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Exhibit 10.12
KELLY-LEVEY & ASSOCIATES, INC.
RETENTION INCENTIVE BONUS PLAN
PREAMBLE
WHEREAS, Kelly-Levey & Associates, Inc. (the "Company") is negotiating
and finalizing a Stock Purchase Agreement (the "Purchase Agreement") with
Conley, Canitano & Assoc., Inc. ("CCAi") pursuant to which CCAi would purchase
all of the capital stock of the Company; and
WHEREAS, in order to consummate the transactions contemplated by the
Purchase Agreement, it is necessary and in the best interests of the Company,
its shareholders and employees that the Company adopt this Plan in order to
provide incentives to certain of the current employees of the Company to
continue to perform their duties and remain employees of the Company after the
closing of the transactions contemplated by the Purchase Agreement.
NOW, THEREFORE, the Company hereby establishes the Kelly-Levey &
Associates, Inc. Retention Incentive Bonus Plan as hereinafter provided.
ARTICLE 1
GENERAL
1.1 EFFECTIVE DATE. The provisions of the Plan shall be effective as of
April 3, 1998 (the "Effective Date").
1.2 PURPOSE. The Plan is intended to be an unfunded plan solely for the
purpose of providing bonus payments to current Company employees based on such
employees continuing their employment with the Company during the Post Closing
Transaction Period.
ARTICLE 2
DEFINITIONS AND USAGE
2.1 DEFINITIONS. Wherever used in the Plan, the following words and
phrases shall have the meaning set forth below unless the context plainly
requires a different meaning:
(a) "AGREEMENT" means the executed Retention Incentive Bonus Plan
Agreement between the Company and an Eligible Employee
substantially in the form of the attached EXHIBIT A.
(b) "BOARD" means the members of the Board of Directors of the
Company.
(c) "BONUS PAYMENT" means the payments made to each Eligible
Employee under this Plan and the Agreement.
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(d) "CAUSE" shall have the meaning ascribed to it in each
individual Participant's employment agreement with CCAi;
PROVIDED, HOWEVER, if such Participant's employment agreement
with CCAi does not define "cause", then "Cause" shall mean:
(i) misappropriating any fluids or property of CCAi,
committing fraud or embezzlement or engaging in any
criminal or illegal activity having a material
adverse effect on CCAi; (ii) except for providing
services to CCAi in exchange for compensation in
accordance with the terms of the Participant's
employment agreement, attempting to obtain material
personal gain, profit or enrichment at the expense of
CCAi or from any transaction in which the Participant
has an interest which is known by the Participant to
be adverse to the interest of CCAi; (iii) being
convicted of a felony; (iv) committing any material
breach of the Participant's employment agreement with
CCAi; provided such breach continues for a period of
30 days after CCAi shall have notified the
Participant in writing of such breach; or (v)
performing or committing any act intended by the
Participant to cause a material adverse effect on
CCAi, including, without limitation, acts of sexual
harassment, provided such act continues unremedied
for a period of 30 days after CCAi shall have
notified the Participant in writing of such act.
(e) "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
(f) "COMPANY" means Kelly-Levey & Associates, Inc., or any
successor thereto, including CCAi.
(g) "EFFECTIVE DATE" means April 3, 1998.
(h) "ELIGIBLE EMPLOYEE" shall have the meaning ascribed to it in
Article 3.
(i) "ESCROW AGENT" means Burke & Company, P.L.L., as determined by
the Board.
(j) "PARTICIPANT" means an Eligible Employee of the Company who is
participating in the Plan.
(k) "PAYMENT DATE" means the date that the Company determines a
Participant's right to receive a Bonus Payment as more
particularly described in Section 6.3.
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(1) "PLAN" means this Kelly-Levey & Associates, Inc. Retention
Incentive Bonus Plan.
(m) "POST CLOSING TRANSACTION PERIOD" means the period commencing
after the closing of the transactions contemplated by the
Purchase Agreement (the "Closing") and ending on the
thirty (30) month anniversary of the Closing.
(m) "TERMINATION EVENT" shall have the meaning ascribed to it in
Section 8.1.
2.2 USAGE. Except where otherwise indicated by the context, any
masculine terminology used herein shall also include the feminine and vice
versa, and the definition of any term herein in the singular shall also include
the plural and vice versa.
ARTICLE 3
ELIGIBILITY
Employees of the Company who are employees of the Company as of the
close of business on April 3, 1998 ("Eligible Employee") will be eligible to
receive Bonus Payments under the Plan upon designation by the Board as evidenced
by an Agreement between such employee and the Company.
ARTICLE 4
ADMINISTRATION
4.1 The Plan shall be administered by the Escrow Agent. With respect to
each Bonus Payment, the Escrow Agent, in its sole discretion, shall determine
whether a Participant is entitled to receive each Bonus Payment hereunder.
4.2 Except as specifically limited by the provisions of the Plan, the
Escrow Agent. in its sole discretion, shall have the authority to:
(a) Distribute the Bonus Payments on such terms and conditions
consistent with this Plan and the Agreements;
(b) Interpret the provisions of the Plan and decide all questions
of fact arising in its application, including, without
limitation, determination of eligibility, Termination Events
and the right to receive Bonus Payment(s); and
(c) Prescribe such rules and procedures for plan administration
as, from time to time, it may deem advisable.
4.3 From time to time, and upon reasonable request by the Escrow Agent,
the Company shall provide the Escrow Agent with information regarding each
Participant, including, without limitation, such Participant's current address
and employment status (i.e. voluntarily terminated, terminated with Cause,
deceased, etc.).
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4.4 Any action, decision, interpretation or determination by the Escrow
Agent with respect to the application or administration of this Plan shall be
final and binding upon all persons, and need not be uniform with respect to its
determination of recipients, amount, timing, form, terms or provisions of Bonus
Payments.
4.5 The Escrow Agent shall not be liable for any action or
determination taken or made in good faith with respect to the Plan or any Bonus
Payment granted hereunder, and to the extent permitted by law, the Escrow Agent
shall be indemnified by the Company for any liability and expense which may
occur from any claim or cause of action pursuant to the provisions of Article
12.
ARTICLE 5
PARTICIPATION IN PLAN
5.1 PARTICIPATION. Each Eligible Employee may become a Participant by
entering into an Agreement in the manner provided in Section 5.2. Each
Participant shall continue as a Participant of the Plan until such Participant's
right to receive Bonus Payments under the Plan is terminated as set forth in
Article 8.
5.2 AGREEMENT. All Bonus Payments due hereunder shall be evidenced by a
written agreement executed between the Company and the Participant in such form
or forms as the Board deems appropriate. An Eligible Employee shall execute and
deliver the Agreement to the Company or the Escrow Agent on or before the
Effective Date which Agreement shall be effective as of the Effective Date. The
Agreement shall set forth each of the Bonus Payments the Participant is eligible
to receive pursuant to this Plan and any additional restrictions on such Bonus
Payments as the Board deems appropriate, including, without limitation, the
Termination Events set forth in Section 8.1.
ARTICLE 6
PAYMENT OF BONUS PAYMENT
6.1 ELIGIBILITY FOR PAYMENT. A Participant's eligibility to receive a
Bonus Payment is subject to the termination provisions of Article 8.
Eligibility shall be determined as of the Payment Dates set forth in Section
6.3. Subject to the termination provisions of Article 8, payment of an eligible
Participant's Bonus Payment shall be made within 30 days after the Payment Date.
Notwithstanding the foregoing, the liability of the Company to make the Bonus
Payments will accrue on the books of the Company as an obligation to the
Participant, but the Company is not required to set aside or designate any
particular assets for this purpose prior to the distribution of the Bonus
Payments.
6.2 AMOUNT OF BONUS PAYMENT. Each Participant's Bonus Payment(s) shall
be determined by the Board in its sole discretion as evidenced in writing in the
Agreement.
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6.3 PAYMENT DATES. Eligibility of a Participant and the right to
receive each of the Bonus Payments will be determined as of the close of
business on the following dates (the "Payment Dates"): (a) October 3, 1998; (b)
April 3, 1999; (c) April 3, 2000; and (d) October 3, 2000.
6.4 FORM OF BONUS PAYMENTS. Each Bonus Payment shall be paid in cash in
a single lump sum payment.
ARTICLE 7
DEATH OF PARTICIPANT
7.1 COMMENCEMENT OF BONUS PAYMENTS. Subject to the Termination Events
set forth in Section 8.1, if a Participant dies during the term of his
Agreement, then the Bonus Payment(s) otherwise payable with respect to the
Participant shall be paid to the Participant's beneficiary or beneficiaries upon
written notification to Escrow Agent of the Participant's death, all in
accordance with the terms of this Plan and the Agreement.
7.2 DESIGNATION OF BENEFICIARY. A Participant may designate, on a form
provided by the Board one or more primary and contingent beneficiaries to
receive all of the Bonus Payments which may be payable hereunder following the
Participant's death, and may designate the proportions in which such
beneficiaries are to receive such payments. A Participant may change such
designations from time to time by filing a new form, and the last written
designation filed with the Board and the Escrow Agent prior to the Participant's
death shall control. If a Participant falls to specifically designate a
beneficiary, or if no designated beneficiary survives the Participant, payment
shall be made by the Escrow Agent in the following order of priority:
(a) to the Participant's surviving spouse, or if none,
(b) to the Participant's estate.
ARTICLE 8
TERMINATION OF BONUS PAYMENTS
8.1 TERMINATION EVENTS. Notwithstanding anything to the contrary in
this Plan, a Participant's right to receive Bonus Payments under this Plan as
evidenced by his Agreement shall terminate immediately without further action by
the Company upon the happening of one of the following events (the "Termination
Events"):
(a) The Participant is terminated by the Company with Cause; or
(b) The Participant voluntarily terminates his employment with the
Company.
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8.2 DETERMINATION OF TERMINATION EVENT. The determination of whether a
Termination Event has occurred shall be made by the Escrow Agent, in its sole
discretion, as of the Payment Dates set forth in Section 6.3.
ARTICLE 9
TRANSFERABILITY OF BONUS PAYMENTS
The Participant shall not have the power to pledge, transfer, assign,
mortgage or otherwise encumber or dispose of in advance any interest in amounts
payable hereunder or any of the payments provided for herein, nor shall any
interest in amounts payable hereunder or in any payments be subject to seizure
for payments of any debts, judgments, alimony or separate maintenance, or be
reached or transferred by operation of law in the event of bankruptcy,
insolvency or otherwise.
ARTICLE 10
EFFECTIVE DATE
This Plan shall become effective as of the Effective Date, having been
adopted by the Board on March 25, 1998.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 EFFECTIVENESS. This Plan shall be effective and binding upon the
Company only upon the closing of the transactions contemplated by the Purchase
Agreement. If a closing of the transactions contemplated under the Purchase
Agreement does not occur, this Plan shall be null and void and of no force or
effect.
11.2 AMENDMENT AND TERMINATION. This Plan may not be amended or
terminated in any way that will reduce or adversely affect the Bonus Payment of
any Participant hereunder entitled to receive a Bonus Payment.
11.3 SUCCESSORS AND ASSIGNS. The provisions of the Plan are binding
upon and inure to the benefit of the Company, its successors and assigns, and
the Participant, his beneficiaries, heirs, legal representatives and assigns.
11.4 GOVERNING LAW. The Plan shall be subject to and construed in
accordance with the laws of the State of Ohio.
11.5 NO GUARANTEE OF EMPLOYMENT. Nothing contained in the Plan shall be
construed as a contract of employment or deemed to give any Participant the
right to be retained in the employ of the Company or any equity or other
interest in the assets, business or affairs of the Company. No
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Participant hereunder shall have a security interest in assets of the Company
used to make Bonus Payments.
11.6 SEVERABILITY. If any provision of the Plan shall be held illegal
or invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions of the Plan, but the Plan shall be construed and enforced
as if such illegal or invalid provision had never been included herein.
11.7 NOTIFICATION OF ADDRESSES. Each Participant shall file with the
Escrow Agent, from time to time, in writing, the post office address of the
Participant and each change of post office address. Any communication, statement
or notice addressed to the last post office address filed with the Escrow Agent
(or if no such address was filed with the Escrow Agent, then to the last post
office address of the Participant or beneficiary as shown on the Company's
records) shall be binding on the Participant for all purposes of the Plan and
neither the Escrow Agent nor the Company shall be obligated or required to
search for or ascertain the whereabouts of any Participant.
11.8 TAX WITHHOLDING/PAYMENT. No later than the date as of which an
amount received pursuant to this Plan first becomes includable in the gross
income of an individual for federal, state and local tax purposes, the
Participant shall pay to the Company, or make arrangements satisfactory to the
Board regarding the payment of, any federal, state or local taxes of any kind
required by law to be withheld with respect to such amount. The obligations of
the Company under the Plan shall be conditional on such payment or arrangements
and the Company shall, in its sole discretion and to the extent permitted by
law, have the right to deduct any such taxes from the Bonus Payment otherwise
due to the Participant.
11.9 NO GRANT OF BONUS PAYMENT. Nothing contained in this Plan or in
any action taken by the Board shall constitute the granting of Bonus Payments.
An Eligible Employee shall be entitled to receive a Bonus Payment only at such
time as a written Agreement shall have been executed and delivered to the
Company and such Participant's right to receive the Bonus Payments has not been
terminated in accordance with Article 8.
ARTICLE 12
INDEMNIFICATION
The Company shall indemnify and hold harmless the Escrow Agent from and
against any and all liabilities, costs, and expenses incurred by such persons as
a result of any act, or omission to act, in connection with the performance its
duties, responsibilities and obligations under this Plan and any Agreement,
other than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful misconduct or criminal acts of the Escrow Agent.
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The undersigned, pursuant to the approval of the Board on March 25,
1998, does herewith execute on behalf of the Company this Kelly-Levey &
Associates, Inc. Retention Incentive Bonus Plan.
KELLY-LEVEY AND ASSOCIATES, INC.
BY: /s/ Anthony F. Kelly
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Anthony F. Kelly, President