Exhibit
10.12
SEPARATION AGREEMENT
AGREEMENT between DA CONSULTING, GROUP, INC., a Texas corporation (the
"Company"), and Xxxx Xxxxxxxx ("Executive"),
W I T N E S S E T H :
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WHEREAS, the Company desires to retain certain key employee personnel and,
accordingly, the Board of Directors of the Company (the "Board") has approved
the Company entering into a separation agreement with Executive in order to
encourage Executive's continued service to the Company; and
WHEREAS, Executive is prepared to perform such services in return for
specific arrangements with respect to separation compensation and other
benefits;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:
1. Definitions.
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(a) "Change in Control" means (i) any merger, consolidation, or
reorganization in which the Company is not the surviving entity (or survives
only as a subsidiary of an entity), (ii) any sale, lease, exchange, or other
transfer of all or substantially all of the assets of the Company to any other
person or entity (in one transaction or a series of related transactions), (iii)
dissolution or liquidation of the Company, (iv) as a result of or in connection
with a contested election of directors, the persons who were directors of the
Company before such election shall cease to constitute a majority of the Board,
or (v) any event that is reported by the Company under Item 1 of a Form 8-K
filed with the Securities and Exchange Commission; provided, however, that the
term "Change in Control" shall not include any reorganization, merger,
consolidation, sale, lease, exchange, or similar transaction involving solely
the Company and one or more previously wholly-owned subsidiaries of the Company
unless such matter is described in clause (v) above.
(b) "Change in Duties" shall mean the occurrence, on the date upon
which a Change in Control occurs or within two years thereafter, of any one or
more of the following:
(i) A significant reduction in the nature or scope of
Executive's authorities or duties from those applicable to Executive
immediately prior to the date on which a Change in Control occurs;
(ii) A reduction in Executive's annual base salary from that
provided to Executive immediately prior to the date on which a Change in
Control occurs;
(iii) A diminution in Executive's eligibility to participate
in bonus, stock option, incentive award and other compensation plans which
provide opportunities to receive compensation which are the greater of (A)
the opportunities provided by the Company (including its subsidiaries) for
executives with comparable duties or (B) the opportunities under any such
plans under which Executive was participating immediately prior to the date
on which a Change in Control occurs;
(iv) A diminution in employee benefits (including but not
limited to medical, dental, life insurance, and long-term disability plans)
and perquisites applicable to Executive from the greater of (A) the
employee benefits and perquisites provided by the Company (including its
subsidiaries) to executives with comparable duties or (B) the employee
benefits and perquisites to which Executive was entitled immediately prior
to the date on which a Change in Control occurs; or
(v) A change in the location of Executive's principal place
of employment by the Company by more than 50 miles from the location where
Executive was principally employed immediately prior to the date on which a
Change in Control occurs.
As used in this section, executives with comparable duties shall mean
executives reporting directly to the Executive.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Compensation" shall mean the greater of:
(i) Executive's annual base salary at the rate in effect
immediately prior to the date on which a Change in Control occurs;
(ii) Executive's annual base salary at the rate in effect
sixty days prior to the date of Executive's Involuntary Termination; or
(iii) Executive's annual base salary at the rate in effect at
the time of Executive's Involuntary Termination.
(e) "Involuntary Termination" shall mean any termination of
Executive's employment with the Company which:
(i) does not result from a resignation by Executive (other than
a resignation pursuant to clause (ii) of this subparagraph (e)); or
(ii) results from a resignation by Executive on or before the
date which is sixty days after the date upon which Executive receives
notice of a Change in Duties;
provided, however, the term "Involuntary Termination" shall not include a
Termination for Cause or any termination as a result of death, disability under
circumstances entitling Executive to benefits under the Company's long-term
disability plan, or Retirement.
(f) "Retirement" shall mean Executive's resignation on or after
the date Executive reaches age sixty-five.
(g) "Separation Amount" shall mean the greater of One Hundred
Ninety Five Thousand Pounds ((British pounds) 195,000.00) or Executive's annual
salary as in effect on the date of Executive's Involuntary Termination.
(h) "Termination for Cause" shall mean Executive (i) has engaged
in gross negligence or willful misconduct in the performance of Executive's
duties, (ii) has willfully refused without proper legal reason to perform
Executive's duties and responsibilities, (iii) has materially breached any
material provision of any agreement between the Company and Executive, including
without limitation paragraph 2 herein, (iv) has materially breached any material
corporate policy maintained and established by the Company that is of general
applicability to the Company's executive employees, (v) has willfully engaged in
conduct that Executive knows or should know is materially injurious to the
Company or any of its affiliates, or (vi) has engaged in illegal conduct or any
act of serious dishonesty which adversely affects, or reasonably could in the
future adversely affect, the value, reliability, or performance of Executive in
a material manner; provided, however, that in no event shall a termination of
Executive's employment constitute a "Termination for Cause" unless such
termination is approved by at least two-thirds of the members of the Board after
Executive has been given written notice by the Company of the specific reason
for such termination and an opportunity for Executive, together with Executive's
counsel, to be heard before the Board. Members of the Board may participate in
any hearing that is required pursuant to this subparagraph (h) by means of
conference telephone or similar communications equipment by means of which all
persons participating in the hearing can hear and speak to each other; provided,
however, that at least one-half of the members of the Board shall attend the
hearing in person.
(i) "Welfare Benefit Plans" shall mean the medical, dental, life
insurance, accidental death and dismemberment, and long-term disability plans
provided by the Company to its active employees.
2. Services. Executive agrees that Executive shall (a) render services
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to the Company (as well as any subsidiary thereof or successor thereto) during
the period of Executive's employment to the best of Executive's ability and in a
prudent and businesslike manner and (b) devote substantially the same time,
efforts, and dedication to Executive's duties as heretofore devoted.
3. Separation Benefits. If Executive's employment by the Company or
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any successor thereto shall be subject to an Involuntary Termination that occurs
on the date upon which a Change in Control occurs or within two years
thereafter, then Executive shall be entitled to receive, as additional
compensation for services rendered to the Company (including its subsidiaries),
the following separation benefits:
(a) A lump sum cash payment in an amount equal to the Separation
Amount, which shall be paid to Executive on or before the thirty-first day after
the last day of Executive's employment with the Company.
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(b) All of the outstanding stock options granted by the Company to
Executive shall become immediately exercisable in full upon Executive's
termination of employment and for a period of three months thereafter or for
such greater period as may be provided in the plan or plans pursuant to which
such stock options were granted (but in no event shall any such stock option be
exercisable after the expiration of the original term of such stock option).
(c) A lump sum cash payment in an amount equal to the greater of
(1) the Company's cost of coverage for Executive and those of Executive's
dependents (including Executive's spouse) who were covered, under the Welfare
Benefit Plans on the day prior to Executive's Involuntary Termination or (2) the
Company's cost of such coverage paid immediately prior to the Change in Control,
for a period of two years. Nothing herein shall be deemed to affect adversely
in any way the rights of Executive and Executive's eligible dependents to health
care continuation coverage as required pursuant to Part 6 of Title I of the
Employee Retirement Income Security Act of 1974, as amended.
(d) Executive shall be entitled to receive out-placement services
in connection with obtaining new employment up to a maximum cost of Twenty
Thousand Pounds ( 20,000.00) (which shall be paid directly by the Company to the
provider of such services).
4. Interest on Late Benefit Payments. If any payment provided for in
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Paragraph 3 hereof is not made when due, the Company shall pay to Executive
interest on the amount payable from the date that such payment should have been
made under such paragraph until such payment is made, which interest shall be
calculated at the rate of 1% per month (with a partial month counting as a full
month).
5. Certain Additional Payments by the Company. Notwithstanding
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anything to the contrary in this Agreement, in the event that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest or penalties, are
hereinafter collectively referred to as the "Excise Tax"), the Company shall pay
to Executive an additional payment (a "Gross-up Payment") in an amount such that
after payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed on any
Gross-up Payment, Executive retains an amount of the Gross-up Payment equal to
the Excise Tax imposed upon the Payments. The Company and Executive shall make
an initial determination as to whether a Gross-up Payment is required and the
amount of any such Gross-up Payment. Executive shall notify the Company
immediately in writing of any claim by the Internal Revenue Service which, if
successful, would require the Company to make a Gross-up Payment (or a Gross-up
Payment in excess of that, if any, initially determined by the Company and
Executive) within ten days of the receipt of such claim. The Company shall
notify Executive in writing at least ten days prior to the due date of any
response required with respect to such claim if it plans to contest the claim.
If the Company decides to contest such claim, Executive shall cooperate fully
with the Company in such action; provided, however, the Company shall bear and
pay directly or indirectly all costs and expenses (including additional interest
and penalties) incurred in connection with such action and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax or income
tax, including interest and penalties with respect thereto, imposed as a result
of the Company's action. If, as a result of the Company's action with respect
to a claim, Executive receives a refund of any amount paid by the Company with
respect to such claim, Executive shall promptly pay such refund to the Company.
If the Company fails to timely notify Executive whether it will contest such
claim or the Company determines not to contest such claim, then the Company
shall immediately pay to Executive the portion of such claim, if any, which it
has not previously paid to Executive.
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6. General.
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(a) Term. The effective date of this Agreement is April 4, 2000.
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Within sixty days from and after the expiration of two years after said
effective date and within sixty days after each successive two-year period of
time there-after that this Agreement is in effect, the Company shall have the
right to review this Agreement, and in its sole discretion either continue and
extend this Agreement, terminate this Agreement, or offer Executive a different
agreement. The Compensation Committee of the Board (excluding any member of
such committee who is covered by this Agreement or by a similar agreement with
the Company) will vote on whether to so extend, terminate, or offer Executive a
different agreement and will notify Executive of such action within said
sixty-day time period mentioned above. This Agreement shall remain in effect
until so terminated or modified by the Company. Failure of the Compensation
Committee of the Board to take any action within said sixty days shall be
considered as an extension of this Agreement for an additional two-year period
of time. Notwithstanding anything to the contrary contained in this "sunset
provision," it is agreed that if a Change in Control occurs while this Agreement
is in effect, then this Agreement shall not be subject to termination or
modification under this "sunset provision," and shall remain in force for a
period of two years after such Change in Control, and if within said two years
the contingency factors occur which would entitle Executive to the benefits as
provided herein, this Agreement shall remain in effect in accordance with its
terms. If, within such two years after a Change in Control, the contingency
factors that would entitle Executive to said benefits do not occur, thereupon
this two-year "sunset provision" shall again be applicable with the sixty-day
time period for action by the Compensation Committee of the Board to thereafter
commence at the expiration of said two years after such Change in Control and on
each two-year anniversary date thereafter.
(b) Indemnification. If Executive shall obtain any money judgment
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or otherwise prevail with respect to any litigation brought by Executive or the
Company to enforce or interpret any provision contained herein, the Company, to
the fullest extent permitted by applicable law, hereby indemnifies Executive for
Executive's reasonable attorneys' fees and disbursements incurred in such
litigation and hereby agrees (i) to pay in full all such fees and disbursements
and (ii) to pay prejudgment interest on any money judgment obtained by Executive
from the earliest date that payment to Executive should have been made under
this Agreement until such judgment shall have been paid in full, which interest
shall be calculated at the rate of 1% per month (with a partial month counting
as a full month).
(c) Payment Obligations. The Company's obligation to pay (or
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cause one of its subsidiaries to pay) Executive the amounts and to make the
arrangements provided herein shall be absolute and unconditional and shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company (including
its subsidiaries) may have against Executive or anyone else. All amounts
payable by the Company (including its subsidiaries hereunder) shall be paid
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without notice or demand. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement. Provided, however, that if Executive receives or is
entitled to receive payments or benefits as a result of Involuntary Termination
from any company affiliated with the Company, all such payments and benefits
shall be credited against the Company's obligations pursuant to this Agreement.
(d) Successors. This Agreement shall be binding upon and inure to
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the benefit of the Company and any successor of the Company, by merger or
otherwise. This Agreement shall also be binding upon and inure to the benefit
of Executive and Executive's estate. If Executive shall die prior to full
payment of amounts due pursuant to this Agreement, such amounts shall be payable
pursuant to the terms of this Agreement to Executive's estate.
(e) Severability. Any provision in this Agreement which is
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prohibited or unenforceable in any jurisdiction by reason of applicable law
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) Non-Alienation. Executive shall not have any right to pledge,
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hypothecate, anticipate or assign this Agreement or the rights hereunder, except
by will or the laws of descent and distribution.
(g) Notices. Any notices or other communications provided for in
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this Agreement shall be sufficient if in writing. In the case of Executive,
such notices or communications shall be effectively delivered if hand delivered
to Executive at Executive's principal place of employment or if sent by
registered or certified mail to Executive at the last address Executive has
filed with the Company. In the case of the Company, such notices or
communications shall be effectively delivered if sent by registered or certified
mail to the Company at its principal executive offices.
(h) Controlling Law. This Agreement shall be governed by, and
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construed in accordance with, the laws of the State of Texas without regard to
conflict of law.
(i) Full Settlement; Withholding. If Executive is entitled to and
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receives the benefits provided hereunder, performance of the obligations of the
Company hereunder will constitute full settlement of all claims that Executive
might otherwise assert against the Company on account of Executive's termination
of employment. Any separation benefits paid pursuant to this Agreement shall be
deemed to be a separation payment and not "Compensation" for purposes of
determining benefits under the Company's qualified plans (unless and to the
extent that any such qualified plan expressly provides otherwise), and shall be
subject to any required tax withholding.
(j) Unfunded Obligation. The obligation to pay amounts under this
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Agreement is an unfunded obligation of the Company (including its subsidiaries),
and no such obligation shall create a trust or be deemed to be secured by any
pledge or encumbrance on any property of the Company (including its
subsidiaries).
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(k) Not a Contract of Employment. This Agreement shall not be
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deemed to constitute a contract of employment, nor shall any provision hereof
affect (i) the right of the Company (or its subsidiaries) to discharge Executive
at will or (ii) the terms and conditions of any other agreement between the
Company and Executive except as provided herein.
(l) Number and Gender. Wherever appropriate herein, words used in
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the singular shall include the plural and the plural shall include the singular.
The masculine gender where appearing herein shall be deemed to include the
feminine gender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
15 day of May , 2000.
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"EXECUTIVE"
/s/ J Xxxxxxxx
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"COMPANY"
DA CONSULTING GROUP, INC.
By: /s/ X.X. Xxxxxxxx
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Name: X.X. Xxxxxxxx
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Title: Chairman
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