exv10w12



 




EXHIBIT 10.12



RETENTION INCENTIVE AGREEMENT



         THIS RETENTION INCENTIVE AGREEMENT is made this 1st day of September 2001
by and between IIT Research Institute, an Illinois not-for-profit corporation
(“IITRI”), and Barry S. Watson, an employee of IITRI (hereinafter “Employee”).


         WHEREAS, the Board of Governors of IITRI has adopted a resolution to
establish a Special Committee to identify and explore alternatives for
enhancing and expanding research activities on the campus of the Illinois
Institute of Technology (“IIT”);


         WHEREAS, IITRI’s corporate charter includes, as a stated purpose of the
corporation, a charge to support, assist and confer benefits upon IIT,
including without limitation financial support, assistance or benefit;


         WHEREAS, one alternative under evaluation by IIT and IITRI to fulfill the
goals of the Special Committee is the restructure and/or recapitalization of
IITRI that may entail a Change of Control (as defined herein) of IITRI;


         WHEREAS, the IITRI Board of Governors has determined that certain measures
are necessary to reinforce and encourage the continued dedication of the
Employee to his assigned duties without distraction in the face of a potential
Change of Control;


         WHEREAS, IITRI desires to induce Employee to continue full-time employment
for a specific period of time during the Special Committee’s evaluation of
IITRI in light of IIT’s goals; and


         WHEREAS, Employee wishes to remain in IITRI’s employ for at least five
years from the date of this Agreement;


         NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, intending to be legally bound, IITRI and Employee agree as follows:


1.     IITRI hereby agrees to pay Employee the sum of $295,000 (hereinafter
Retention Inventive) in addition to any other monetary consideration to which
Employee may be entitled to receive (including without limitation wages,
salary, other compensation and unreimbursed expenses), provided that Employee
remains in good standing as an employee of IITRI, or any subsidiary or
affiliate of IITRI, on a full-time basis for the five year period beginning the
September 1, 2001, through the September 1, 2006.


2.     IITRI shall, within ten (10) days after mutual execution of this Agreement,
deposit for the benefit of Employee the full amount of the Retention Incentive
into the IITRI Flexible Option Plan as in effect at the time of deposit.
Pursuant to the current terms of the Flexible Option Plan, fifty percent (50%)
of the option amount vests after three years of service, an additional
twenty-five percent (25%) vests after four years of service, and the remaining
twenty-five percent (25%) vests after five years of service. Any amounts that
do not vest are retained by IITRI.


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3.     In the event of a proposed Change of Control to IITRI, or any subsidiary or
affiliate of IITRI employing Employee as of the effective date of such Change
of Control, IITRI shall give Employee written notice that such event is to
occur at least sixty (60) days prior to the effective date thereof, and all
unvested options held by Employee in the IITRI Flexible Option Plan shall
become fully vested as of the date of such Change of Control and Employee shall
have the right to exercise his or her options in whole or in part at any time
after the date of such notice, to the extent not theretofore exercised. For
the purposes of this paragraph, a Change of Control shall mean and shall be
effective upon the closing date of: (i) the dissolution or liquidation of
IITRI; (ii) the merger or consolidation of IITRI with any other corporation,
foundation, association or other entity; (iii) the amendment of IITRI’s
corporate documents to grant a party other than IIT, through its Executive
Committee, the right to designate, elect or remove a majority of IITRI’s voting
directors; or (iv) the transfer to another corporation, foundation, association
or other entity in a sale, lease, exchange or other similar transfer (in a
single transaction or in a series of related transactions) of all or
substantially all of the assets of IITRI.


4.     This Agreement is intended to supplement, and in no way alters or affects,
the Employment Agreement dated September 29, 2000, by and between IITRI and
Employee, and any amendments thereto. The Employment Agreement, as may be
amended from time to time by the mutual consent of IITRI and Employee, shall
remain in full force and effect in accordance with its terms.


         IN WITNESS WHEREOF, the duly authorized representative of IITRI and
Employee hereby execute this Retention Incentive Agreement by their own free
act and deed, as follows:



	 	 	 	 	 
	EMPLOYEE	 	
IIT RESEARCH INSTITUTE
	
	
	
	

	 	 	 	 	 
	
	
	
	

	/s/ Barry S. Watson	 	
By:
	 	/s/ Bahman Atefi
	
	 	 	 	

	 	 	
Title:
	 	President & CEO
	 	 	 	 	

	 	 	 	 	 
	
	
	
	

	 	 	 	 	 




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