This Employment Agreement (this "Agreement") is made and
entered into this 1st day of September, 1996, by and between VERSAR, INC., a
Delaware corporation ("Company"), its successors and assigns, and BENJAMIN M.
Whereas, Company desires to assure itself of the services of
Executive and Executive is willing to make his services available to Company on
the terms and conditions set forth below.
Now, therefore, in consideration of the premises and mutual
promises contained in this Agreement, it is agreed:
1. Employment. Company hereby employs Executive and
Executive hereby accepts employment with Company on the terms and conditions
set forth in this Agreement.
2. Duties. Executive shall serve as Chairman,
President and Chief Executive Officer of Company. Under the direction of the
Board of Directors, Executive shall perform all assigned duties reasonably
required of an employee in such positions and shall personally, diligently and
faithfully perform his duties to the best of his ability, on a full-time and
3. Compensation. Executive's compensation for the
services performed under this Agreement shall consist of a Base Salary and
Incentive Compensation, if any, as described below:
3.1 Base Salary. Executive 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
Executive on the date of this Agreement, unless Executive agrees to a
reduction. In the event that Executive's employment with Company is terminated
as provided in this Agreement, the Base Salary shall be deemed to be
Executive's then current Base Salary or $250,000, whichever is greater.
3.2 Incentive Compensation. In addition to the
Base Salary, Executive 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
3.3 Withholding. Executive agrees and
acknowledges that Company will withhold from Executive's 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.
4.1 Generally. Executive 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 Executive from time to time.
4.2 Insurance. Executive 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
4.3 Other Benefit. In lieu of the deferred
compensation program offered in the March 21, 1991 employment letter, Executive
shall be eligible to participate in the Retired Executive's Insurance Program.
4.4 Personal Leave. Executive shall be entitled
to take seven (7) weeks of paid personal leave annually.
4.5 Reimbursement for Reasonable Business
Expenses. Company shall reimburse Executive for customary and reasonable
expenses incurred by him in performing his duties pursuant to this Agreement,
in accordance with Company's then current reimbursement policy (including
appropriate itemization and substantiation of expenses incurred).
5. Term. Subject to early termination of this
Agreement in accordance with Section 6 or 7 below, the term of Executive's
employment hereunder shall commence on the date hereof, and shall continue for
a period of two (2) years. Executive expressly agrees and acknowledges that
Company has no obligation to renew this Agreement or to continue Executive's
employment after the two-year term.
6. Termination by Company.
6.1 Termination With Cause. Company shall be
entitled to terminate Executive's employment and services immediately upon
written notice to Executive, except in the case of death, specifying the date
of termination in the event that (i) Executive fails to carry out assigned
duties after being given prior warning and an opportunity to remedy the
failure; or (ii) Executive breaches any material term of this Agreement; (iii)
Executive engages 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 his duties hereunder; (iv)
Executive is convicted of a felony or crime involving moral turpitude; (v)
Executive suffers a permanent and total disability which for at least six
months prevents his performance of his duties hereunder if such permanent
disability is covered by Workers Compensation or long term disability
insurance, or both; or (vi) Executive dies. For eight weeks following
Company's termination of this Agreement with cause pursuant to this Section
6.1, Company shall continue to pay Executive his Base Salary in effect as of
the date of termination and make available the benefits set forth in Section 4.
All other obligations of Company hereunder shall cease as of the date of
6.2 Termination Without Cause. Company shall be
entitled to terminate Executive's employment and services without cause upon
not less than sixty (60) days' prior written notice to Executive specifying the
date of termination. If Company terminates Executive's employment without
cause at any time during the two-year term, Company shall give Executive a lump
sum payment equivalent to one year of Executive's then current Base Salary, any
Incentive Compensation to which Executive 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 4 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,
Executive 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 his grant of option, and vesting of any and all other
options, warrants, or shares, and Executive shall have the right to exercise
such options or warrants, or purchase such shares under the same terms and
conditions applicable to Executive prior to termination.
7. Termination by Executive.
7.1 Termination for Any Reason. Executive may terminate
his 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 Executive terminates the Agreement in accordance with this
Section 7.1, then from the date of Executive's notice to the date of
termination (provided that during this notice period, Company does not
terminate Executive for cause under Section 6.1 above), Company shall continue
to pay Executive his Base Salary in effect as of the date of termination, and
any Incentive Compensation to which Executive 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 4 until the
date of termination. All other obligations of Company hereunder shall cease as
of the date of termination.
7.2 Termination for Change in Circumstances or Control.
Notwithstanding Section 7.1 above, if Executive terminates this Agreement as a
result of a Change of Circumstances or Change in Control, as defined below,
then for eighteen months following Executive's termination of this Agreement
pursuant to Section 7.1, Company shall continue to pay Executive his Base
Salary in effect as of the date of termination, any Incentive Compensation to
which Executive was 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 4 for eighteen (18) months. All other
obligations of Company hereunder shall cease as of the date of termination;
provided, however, if there is a Change in Control, Executive shall be entitled
to the immediate vesting of any and all stock options regardless of whether
Executive terminates his employment based on such Change in Control.
7.2.1 Change in Circumstances. For the purposes of
Section 7.2, a "Change in Circumstances" shall be deemed to occur if and only
if there occurs:
(a) a change in Executive's title of
Chairman, President and Chief Executive Officer;
(b) a reduction in Executive's Base Salary
unless agreed to by Executive;
(c) a change in the geographic location
where Executive's position is based of more than 50 miles; or
(d) a Change in Control (as defined below)
of Company without the concurrence of Executive, followed by (i) any material
change in Executive's positions, authorities, powers, duties, responsibilities
or functions from those that were in effect immediately prior to the Change in
Control, except in connection with the termination of Executive's employment by
Company for cause in accordance with Section 6.1 above; or (ii) a personal
determination by Executive that, as a result of a change in circumstances
significantly affecting his position which occurred without his approval and
which was caused by a Change in Control within six months after a Change in
Control occurs, he is unable to carry out the authorities, powers, duties,
responsibilities or functions carried out by him prior to such Change in
7.2.2 Change In Control. For the purposes of
Section 7.2, a "Change in Control" shall be deemed to occur if and only if:
(a) any person, partnership, association,
trust or other entity, or any "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), becomes the
"beneficial owner," as defined in Rule 13d-3 promulgated under the Exchange
Act, directly or indirectly, of securities of Company representing more than
twenty-five percent (25%) of the combined voting power of Company's then
(b) during the term of this Agreement,
individuals who at the beginning of such 24-month period were directors of
Company cease for any reason to constitute a majority of the Board of Directors
of Company (or of any successor to Company by merger, consolidation,
reorganization, sale of assets or otherwise), unless three-quarters of the
Board at the beginning of such 24-month period approve the nomination of each
of the directors who were not directors at the beginning of such 24-month
period (other than in a nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of Directors of Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act); or
(c) a majority of the Board determines in
its sole and absolute discretion that there has been a Change in Control of
Company, which determination may be made in advance of the event constituting
such Change in Control.
8. Survival. This Agreement shall survive any Changes in
Control, change in management of Company, and any merger, consolidation,
reorganization, sale of assets or sale of stock of Company.
9. Non-Competition and Non-Solicitation.
9.1 Prohibition. Executive acknowledges that Company's
business and employee relationships are maintained at great expense and effort.
Executive further acknowledges that, by virtue of his employment under this
Agreement, he will have an extensive and unique opportunity to establish and
maintain valuable contacts with Company's customers and employees and the
opportunity both during and after employment to unfairly compete with Company,
its subsidiaries and affiliates. Therefore, Executive agrees that during the
term of his employment with Company and for a period of the balance of the term
of this Agreement or twelve (12) months following termination of such
employment, whichever is greater, he shall not compete with the business of
Company, its subsidiaries or affiliates. For the purpose of this Agreement,
activities among others which shall be deemed competitive include: (i)
encouraging any customers of Company, its subsidiaries or affiliates to become
a customer of Executive or of any other person except through normal
competitive bidding; or (ii) encouraging any employee of Company, its
subsidiaries or affiliates to become an employee of Executive or of any other
9.2 Remedies for Breach. Executive acknowledges that
the damage to Company, its subsidiaries and affiliates resulting from a breach
of this Section 9 may cause irreparable injury. Therefore, in the event of any
such breach, Company, its subsidiaries and affiliates shall be entitled to seek
such remedies as are available at law or equity to restrain and enjoin
Executive from continuing to violate the provisions of this Section 9.
9.3 Binding Effect. In the event that any part of this
Section 9 shall be deemed by a court of competent jurisdiction to be in
violation of applicable law for any reason whatsoever, than such part shall not
be deemed to be void, but shall be deemed to be modified so as to be valid and
enforceable, and the remaining provisions of this Section 9 or of this
Agreement shall not be affected. The provisions of Section 9 shall survive the
termination of Executive's employment for any reason.
10. Confidentiality and Non-Disclosure.
10.1 Prohibition. Executive understands and acknowledges
that the success of Company's business is dependent upon the secrecy and
non-disclosure of many confidential plans, procedures and methods. Therefore,
Executive agrees that he will not directly or indirectly disclose to any person
or use for his own purposes any confidential information, records, data,
formulae, specifications, customer lists, ideas, inventions, plans concerning
business or product development, business procedures, contract proposals or
such proprietary information or other trade secrets of Company, its
subsidiaries or affiliates ("Confidential Information")
provided such information is marked as such or Executive has reason to know it
is confidential. Upon termination of this Agreement and employment hereunder,
Executive agrees to promptly deliver to Company all papers, records, files,
other documents and Confidential Information belonging to Company, its
subsidiaries and affiliates and to not retain any copies thereof.
10.2 Remedies for Breach. Executive acknowledges that
the damage to Company, its subsidiaries and affiliates resulting from a breach
of this Section 10 may cause irreparable injury. Therefore, in the event of
any such breach, Company, its subsidiaries and affiliates shall be entitled to
seek such remedies as are available at law or equity to restrain and enjoin
Executive from continuing to violate the provisions of this Section 10.
10.3 Binding Effect. The provisions of Section 10 shall
survive the termination of this Agreement and Executive's employment for any
11. Results and Proceeds.
11.1 Ownership. As Executive's employer, Company shall
own all rights in and to the results and proceeds connected with or arising out
of, directly or indirectly, Executive's services hereunder. Executive hereby
assigns to Company all right, title and interest in and to all intellectual
property, discoveries and trade secrets which Executive may solely or jointly
conceive, design, develop, create or suggest or cause to be conceived, designed
or developed or created during the term of Executive's employment by Company,
which relate to Executive's employment or Company's business. For purposes of
this Agreement, the term "intellectual property" shall include, without
limitation, any ideas, concepts, literary material, designs, drawings,
illustrations, photographs, patentable ideas and musical compositions. To the
extent that any such intellectual property may be protectable pursuant to
applicable copyright law, Executive acknowledges that such property is a work
for hire within the meaning of such law.
11.2 Further Assurances. Executive hereby agrees to
execute any documents necessary to evidence Company's proprietary interest in
any intellectual property, discovery or trade secrets referred to Section 11.1
above. In the event Company is unable, for any reason whatsoever, to secure
Executive's signature to any lawful and necessary document required to apply
for protection of, or enforce any rights with respect to, any copyrights,
trademark, patent or other proprietary rights, Executive hereby irrevocably
designates and appoints Company, and its duly authorized officers and agents,
as his agent and attorney-in-fact, whose power is coupled with an interest, to
act for and in Executive's behalf and stead, to execute such documents and to
do all other lawful acts to protect Company's interest in any such copyright,
trademark, patent or other proprietary right with the same legal force and
effect as if executed by Executive.
12.1 Conformity with the Immigration Reform and Control
Act of 1986. Upon request, Executive agrees to furnish Company with all
documentation needed to satisfy the requirements of the Immigration Reform and
Control Act of 1986.
12.2 Waiver. The failure of either party to insist, in
any one or more instances, upon performance of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any term or condition.
12.3 Notices. Any notice to be given hereunder shall be
deemed sufficient if addressed in writing and delivered by registered or
certified mail or delivered personally, in the case of Company, to its
principal business office in Springfield, Virginia and, in the case of
Executive to his address appearing in the records of Company, or to such other
address as he may designate in writing to Company.
12.4 Severability. In the event that any provisions
shall be held to be invalid or unenforceable for any reason whatsoever, it is
agreed that such invalidity or lack of enforceability shall not affect any
other provision of this Agreement and the remaining provisions hereof shall
continue in full force and effect. Any court of competent jurisdiction may so
modify the objectionable provision as to make it valid, reasonable and
12.5 Amendment. This Agreement may be amended only by an
agreement in writing signed by the parties hereto.
12.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Virginia.
12.7 Coverage. The provisions of this Agreement
regarding the terms and conditions of Executive's employment shall not preclude
Executive from participating in any other employee compensation or benefit
program adopted by Company for which he is otherwise eligible.
12.8 Resignation from Offices. Upon termination of his
employment, Executive shall be deemed to have resigned as an officer and
director of Company, its subsidiaries and affiliates, if then so acting, as of
the date of such termination.
12.9 Benefit. This Agreement shall be binding upon and
inure to the benefit of and shall be enforceable by and against Company, its
successors and assigns and Executive, his heirs, beneficiaries and legal
representatives. This agreement may be assigned by Company but may not be
assigned by Executive.
12.10 Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to Executive's employment by Company and
supersedes any prior or simultaneous agreements between them, whether oral or
written, regarding such employment, except any confidentiality agreements
between Executive and Company. There are no other agreements, covenants or
representations, express or implied, concerning Executive's employment by
Company except those expressly set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date above written.
By: /S/ John P. Horton
John P. Horton
Chairman, Compensation Committee
/S/ Benjamin M. Rawls
Benjamin M. Rawls