EXHIBIT 10.12
KRONOS INCORPORATED
SUMMARY OF TERMS
SENIOR EXECUTIVE RETENTION AGREEMENT
1. Nature of Agreement. This Agreement is not an employment contract and does
not specify any terms or conditions of employment. It provides for certain
severance benefits to the Executive in the event his employment is
terminated under specified circumstances following a Change in Control of
the Company.
2. Term of Agreement. This Agreement takes effect upon execution and expires
on October 4, 2005; provided that (i) it is subject to automatic one-year
extensions unless prior notice of termination is given by the Company and
(ii) the Executive is entitled to the severance benefits provided therein
if a Change in Control occurs during the term of this Agreement and the
Executive's employment is terminated under specified circumstances within
36 months after such Change in Control.
3. Key Definitions.
a. Change in Control means, in summary: (i) the acquisition by a party or a
group of 20% or more of the outstanding stock of the Company; (ii) a
change, without Board of Directors approval, of a majority of the Board of
Directors; (iii) the acquisition of the Company by means of a
reorganization, merger, consolidation or asset sale; or (iv) the approval
of a liquidation or dissolution of the Company.
b. Cause means, in summary: (i) the Executive's willful and continued failure
to substantially perform his reasonable assigned duties (which failure
continues after a 90-day cure period); or (ii) the Executive's willful
engagement in illegal conduct or gross misconduct injurious to the Company.
c. Good Reason means, in summary, a good faith determination by the Executive
that there has occurred (i) a diminution in the Executive's position,
authority or responsibilities; (ii) a reduction in his salary or benefits;
(iii) a relocation of the Executive; or (iv) a breach of an employment
contract with the Executive. In addition, a resignation by the Executive,
for any reason, during the 30-day period immediately following the one-year
anniversary of the Change in Control shall be deemed to be a termination
for Good Reason.
4. Severance Benefits.
a. Termination Without Cause or for Good Reason Within 12 Months of a Change
in Control. If the Executive's employment is terminated by the Company
without Cause or by the Executive for Good Reason within 12 months of a
Change in Control, the Executive shall receive (i) accrued compensation
(including a pro rata bonus payment) through the date of termination; (ii)
a payment equal to three times the sum of the Executive's highest base
salary and highest bonus for any year during the five-year period prior to
the Change in Control, payable, at the prior written election of the
Executive, in cash, either (A) in one lump sum, within 30 days after the
Executive's termination or (B) in 36 equal monthly installments, with an
annual interest rate on the unpaid principal balance equal to the minimum
applicable Federal rate in effect on the Date of Termination, beginning 30
days after the Executive's termination; (iii) a continuation of all
employee benefits during the twelve-month period following employment
termination; and (iv) any other post-termination benefits which the
Executive is eligible to receive under any plan or program of the Company.
b. Termination Without Cause or for Good Reason Following 12 Months After a
Change in Control. If the Executive's employment is terminated by the
Company without Cause or by the Executive for Good Reason on a date that is
greater than 12 months following a Change in Control, the Executive shall
receive (i) accrued compensation (including a pro rata bonus payment)
through the date of termination; (ii) a payment equal to two times the sum
of the Executive's highest base salary and highest bonus for any year
during the five-year period prior to the Change in Control, payable, at the
prior written election of the Executive, in cash, either (A) in one lump
sum, within 30 days after the Executive's termination or (B) in 24 equal
monthly installments, with an annual interest rate on the unpaid principal
balance equal to the minimum applicable Federal rate in effect on the Date
of Termination, beginning 30 days after the Executive's termination; (iii)
a continuation of all employee benefits during the twelve-month period
following employment termination; and (iv) any other post-termination
benefits which the Executive is eligible to receive under any plan or
program of the Company.
c. Other Employment Terminations. In general, if the Executive's employment
terminates for any other reason following a Change in Control, the
Executive shall receive only the benefits described in clauses (i) and (iv)
of the preceding paragraphs (provided that the pro rata bonus payment shall
not be made in the event of a termination by the Company for Cause).
d. Tax Treatment. The Internal Revenue Code imposes certain tax penalties on
both the Company and the Executive if the amount of severance payments to
the Executive following a Change in Control exceeds certain limits
(generally three times the average of the Executive's compensation over the
previous five years). The Retention Agreement provides that the amount of
severance benefits payable to the Executive shall be reduced by an amount
necessary to avoid triggering the penalty taxes only if such reduction
results in greater net after-tax benefits to the Executive.
e. No Mitigation. The severance benefits payable to the Executive are not
reduced by payments received by the Executive from a subsequent employer.
5. Expenses. The Company must pay, as incurred, all expenses which the
Executive reasonably incurs as a result of any dispute relating to this
Agreement (regardless of the outcome of such dispute). In addition, the
Company is obligated to continue to pay to the Executive his base salary
and benefits during the pendency of such a dispute; following the
resolution of such dispute, the payments to the Executive during such
dispute shall either be deducted from the benefits to which the Executive
is entitled or repaid to the Company.
KRONOS INCORPORATED
Senior Executive Retention Agreement
THIS SENIOR EXECUTIVE RETENTION AGREEMENT, by and between Kronos
Incorporated, a Massachusetts corporation (the "Company"), and
[_________________] (the "Executive") is made as of October 5, 2000 (the
"Effective Date").
WHEREAS, the Company recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control of the
Company exists and that such possibility, and the uncertainty and questions
which it may raise among key personnel, may result in the departure or
distraction of key personnel to the detriment of the Company and its
stockholders, and
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that appropriate steps should be taken to reinforce and encourage the continued
employment and dedication of the Company's key personnel without distraction
from the possibility of a change in control of the Company and related events
and circumstances.
NOW, THEREFORE, as an inducement for and in consideration of the Executive
remaining in its employ, the Company agrees that the Executive shall receive the
severance benefits set forth in this Agreement in the event the Executive's
employment with the Company is terminated under the circumstances described
below subsequent to a Change in Control (as defined in Section 1.1).
1. Key Definitions.
As used herein, the following terms shall have the following respective
meanings:
1.1 "Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence
that constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership of any
capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 20% or more of either (i) the then-outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or
(ii) the combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition directly from the
Company (excluding an acquisition pursuant to the exercise, conversion or
exchange of any security exercisable for, convertible into or exchangeable
for common stock or voting securities of the Company, unless the Person
exercising, converting or exchanging such security acquired such security
directly from the Company or an underwriter or agent of the Company), (ii)
any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i) and
(ii) of subsection (c) of this Section 1.1; or
(b) such time as the Continuing Directors (as defined below) do not constitute
a majority of the Board (or, if applicable, the Board of Directors of a
successor corporation to the Company), where the term "Continuing Director"
means at any date a member of the Board (i) who was a member of the Board
on the date of the execution of this Agreement or (ii) who was nominated or
elected subsequent to such date by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or
whose election to the Board was recommended or endorsed by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be excluded
from this clause (ii) any individual whose initial assumption of office
occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents, by or on behalf of a person
other than the Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a
sale or other disposition of all or substantially all of the assets of the
Company in one or a series of transactions (a "Business Combination"),
unless, immediately following such Business Combination, each of the
following two conditions is satisfied: (i) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock
and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, respectively, of the
resulting or acquiring corporation in such Business Combination (which
shall include, without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the Company's assets
either directly or through one or more subsidiaries) (such resulting or
acquiring corporation is referred to herein as the "Acquiring Corporation")
in substantially the same proportions as their ownership, immediately prior
to such Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, respectively; and (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 20% or more of the
then outstanding shares of common stock of the Acquiring Corporation, or of
the combined voting power of the then-outstanding securities of such
corporation entitled to vote generally in the election of directors (except
to the extent that such ownership existed prior to the Business
Combination); or
(d) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
1.2 "Change in Control Date" means the first date during the Term (as defined
in Section 2) on which a Change in Control occurs. Anything in this
Agreement to the contrary notwithstanding, if (a) a Change in Control
occurs, (b) the Executive's employment with the Company is terminated prior
to the date on which the Change in Control occurs, and (c) it is reasonably
demonstrated by the Executive 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
in anticipation of a Change in Control, then for all purposes of this
Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
1.3 "Cause" means:
(a) the Executive's willful and continued failure to substantially perform his
reasonable assigned duties as an officer of the Company (other than any
such failure resulting from incapacity due to physical or mental illness or
any failure after the Executive gives notice of termination for Good
Reason), which failure is not cured within 90 days after a written demand
for substantial performance is received by the Executive from the Board of
Directors of the Company which specifically identifies the manner in which
the Board of Directors believes the Executive has not substantially
performed the Executive's duties; or
(b) the Executive's willful engagement in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company.
For purposes of this Section 1.3, no act or failure to act by the Executive
shall be considered "willful" unless it is done, or omitted to be done, in bad
faith and without reasonable belief that the Executive's action or omission was
in the best interests of the Company.
1.4 "Good Reason" means the occurrence, without the Executive's written
consent, of any of the events or circumstances set forth in clauses (a)
through (g) below. Notwithstanding the occurrence of any such event or
circumstance, such occurrence shall not be deemed to constitute Good Reason
if, prior to the Date of Termination specified in the Notice of Termination
(each as defined in Section 3.2(a)) given by the Executive in respect
thereof, such event or circumstance has been fully corrected and the
Executive has been reasonably compensated for any losses or damages
resulting therefrom (provided that such right of correction by the Company
shall only apply to the first Notice of Termination for Good Reason given
by the Executive).
(a) the assignment to the Executive of duties inconsistent in any material
respect with the Executive's position (including status, offices, titles
and reporting requirements), authority or responsibilities in effect
immediately prior to the earliest to occur of (i) the Change in Control
Date, (ii) the date of the execution by the Company of the initial written
agreement or instrument providing for the Change in Control or (iii) the
date of the adoption by the Board of Directors of a resolution providing
for the Change in Control (with the earliest to occur of such dates
referred to herein as the "Measurement Date"), or any other action or
omission by the Company which results in a material diminution in such
position, authority or responsibilities;
(b) a reduction in the Executive's annual base salary as in effect on the
Measurement Date or as the same was or may be increased thereafter from
time to time;
(c) the failure by the Company to (i) continue in effect any material
compensation or benefit plan or program (including without limitation any
life insurance, medical, health and accident or disability plan and any
vacation or automobile program or policy) (a "Benefit Plan") in which the
Executive participates or which is applicable to the Executive immediately
prior to the Measurement Date, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been made with respect to
such plan or program, (ii) continue the Executive's participation therein
(or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level
of the Executive's participation relative to other participants, than the
basis existing immediately prior to the Measurement Date or (iii) award
cash bonuses to the Executive in amounts and in a manner substantially
consistent with past practice in light of the Company's financial
performance;
(d) a change by the Company in the location at which the Executive performs his
principal duties for the Company to a new location that is both (i) outside
a radius of 35 miles from the Executive's principal residence immediately
prior to the Measurement Date and (ii) more than 35 miles from the location
at which the Executive performed his principal duties for the Company
immediately prior to the Measurement Date; or a requirement by the Company
that the Executive travel on Company business to a substantially greater
extent than required immediately prior to the Measurement Date;
(e) the failure of the Company to obtain the agreement from any successor to
the Company to assume and agree to perform this Agreement, as required by
Section 6.1;
(f) a purported termination of the Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
3.2(a); or
(g) any failure of the Company to pay or provide to the Executive any portion
of the Executive's compensation or benefits due under any Benefit Plan
within seven days of the date such compensation or benefits are due, or any
material breach by the Company of this Agreement or any employment
agreement with the Executive.
(h) In addition, the termination of employment by the Executive for any reason
or no reason during the 30-day period beginning on the first anniversary of
the Change in Control Date shall be deemed to be termination for Good
Reason for all purposes under this Agreement.
The Executive's right to terminate his employment for Good Reason shall be
made in good faith and shall not be affected by his incapacity due to physical
or mental illness.
1.5 "Disability" means the Executive's absence from the full-time performance
of the Executive's duties with the Company for 180 consecutive calendar
days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.
2. Term of Agreement. This Agreement, and all rights and obligations of the
parties hereunder, shall take effect upon the Effective Date and shall
expire upon the first to occur of (a) the expiration of the Term (as
defined below) if a Change in Control has not occurred during the Term, (b)
the date 36 months after the Change in Control Date, if the Executive is
still employed by the Company as of such later date, or (c) the fulfillment
by the Company of all of its obligations under Sections 4 and 5.2 and 5.3
if the Executive's employment with the Company terminates within 36 months
following the Change in Control Date. "Term" shall mean the period
commencing as of the Effective Date and continuing in effect through
October [_], 2005; provided, however, that commencing on October [_], 2005
and each October [_] thereafter, the Term shall be automatically extended
for one additional year unless, not later than 90 days prior to the
scheduled expiration of the Term (or any extension thereof), the Company
shall have given the Executive written notice that the Term will not be
extended.
3. Employment Status; Termination Following Change in Control.
3.1 Not an Employment Contract. The Executive acknowledges that this Agreement
does not constitute a contract of employment or impose on the Company any
obligation to retain the Executive as an employee and that this Agreement
does not prevent the Executive from terminating employment at any time. If
the Executive's employment with the Company terminates for any reason and
subsequently a Change in Control shall occur, the Executive shall not be
entitled to any benefits hereunder except as otherwise provided pursuant to
Section 1.2.
3.2 Termination of Employment.
(a) If the Change in Control Date occurs during the Term, any termination of
the Executive's employment by the Company or by the Executive within 36
months following the Change in Control Date (other than due to the death of
the Executive) shall be communicated by a written notice to the other party
hereto (the "Notice of Termination"), given in accordance with Section 7.
Any Notice of Termination shall: (i) indicate the specific termination
provision (if any) of this Agreement relied upon by the party giving such
notice, (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) specify
the Date of Termination (as defined below). The effective date of an
employment termination (the "Date of Termination") shall be the close of
business on the date specified in the Notice of Termination (which date may
not be less than 15 days or more than 120 days after the date of delivery
of such Notice of Termination), in the case of a termination other than one
due to the Executive's death, or the date of the Executive's death, as the
case may be. In the event the Company fails to satisfy the requirements of
Section 3.2(a) regarding a Notice of Termination, the purported termination
of the Executive's employment pursuant to such Notice of Termination shall
not be effective for purposes of this Agreement.
(b) The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting any such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(c) Any Notice of Termination for Cause given by the Company must be given
within 90 days of the occurrence of the event(s) or circumstance(s) which
constitute(s) Cause. Prior to any Notice of Termination for Cause being
given (and prior to any termination for Cause being effective), the
Executive shall be entitled to a hearing before the Board of Directors of
the Company at which he may, at his election, be represented by counsel and
at which he shall have a reasonable opportunity to be heard. Such hearing
shall be held on not less than 15 days prior written notice to the
Executive stating the Board of Directors' intention to terminate the
Executive for Cause and stating in detail the particular event(s) or
circumstance(s) which the Board of Directors believes constitutes Cause for
termination. Any such Notice of Termination for Cause must be approved by
an affirmative vote of two-thirds of the members of the Board of Directors.
(d) Any Notice of Termination for Good Reason given by the Executive must be
given within 90 days of the occurrence of the event(s) or circumstance(s)
which constitute(s) Good Reason.
4. Benefits to Executive.
4.1 Compensation. If the Change in Control Date occurs during the Term and the
Executive's employment with the Company terminates within 36 months
following the Change in Control Date, the Executive shall be entitled to
the following benefits:
(a) Termination Without Cause or for Good Reason Within 12 Months of the Change
in Control Date. If the Executive's employment with the Company is
terminated by the Company (other than for Cause, Disability or Death), by
the Executive for Good Reason within 12 months of the Change in Control
Date or by the Executive in accordance with Section 1.4(h), then the
Executive shall be entitled to the following benefits:
(i) the Company shall pay to the Executive, at the prior written election of
the Executive tendered to the Company on or before the Change in Control
Date, in cash, either (A) in one lump sum, within 30 days after the
Executive's termination or (B) in 36 equal monthly installments, with an
annual interest rate on the unpaid principal balance equal to the minimum
applicable Federal rate in effect on the Date of Termination, beginning 30
days after the Date of Termination, the aggregate of the following amounts:
(1) the sum of (A) the Executive's base salary through the Date of Termination,
(B) the product of (x) the annual bonus paid or payable (including any
bonus or portion thereof which has been earned but deferred) for the most
recently completed fiscal year and (y) a fraction, the numerator of which
is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (C) the amount of any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not previously paid (the sum of the amounts described in
clauses (A), (B), and (C) shall be hereinafter referred to as the "Accrued
Obligations"); and
(2) the amount equal to (A) three multiplied by (B) the sum of (x) the
Executive's highest annual base salary for any year during the five-year
period prior to the Change in Control Date and (y) the Executive's highest
annual bonus for any year during the five-year period prior to the Change
in Control Date.
(ii) for 12 months after the Date of Termination, or such longer period as may
be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue to provide benefits to the Executive and
the Executive's family at least equal to those which would have been
provided to them if the Executive's employment had not been terminated, in
accordance with the applicable Benefit Plans in effect on the Measurement
Date or, if more favorable to the Executive and his family, in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies; provided, however, that if the
Executive becomes reemployed with another employer and is eligible to
receive a particular type of benefits (e.g., health insurance benefits)
from such employer on terms at least as favorable to the Executive and his
family as those being provided by the Company, then the Company shall no
longer be required to provide those particular benefits to the Executive
and his family;
(iii)to the extent not previously paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive following
the Executive's termination of employment under any plan, program, policy,
practice, contract or agreement of the Company and its affiliated companies
(such other amounts and benefits shall be hereinafter referred to as the
"Other Benefits"); and
(iv) for purposes of determining eligibility (but not the time of commencement
of benefits) of the Executive for retiree benefits to which the Executive
is entitled, the Executive shall be considered to have remained employed by
the Company until 12 months after the Date of Termination.
(b) Termination Without Cause or for Good Reason Following 12 Months After the
Change in Control Date. If the Executive's employment with the Company is
terminated by the Company (other than for Cause, Disability or Death) or by
the Executive for Good Reason (other than a termination by the Executive in
accordance with Section 1.4(h) hereof) on a date which is more than 12
months following the Change in Control Date, then the Executive shall be
entitled to the following benefits:
(i) the Company shall pay to the Executive, at the prior written election of
the Executive tendered to the Company on or before the Change in Control
Date, in cash, either (A) in one lump sum, within 30 days after the
Executive's termination or (B) in 36 equal monthly installments, with an
annual interest rate on the unpaid principal balance equal to the minimum
applicable Federal rate in effect on the Date of Termination, beginning 30
days after the Date of Termination, the aggregate of the following amounts:
(1) the sum of (A) the Executive's base salary through the Date of Termination,
(B) the product of (x) the annual bonus paid or payable (including any
bonus or portion thereof which has been earned but deferred) for the most
recently completed fiscal year and (y) a fraction, the numerator of which
is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (C) the amount of any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not previously paid (the sum of the amounts described in
clauses (A), (B), and (C) shall be hereinafter referred to as the "Accrued
Obligations"); and
(2) the amount equal to (A) two multiplied by (B) the sum of (x) the
Executive's highest annual base salary for any year during the five-year
period prior to the Change in Control Date and (y) the Executive's highest
annual bonus for any year during the five-year period prior to the Change
in Control Date.
(ii) for 12 months after the Date of Termination, or such longer period as may
be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue to provide benefits to the Executive and
the Executive's family at least equal to those which would have been
provided to them if the Executive's employment had not been terminated, in
accordance with the applicable Benefit Plans in effect on the Measurement
Date or, if more favorable to the Executive and his family, in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies; provided, however, that if the
Executive becomes reemployed with another employer and is eligible to
receive a particular type of benefits (e.g., health insurance benefits)
from such employer on terms at least as favorable to the Executive and his
family as those being provided by the Company, then the Company shall no
longer be required to provide those particular benefits to the Executive
and his family;
(iii)to the extent not previously paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive following
the Executive's termination of employment under any plan, program, policy,
practice, contract or agreement of the Company and its affiliated companies
(such other amounts and benefits shall be hereinafter referred to as the
"Other Benefits"); and
(iv) for purposes of determining eligibility (but not the time of commencement
of benefits) of the Executive for retiree benefits to which the Executive
is entitled, the Executive shall be considered to have remained employed by
the Company until 12 months after the Date of Termination.
(c) Resignation without Good Reason; Termination for Death or Disability. If
the Executive voluntarily terminates his employment with the Company within
12 months following the Change in Control Date, excluding a termination for
Good Reason, or if the Executive's employment with the Company is
terminated by reason of the Executive's death or Disability within 12
months following the Change in Control Date, then the Company shall (i) pay
the Executive (or his estate, if applicable), at the prior written election
of the Executive tendered to the Company on or before the Change in Control
Date, in cash, either (A) in one lump sum, within 30 days after the
Executive's termination or (B) in 36 equal monthly installments, with an
annual interest rate on the unpaid principal balance equal to the minimum
applicable Federal rate in effect on the Date of Termination, beginning
within 30 days after the Date of Termination, the Accrued Obligations and
(ii) timely pay or provide to the Executive the Other Benefits.
(d) Termination for Cause. If the Company terminates the Executive's employment
with the Company for Cause within 36 months following the Change in Control
Date, then the Company shall (i) pay the Executive, in a lump sum in cash
within 30 days after the Date of Termination, the sum of (A) the
Executive's annual base salary through the Date of Termination and (B) the
amount of any compensation previously deferred by the Executive, in each
case to the extent not previously paid, and (ii) timely pay or provide to
the Executive the Other Benefits.
(e) Effect of Failure to Make Election. In the event the Executive fails to
make an election with respect to the payment of amounts payable pursuant to
Section 4.1(a)(i) or (a)(ii) hereof on or before the Change in Control
Date, the Company shall pay such amounts due to the Executive hereunder in
one lump sum, within 30 days after the Executive's termination.
4.2 Taxes.
(a) Notwithstanding any other provision of this Agreement, except as set forth
in Section 4.2(b), in the event that the Company undergoes a "Change in
Ownership or Control" (as defined below), the Company shall not be
obligated to provide to the Executive a portion of any "Contingent
Compensation Payments" (as defined below) that the Executive would
otherwise be entitled to receive to the extent necessary to eliminate any
"excess parachute payments" (as defined in Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code")) for the Executive.
For purposes of this Section 4.2, the Contingent Compensation Payments so
eliminated shall be referred to as the "Eliminated Payments" and the
aggregate amount (determined in accordance with Proposed Treasury
Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the
Contingent Compensation Payments so eliminated shall be referred to as the
"Eliminated Amount."
(b) Notwithstanding the provisions of Section 4.2(a), no such reduction in
Contingent Compensation Payments shall be made if (i) the Eliminated Amount
(computed without regard to this sentence) exceeds (ii) 110% of the
aggregate present value (determined in accordance with Proposed Treasury
Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions)
of the amount of any additional taxes that would be incurred by the
Executive if the Eliminated Payments (determined without regard to this
sentence) were paid to him (including, state and federal income taxes on
the Eliminated Payments, the excise tax imposed by Section 4999 of the Code
payable with respect to all of the Contingent Compensation Payments in
excess of the Executive's "base amount" (as defined in Section 280G(b)(3)
of the Code), and any withholding taxes). The override of such reduction in
Contingent Compensation Payments pursuant to this Section 4.2(b) shall be
referred to as a "Section 4.2(b) Override." For purpose of this paragraph,
if any federal or state income taxes would be attributable to the receipt
of any Eliminated Payment, the amount of such taxes shall be computed by
multiplying the amount of the Eliminated Payment by the maximum combined
federal and state income tax rate provided by law.
(c) For purposes of this Section 4.2 the following terms shall have the
following respective meanings:
(i) "Change in Ownership or Control" shall mean a change in the ownership or
effective control of the Company or in the ownership of a substantial
portion of the assets of the Company determined in accordance with Section
280G(b)(2) of the Code.
(ii) "Contingent Compensation Payment" shall mean any payment (or benefit) in
the nature of compensation that is made or made available (under this
Agreement or otherwise) to a "disqualified individual" (as defined in
Section 280G(c) of the Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control
of the Company.
(d) Any payments or other benefits otherwise due to the Executive following a
Change in Ownership or Control that could reasonably be characterized (as
determined by the Company) as Contingent Compensation Payments (the
"Potential Payments") shall not be made until the dates provided for in
this Section 4.2(d). Within 30 days after each date on which the Executive
first becomes entitled to receive (whether or not then due) a Contingent
Compensation Payment relating to such Change in Ownership or Control, the
Company shall determine and notify the Executive (with reasonable detail
regarding the basis for its determinations) (i) which Potential Payments
constitute Contingent Compensation Payments, (ii) the Eliminated Amount and
(iii) whether the Section 4.2(b) Override is applicable. Within 30 days
after delivery of such notice to the Executive, the Executive shall deliver
a response to the Company (the "Executive Response") stating either (A)
that he agrees with the Company's determination pursuant to the preceding
sentence, in which case he shall indicate, if applicable, which Contingent
Compensation Payments, or portions thereof (the aggregate amount of which,
determined in accordance with Proposed Treasury Regulation Section
1.280G-1, Q/A-30 or any successor provision, shall be equal to the
Eliminated Amount), shall be treated as Eliminated Payments or (B) that he
disagrees with such determination, in which case he shall set forth (i)
which Potential Payments should be characterized as Contingent Compensation
Payments, (ii) the Eliminated Amount, (iii) whether the Section 4.2(b)
Override is applicable, and (iv) which (if any) Contingent Compensation
Payments, or portions thereof (the aggregate amount of which, determined in
accordance with Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or
any successor provision, shall be equal to the Eliminated Amount, if any),
shall be treated as Eliminated Payments. In the event that the Executive
fails to deliver an Executive Response on or before the required date, the
Company's initial determination shall be final and the Contingent
Compensation Payments that shall be treated as Eliminated Payments shall be
determined by the Company in its absolute discretion. If the Executive
states in the Executive Response that he agrees with the Company's
determination, the Company shall make the Potential Payments to the
Executive within three business days following delivery to the Company of
the Executive Response (except for any Potential Payments which are not due
to be made until after such date, which Potential Payments shall be made on
the date on which they are due). If the Executive states in the Executive
Response that he disagrees with the Company's determination, then, for a
period of 60 days following delivery of the Executive Response, the
Executive and the Company shall use good faith efforts to resolve such
dispute. If such dispute is not resolved within such 60-day period, such
dispute shall be settled exclusively by arbitration in Boston,
Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. The Company shall, within three
business days following delivery to the Company of the Executive Response,
make to the Executive those Potential Payments as to which there is no
dispute between the Company and the Executive regarding whether they should
be made (except for any such Potential Payments which are not due to be
made until after such date, which Potential Payments shall be made on the
date on which they are due). The balance of the Potential Payments shall be
made within three business days following the resolution of such dispute.
Subject to the limitations contained in Sections 4.2(a) and (b) hereof, the
amount of any payments to be made to the Executive following the resolution
of such dispute shall be increased by amount of the accrued interest
thereon computed at the prime rate announced from time to time by The Wall
Street Journal (or if unavailable, by such other nationally recognized
financial publication published daily) compounded monthly from the date
that such payments originally were due.
(f) The provisions of this Section 4.2 are intended to apply to any and all
payments or benefits available to the Executive under this Agreement or any
other agreement or plan of the Company under which the Executive receives
Contingent Compensation Payments.
4.3 Mitigation. The Executive shall not be required to mitigate the amount of
any payment or benefits provided for in this Section 4 by seeking other
employment or otherwise. Further, except as provided in Section 4.1(a)(ii)
or (b)(ii), the amount of any payment or benefits provided for in this
Section 4 shall not be reduced by any compensation earned by the Executive
as a result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the
Company or otherwise.
4.4 Outplacement Services. In the event the Executive is terminated by the
Company (other than for Cause, Disability or Death), or the Executive
terminates employment for Good Reason, within 36 months following the
Change in Control Date, the Company shall provide outplacement services
through one or more outside firms of the Executive's choosing up to an
aggregate of $12,000, with such services to extend until the earlier of (i)
12 months following the termination of Executive's employment or (ii) the
date the Executive secures full time employment.
5. Disputes.
5.1 Settlement of Disputes; Arbitration. All claims by the Executive for
benefits under this Agreement shall be directed to and determined by the
Board of Directors of the Company and shall be in writing. Any denial by
the Board of Directors of a claim for benefits under this Agreement shall
be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board of Directors shall afford a reasonable opportunity to the
Executive for a review of the decision denying a claim. Any further dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in Boston, Massachusetts, in accordance
with the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
5.2 Expenses. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal, accounting and other fees and expenses which
the Executive may reasonably incur as a result of any claim or contest
(regardless of the outcome thereof) by the Company, the Executive or others
regarding the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive regarding the amount
of any payment or benefits 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 Code.
5.3 Compensation During a Dispute. If the Change in Control Date occurs during
the Term and the Executive's employment with the Company terminates within
36 months following the Change in Control Date, and the right of the
Executive to receive benefits under Section 4 (or the amount or nature of
the benefits to which he is entitled to receive) are the subject of a
dispute between the Company and the Executive, the Company shall continue
(a) to pay to the Executive his base salary in effect as of the Measurement
Date and (b) to provide benefits to the Executive and the Executive's
family at least equal to those which would have been provided to them, if
the Executive's employment had not been terminated, in accordance with the
applicable Benefit Plans in effect on the Measurement Date, until such
dispute is resolved either by mutual written agreement of the parties or by
an arbitrator's award pursuant to Section 5.1. Following the resolution of
such dispute, the sum of the payments made to the Executive under clause
(a) of this Section 5.3 shall be deducted from any cash payment which the
Executive is entitled to receive pursuant to Section 4; and if such sum
exceeds the amount of the cash payment which the Executive is entitled to
receive pursuant to Section 4, the excess of such sum over the amount of
such payment shall be repaid (without interest) by the Executive to the
Company within 60 days of the resolution of such dispute.
6. Successors.
6.1 Successor to Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business or assets of the Company expressly to
assume and agree to perform this Agreement to the same extent that the
Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain an assumption of this Agreement at
or prior to the effectiveness of any succession shall be a breach of this
Agreement and shall constitute Good Reason if the Executive elects to
terminate employment, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall
mean the Company as defined above and any successor to its business or
assets as aforesaid which assumes and agrees to perform this Agreement, by
operation of law or otherwise.
6.2 Successor to Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be
payable to the Executive or his family hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the Executive's
estate.
7. Notice. All notices, instructions and other communications given hereunder
or in connection herewith shall be in writing. Any such notice, instruction
or communication shall be sent either (i) by registered or certified mail,
return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the
Company, at Kronos Incorporated, 000 Xxxxxxxxx Xxxx. Xxxxxxxxxx,
Xxxxxxxxxxxxx, 00000 (Attn: General Counsel) and to the Executive at
[_____________] (or to such other address as either the Company or the
Executive may have furnished to the other in writing in accordance
herewith). Any such notice, instruction or communication shall be deemed to
have been delivered five business days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, or one business
day after it is sent via a reputable nationwide overnight courier service.
Either party may give any notice, instruction or other communication
hereunder using any other means, but no such notice, instruction or other
communication shall be deemed to have been duly delivered unless and until
it actually is received by the party for whom it is intended.
8. Miscellaneous.
8.1 Employment by Subsidiary. For purposes of this Agreement, the Executive's
employment with the Company shall not be deemed to have terminated solely
as a result of the Executive continuing to be employed by a wholly-owned
subsidiary of the Company.
8.2 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
8.3 Injunctive Relief. The Company and the Executive agree that any breach of
this Agreement by the Company is likely to cause the Executive substantial
and irrevocable damage and therefore, in the event of any such breach, in
addition to such other remedies which may be available, the Executive shall
have the right to specific performance and injunctive relief.
8.4 Governing Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts, without regard to conflicts of law
principles.
8.5 Waivers. No waiver by the Executive at any time of any breach of, or
compliance with, any provision of this Agreement to be performed by the
Company shall be deemed a waiver of that or any other provision at any
subsequent time.
8.6 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
8.7 Tax Withholding. Any payments provided for hereunder shall be paid net of
any applicable tax withholding required under federal, state or local law.
8.8 Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by
any officer, employee or representative of any party hereto in respect of
the subject matter contained herein; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby
terminated and cancelled.
8.9 Amendments. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Senior Executive
Employee Retention Agreement as of the day and year first set forth above.
KRONOS INCORPORATED
By:________________________________
Name:
Title:
-----------------------------------
[Insert Name of Executive]
--------------------------------------------------------------------------------
Schedule to Exhibit 10.12
--------------------------------------------------------------------------------
Name Date of Agreement Length of Agreement
--------------------------------------------------------------------------------
Xxxx X. Ain October 5, 2000 36 months after Change in Control
as defined in Section 3.a.
--------------------------------------------------------------------------------
Xxxx Xxx October 5, 2000 36 months after Change in Control
as defined in Section 3.a.
--------------------------------------------------------------------------------
Xxxx Xxxx October 5, 2000 36 months after Change in Control
as defined in Section 3.a.
--------------------------------------------------------------------------------
Xxxxx Xxxxxxxxxxx February 11, 2002 36 months after Change in Control
as defined in Section 3.a.
--------------------------------------------------------------------------------
Xxxxx Xxxxxx December 8, 2003 36 months after Change in Control
as defined in Section 3.a.
--------------------------------------------------------------------------------
Xxxxx Xxxxxxx December 8, 2003 36 months after Change in Control
as defined in Section 3.a.
--------------------------------------------------------------------------------
Xxxxxx XxXxxxxxx December 8, 2003 36 months after Change in Control
as defined in Section 3.a.
--------------------------------------------------------------------------------
Xxxxx Xxxxxxx October 5, 2000 36 months after Change in Control
as defined in Section 3.a.
--------------------------------------------------------------------------------
