CHANGE OF CONTROL SEVERANCE AGREEMENT
AGREEMENT by and between Versar, Inc., a Delaware corporation (the
"Company") and LAWRENCE W. SINNOTT (the "Employee"), dated as of the 1st day of
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by pending or threatened Change of Control and
to encourage the Employee's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Employee with compensation and benefit arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Employee will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Agreement.
NOW THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean the
first date during the Change of Control Period (as defined in Section 1(b)) on
which a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Employee's employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Employee that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control
or (ii) otherwise arose in connection with or anticipation of a Change in
Control (in each case, a "Potential Change of Control"), then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior to
the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on August 31, 1998, unless otherwise extended by
2. Change in Circumstances or Control.
2.1 Change in Circumstances. For the purposes of Section 3,
a "Change in Circumstances" shall be deemed to occur if and only if there
(a) a change in Executive's title of Vice
President, Chief Financial Officer; and Treasurer.
(b) a reduction in Executive's Base Salary in
effect, prior to the Effective Date 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 2.1
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, he is unable
to carry out the authorities, powers, duties, responsibilities or functions
carried out by him prior to such Change in Control.
2.2 Change In Control. For the purposes of Section 2.1, and
3, "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 outstanding
(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.
3. Termination by Executive.
3.1 Termination for Change in Circumstances or Control.
During the Change in Control period, if a Change of Circumstances or Change in
Control occurs, the Executive may terminate his employment at any time. If
Executive terminates his employment as a result of a Change of Circumstances or
Change in Control, as defined herein, then for twelve months following
Executive's termination of his employment Company shall continue to pay
Executive his Base Salary in effect as of the date of termination or in effect
prior to the Effective Date, which ever is greater, plus 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 twelve (12) 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
3.2 Base Salary. Executive shall receive the base
salary approved by Company's Board of Directors, payable in regular bi-monthly
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 $110,000, whichever is greater.
3.3 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 ("Incentive
3.4 Withholding. Executive agrees and acknowledges that
Company will withhold from Executive's continuing 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 Personal Leave. Executive shall be entitled to take
five (5) weeks of personal leave annually.
4.4 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. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim right or action which the Company may have
against the Employee or others. In no event shall the Employee be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this agreement
and such amounts shall not be reduced whether or not the Employee obtains other
employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Employee may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company, the Employee or others of the validity or enforceability of, or
liability under, any provision of the Agreement or any guarantee of performance
thereof (including as a result of any contest by the Employee about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code).
6. Survival. This Agreement shall survive any Change on
Control, change in management of Company, and any merger, consolidation,
reorganization, sale of assets or sale of stock of Company.
7.1 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.
7.2 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.
7.3 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
7.4 Amendment. This Agreement may be amended only by an
agreement in writing signed by the parties hereto.
7.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Virginia.
7.6 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.
7.7 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/ Benjamin M. Rawls
/S/ Lawrence W. Sinnott
Lawrence W. Sinnott