 8, 2005 as amended
November 15, 2007, between Versar, Inc. and Theodore M. Prociv
is entered into this 1 st day December, 2008 as follows:
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1.
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The
term of this Agreement is extended to November 30,
2009;
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2.
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The
base salary set forth in Section 4.1 shall be $355,000 per
annum beginning on September 27, 2008;
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3.
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The
personal leave set forth in Section 5.3 shall be six
(6) weeks annually; and
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4.
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All
other terms of the Agreement shall remain unchanged.
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IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the
date above written.
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/S/ Theodore M.
Prociv
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Theodore M.
Prociv
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/S/ Amir A.
Metry
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Amir A.
Metry
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Compensation
Committee Chairman
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This Employment
Agreement (this “Agreement”) is made and entered into
this 8th day of February 2005, by and between Versar, Inc., a
Delaware corporation (“Company”), its successors and
assigns, and Theodore M. Prociv (“you” or
“your”). This Agreement promises you an employment
relationship and certain severance benefits during the Term of this
Agreement. Capitalized terms are defined in the last section of the
Agreement.
The Company
considers a sound and vital management team to be essential. The
Company desires to assure itself of your services, which you are
willing to provide. Further, management personnel who become
concerned about the possibility that the Company may undergo a
Change in Control may terminate employment or become distracted.
Accordingly, the Board has determined that appropriate steps should
be taken to minimize the distraction executives may suffer from the
possibility of a Change in Control. One step is to enter into this
Agreement with you.
Company hereby
employs you, and you accept employment with Company on the terms
and conditions set forth in this Agreement.
You shall serve
as President and Chief Executive Officer of the Company. Under the
direction of the Board of Directors, you shall perform all assigned
duties reasonably required of an employee in such positions, shall
personally, diligently, and faithfully perform these duties to the
best of your ability, on a full-time and exclusive basis. Your
principal office will be located in Springfield,
Virginia.
Your
compensation for the services performed under this Agreement shall
consist of a Base Salary and Incentive Compensation, if any, as
described below:
4.1. Base Salary:
You shall receive the base salary approved by Company’s Board
of Directors, payable in regular bi-weekly installments (the
“Base Salary”). The Base Salary will be reviewed
annually by the Board of Directors in accordance with standard
salary review procedures in effect from time to time for executive
officers of Company. In no event shall the Base Salary be less than
the Base Salary being paid to you on the date of this Agreement,
unless you agree to a reduction. In the event that your employment
with Company is terminated as provided in this Agreement, the Base
Salary shall be deemed your then current Base Salary or $285,000,
whichever is greater.
4.2. Incentive
Compensation: In addition to the Base Salary, you shall be eligible
to earn incentive compensation in the form of cash or securities
under bonus and incentive programs as may be in effect from time to
time for executive officers of Company generally (“Incentive
Compensation”).
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4.3. Withholding:
You agree and acknowledge that Company will withhold from your
compensation all taxes and other amounts, which Company is required
by law to withhold, including without limitation (i) federal
income taxes, (ii) state income taxes, (iii) county, city
or other local income taxes, and (iv) social security
taxes.
5.1. Generally:
You shall be entitled to receive any and all benefits made
available to executive officers of Company generally and such other
benefits as the Board of Directors in its discretion may make
available to you from time to time.
5.2. Insurance:
You shall be eligible to participate in all medical,
hospitalization, dental, life, disability and other insurance plans
as are in effect from time to time for executive officers of
Company generally.
5.3. Personal
Leave: You shall be entitled to take five (5) weeks of paid
personal leave annually.
5.4. Reimbursement
for Reasonable Business Expenses: Company shall reimburse you for
customary and reasonable expenses incurred in performing your
duties pursuant to this Agreement, in accordance with
Company’s then current reimbursement policy (including
appropriate itemization and substantiation of expenses
incurred).
Subject to
early termination of this Agreement in accordance with
Section 7 or 8 below, the term of your employment hereunder
shall commence as of December 1, 2004, and shall continue for
a period of two (2) years. You agree and acknowledge that
Company has no obligation to renew this Agreement or to continue
your employment after the one-year term.
7. Termination
by Company
7.1. Termination
with Cause: Company shall be entitled to terminate your employment
and services immediately upon written notice to you, except in the
case of death, specifying the date of termination in the event
that: (i) you fail to carry out assigned duties after being
given prior warning and an opportunity to remedy the failure; or
(ii) you breach any material term of this Agreement;
(iii) you engage in fraud, dishonesty, willful misconduct,
gross negligence or breach of fiduciary duty (including without
limitation any failure to disclose a conflict of interest), in the
performance of your duties hereunder; (iv) you are convicted
of a felony or crime involving moral turpitude; (v) you suffer
a permanent and total disability which for at least six months
prevents your performance of your duties hereunder if such
permanent disability is covered by Workers Compensation or long
term disability insurance, or both; or (vi) if you die. For
eight weeks following Company’s termination of this Agreement
with cause pursuant to this Section 7.1, Company shall
continue to pay your Base Salary in effect as of the date of
termination and make available the benefits set forth in
Section 5. All other obligations of Company hereunder shall
cease as of the date of termination.
7.2. Termination
Without Cause: Company shall be entitled to terminate your
employment and services without cause upon, not less than sixty
(60) days, prior written notice to you specifying the date of
termination. If Company terminates your employment without cause,
at any time during the one-year term, Company shall give you a lump
sum payment equivalent of one year’s Base Salary, any
Incentive Compensation to which you would have been entitled as of
the date of termination, any deferred compensation, any accrued
personal leave and will continue to make available the benefits set
forth in Section 5 for twelve (12) months. All other
obligations of Company hereunder shall cease as of the date of
termination. Notwithstanding the foregoing, during the eighteen
months immediately following Company’s termination of this
Agreement without cause, you shall be entitled to the vesting of
any and all stock options issued by Company pursuant to its
Incentive Stock Option Plan in accordance with the vesting schedule
in your grant of options, and vesting of any and all other options,
warrants, or shares, and you shall have the right to exercise such
options or warrants, or purchase such shares under the same terms
and conditions applicable to you prior to termination.
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You may
terminate your employment and services at any time and for any
reason by giving Company at least thirty (30) days’
prior written notice specifying the date of termination. If you
terminate the Agreement in accordance with this Section 8.1,
then from the date of your notice to the date of termination
(provided that during this notice period, Company does not
terminate you for cause under Section 7.1 above), Company
shall continue to pay you the Base Salary in effect as of the date
of termination, and any Incentive Compensation to which you would
have been entitled as of the date of termination, any deferred
compensation, any accrued personal leave and continue to make
available the benefits set forth in Section 5 until the date
of termination. All other obligations of Company hereunder shall
cease as of the date of termination.
9. Your
Agreement on Change in Control
If one or more
Potential Changes in Control occur during the Term of this
Agreement, you agree not to resign for at least six full calendar
months after a Potential Change in Control occurs, except as
follows: (a) you may resign after a Change in Control occurs;
(b) you may resign if you are given Good Reason to do so; and
(c) you may terminate employment on account of retirement on
or after age 65 or because you become unable to work due to serious
illness or injury.
10. Events That
Trigger Severance Benefits
10.1. Termination
After a Change in Control: You will receive Severance Benefits
under this Agreement if, during the Term of this Agreement and
after a Change in Control has occurred, your employment is
terminated by the Company without Cause (other than on account of
your Disability or death) or you resign for Good Reason.
10.2. Termination
After a Potential Change in Control: You also will receive
Severance Benefits under this Agreement if, during the Term of this
Agreement and after a Potential Change in Control has occurred but
before a Change in Control actually occurs, your employment is
terminated by the Company without Cause or you resign for Good
Reason, but only if either: (i) you are terminated at the
direction of a Person who has entered into an agreement with the
Company that will result in a Change in Control; or (ii) the
event constituting Good Reason occurs at the direction of such
Person.
10.3. Successor
Fails to Assume This Agreement: You also will receive Severance
Benefits under this Agreement if, during the Term of this
Agreement, a successor to the Company fails to assume this
Agreement, as provided in Section 20.1.
11. Events That
Do Not Trigger Severance Benefits
You will not be
entitled to Severance Benefits if your employment ends because you
are terminated for Cause or because of Disability or because you
resign without Good Reason, retire, or die. Except as provided in
Section 10.3, you will not be entitled to Severance Benefits
while you remain protected by this Agreement and remain employed by
the Company, its affiliates, or their successors.
12. Termination
Procedures
If you are
terminated by the Company after a Change in Control and during the
Term of this Agreement, the Company shall provide you with
30 days’ advance written notice of your termination,
unless you are being terminated for Cause. The notice will indicate
why you are being terminated and, will set forth in reasonable
detail, the facts and circumstances claimed to provide a basis for
your termination. If you are being terminated for Cause, your
notice of termination will include a copy of a resolution duly
adopted by the affirmative vote of not less than 51 % of the entire
membership of the Board (at a meeting of the Board called and held
for the purpose of considering your termination (after reasonable
notice to you and an opportunity for you and your counsel to be
heard before the
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Board)) finding
that, in the good faith opinion of the Board, Cause for your
termination exists and specifying the basis for that opinion in
detail. If you are purportedly terminated without the notice
required by this Section, your termination shall not be
effective.
13.1. In General:
If you become entitled to Severance Benefits under this Agreement,
you will receive all of the Severance Benefits described in this
Section.
13.2. Lump-Sum
Payment in Lieu of Future Compensation: In lieu of any further cash
compensation for periods after your employment ends, you will be
paid a cash lump sum equal to two times your Base Salary in effect
when your employment ends or, if higher, in effect immediately
before the Change in Control, Potential Change in Control or Good
Reason event for which you terminate employment. In addition, and
without duplication, you will be paid a cash lump sum equal to 2
times the higher of the amounts paid to you (if any) under any
existing bonus or incentive plans in the calendar year preceding
the calendar year in which your employment ends or in the calendar
year preceding the calendar year in which the Change in Control
occurred (or in which the Potential Change in Control occurred, if
benefits are payable under Section 10.2 hereof).
13.3. Incentive
Compensation and Options: The Company will pay you a cash lump sum
equal to any unpaid Incentive Compensation (that is not otherwise
paid to you) that you have been allocated or awarded under any
existing bonus or incentive plans for measuring periods completed
before you became entitled to Severance Benefits under this
Agreement. All unvested options to purchase Company common stock
will immediately vest and remain exercisable for the longest period
of time permitted under the applicable stock option
plan.
13.4. Group
Insurance Benefit Continuation: During the period that begins when
you become entitled to Severance Benefits under this Agreement and
ends on the last day of the 24th calendar month beginning
thereafter, the Company shall provide, at no cost to you or your
spouse or dependents, the life, disability, accident, and health
and dental insurance benefits (or substantially similar benefits)
it was providing to you and your spouse and dependents immediately
before you became entitled to Severance Benefits under this
Agreement (or immediately before a benefit reduction that
constitutes Good Reason, if you terminate employment for that Good
Reason). These benefits shall be treated as satisfying the
Company’s COBRA obligations. After benefit continuation under
this subsection ends, you and your spouse and dependents will be
entitled to any remaining COBRA rights.
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)).
When payments
are made to you, the Company will provide you with a written
statement explaining how your payments were calculated and the
basis for the calculations. This statement will include any
opinions or other advice the Company has received from auditors or
consultants as to the calculation of your benefits. If your benefit
is affected by the golden parachute limitation in Section 17,
the Company will provide you with calculations relating to that
limitation and any supporting materials you reasonably need to
permit you to evaluate those calculations.
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16. Relation to
Other Severance Programs
Your Severance
Benefits under this Agreement are in lieu of any severance or
similar benefits that may be payable to you under any other
employment agreement or other arrangement; to the extent any such
benefits are paid to you, they shall be applied to reduce the
amount due under this Agreement. This Agreement constitutes the
entire agreement between you and the Company and its affiliates
with respect to such benefits.
17. Potential
Limitations
17.1. Golden
Parachute Limitation: Your aggregate payments and benefits under
this Agreement and all other contracts, arrangements, or programs
shall not exceed the maximum amount that may be paid without
triggering golden parachute penalties under Section 280G and
related provisions of the Internal Revenue Code, as determined in
good faith by the Company’s independent auditors. The
preceding sentence shall not apply to the extent the shareholder
approval requirements of Code Section 280G (b) (5) are
satisfied. If your benefits must be reduced to avoid triggering
such penalties, your benefits will be reduced in the priority order
you designate or, if you fail promptly to designate an order, in
the priority order designated by the Company. If an amount in
excess of the limit set forth in this Section is paid to you, you
must repay the excess amount to the Company on demand, with
interest at the rate provided in Code Section 1274(b)(2)(B).
You and the Company agree to cooperate with each other reasonably
in connection with any administrative or judicial proceedings
concerning the existence or amount of golden parachute penalties on
payments or benefits you receive.
17.2. Section
162(m) Limitation: To the extent payments or benefits under this
Agreement would not be deductible under Code Section 162(m) if made
or provided when otherwise due under this Agreement, they shall be
made or provided later, immediately after Section 162(m) ceases to
preclude their deduction, with interest thereon at the rate
provided in Code Section 1274(b)(2)(B).
Following a
Change in Control, while you are absent from work as a result of
physical or mental illness, the Company will continue to pay you
your full salary and provide you all other compensation and
benefits payable to you under the Company’s compensation or
benefit plans, programs, or arrangements. These payments will stop
if and when your employment is terminated by the Company for
Disability or at the end of the Term of this Agreement, whichever
is earlier. Severance Benefits under this Agreement are not payable
if you are terminated because of your Disability.
19. Effect of
Reemployment
Your Severance
Benefits will not be reduced by any other compensation you earn or
could have earned from another source.
20.1. Assumption
Required: In addition to obligations imposed by law on a successor
to the Company, during the Term of this Agreement the Company will
require any successor to all or substantially all of the business
or assets of the Company expressly to assume and to agree to
perform this Agreement in the same m
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