CHANGE IN CONTROL AND TERMINATION AGREEMENT
This Change in Control and Termination Agreement
("Agreement") is entered into as of this 20th day of
January, 1995, by and between Premier Financial
Services, Inc., a Delaware corporation ("Premier") and
Xxxxxxx X. Xxxxx ("Executive").
WITNESSETH:
WHEREAS, Executive is currently employed by Premier as its
President and Chief Executive Officer; and
WHEREAS, Premier desires to provide security to Executive in
connection with Executive's employment with Premier in the event
of a Change in Control of Premier; and
WHEREAS, Executive and Premier desire to enter into this
Agreement pertaining to the terms of the security Premier is
providing to Executive with respect to his employment in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties agree as follows:
1. Term. The term of this Agreement shall be the period
beginning on the date hereto and terminating on the date 36
months after the date hereof (the "Term"), provided that for each
day from and after the date hereof the Term will automatically be
extended for an additional day, unless either Premier or
Executive has given written notice to the other party of its or
his election to cease such automatic extension, in which case the
Term shall end at the expiration of the 36 month period beginning
on the date such notice is received by such other party.
2. Definitions. For purposes of this Agreement:
(a) "Affiliate" or "Associate" shall have the meaning
set forth in Rule 12b-2 under the Securities Exchange Act of
0000 (xxx "Xxxxxxxx Xxx").
(b) "Base Salary" shall mean Executive's monthly base
salary at the rate in effect on the date of a termination of
employment under circumstances described in subsections 3(a)
or (b) below; provided, however, that such rate shall in no
event be less than the highest rate in effect for Executive
at any time during the Term.
(c) "Beneficiary" shall mean the person or entity
designated by the Executive, by written instrument delivered
to Premier, to receive the benefits payable under this
Agreement in the event of his death. If the Executive fails
to designate a Beneficiary, or if no Beneficiary survives
the Executive, such death benefits shall be paid:
(i) to the Executive's surviving spouse; or
(ii) if there is no surviving spouse, to the
Executive's living descendants per stirpes; or
(iii) if there is neither a surviving spouse nor
descendants, to the Executive's duly
appointed and qualified executor or personal
representative.
(d) A "Change in Control" of Premier shall be deemed
to have occurred if:
(i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act is or
becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act, except that a person
shall be deemed to be the "beneficial owner" of
all shares that any such person has the right to
acquire pursuant to any agreement or arrangement
or upon exercise of conversion rights, warrants,
options or otherwise, without regard to the sixty
day period referred to in such Rule), directly or
indirectly, of securities representing 25% or more
of the combined voting power of Premier's then
outstanding securities; or
(ii) at any time during any period of two consecutive
years (not including any period prior to January
1, 1995) individuals who at the beginning of such
period constituted the Board (the "Incumbent
Board") cease for any reason to constitute at
least a majority of the Board; provided, however,
that any individual becoming a director subsequent
to such date whose election, or nomination for
election by Premier's shareholders, was approved
by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be
considered as though such individual were a member
of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial
assumption of office occurs as a result of either
an actual or threatened election contest (as such
terms are used in Rule 14a-11 or Regulation 14A
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a person other than
the Board.
(e) "Good Cause" shall be deemed to exist if, and only
if:
(i) Executive engages in acts or omissions
constituting dishonesty, intentional breach of
fiduciary obligation or intentional wrongdoing or
malfeasance, in each case that results in
substantial harm to Premier or any Affiliate; or
(ii) Executive is convicted of a criminal violation
involving fraud or dishonesty.
(e) "Good Reason" shall be deemed to exist if, and
only if, Executive terminates his employment because,
without his express written consent:
(i) Premier assigns to Executive duties of a
nonexecutive nature or for which Executive is not
reasonably equipped by his skills and experience;
(ii) Premier reduces the salary of Executive, or
materially reduces the amount of paid vacation to
which he is entitled, or his fringe benefits and
perquisites;
(iii) Premier requires Executive to relocate his
principal business office or his principal
place of residence, or assign to Executive
duties that would reasonably require such
relocation;
(iv) Premier requires Executive, or assign duties to
Executive which would reasonably require him to
spend more than 30 normal working days away from
his principal business office or his principal
place of residence during any consecutive twelve-
month period;
(v) Premier fails to provide office facilities,
secretarial services, and other administrative
services to Executive which are substantially
equivalent to the facilities and services provided
to Executive on the date hereof; or
(vi) Premier terminates any Incentive, Retirement or
Welfare Plans, or reduces or limits Executive's
participation therein relative to the level of
participation of other executives of similar rank,
to such an extent as to materially reduce the
aggregate value of Executive's incentive
compensation and benefits below their aggregate
value as of the date hereof.
(f) "Retirement Plan" shall mean any qualified or
supplemental employee pension benefit plan, as defined in
Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), currently or hereinafter made
available by Premier in which Executive is eligible to
participate, including, but not limited to, the Premier
Financial Services, Inc. Employee Savings and Stock Plan and
Trust (the "Savings Plan") and the Premier Financial
Services, Inc. Senior Leadership and Directors Deferred
Compensation Plan (the "Deferred Compensation Plan").
(g) "Severance Period" shall mean the period beginning
on the date Executive's employment with Premier terminates
under circumstances described in subsection 3(a) and ending
on the date 12 months thereafter.
(h) "Substantial Portion of the Property of Premier"
shall mean 50% of the aggregate book value of the assets of
Premier and its Affiliates and Associates as set forth on
the most recent balance sheet of Premier, prepared on a
consolidated basis, by its regularly employed, independent,
certified public accountants.
(i) "Welfare Plan" shall mean any health and dental
plan, disability plan, survivor income plan or life
insurance plan, as defined in Section 3(1) of ERISA,
currently or hereafter made available by Premier in which
Executive is eligible to participate.
(j) "Incentive Plan" shall mean any incentive or bonus
plan currently or hereinafter made available by Premier in
which Executive is eligible to participate, including, but
not limited to, the Premier Financial Services, Inc. 1995
Stock Option Plan, and any successor thereto..
3. Benefits Upon Termination of Employment. The following
provisions will apply if a Change in Control occurs during the
Term, and at any time during the 24 months after the Change in
Control occurs (whether during or after the expiration of the
Term), the employment of Executive with Premier is terminated by
Premier for any reason other than Good Cause, or Executive
terminates his employment with Premier for Good Reason:
(a) Premier shall pay Executive an amount equal to
Executive's Base Salary multiplied by 12. Such amount shall
be paid to Executive in a lump sum within 90 days after his
date of termination of employment; provided, however,
Executive, by written notice to Premier, may elect to
receive such payment on any date that is no earlier than the
later to occur of: (i) the date 10 days after the date of
termination; and (ii) the date 10 days after receipt of such
notice.
(b) During the Severance Period Executive and his
spouse and other dependents will continue to be covered by
all Welfare Plans maintained by Premier in which he and his
spouse and other dependents were participating immediately
prior to the date of his termination, as if he continued to
be an employee of Premier, and Premier will continue to pay
the costs of coverage of Executive and his spouse and other
dependents under such Welfare Plans on the same basis as is
applicable to active employees covered thereunder; provided
that, if participation in any one or more of such Welfare
Plans is not possible under the terms thereof, Premier will
provide substantially identical benefits. Coverage under
any such Welfare Plan will cease if and when Executive
obtains employment with another employer during the
Severance Period, and becomes eligible for coverage under
any substantially similar Welfare Plan provided by his new
employer.
(c) Premier shall pay to Executive in a lump sum
within 90 days after his termination of employment: (i) a
bonus in the amount that would have been payable under any
Incentive Plan for the year of such employment termination
had he not terminated employment, but pro rated according to
the number of months the Executive was employed by Premier
for that year; and (ii) an additional bonus amount that is
equal to the average of the annual bonus amount paid to
Executive during the three years preceding the year of his
employment termination.
(d) Premier shall pay to Executive in a lump sum
within 90 days after his termination of employment an amount
equal to the amount that would have been contributed by
Premier on behalf of the Executive under the Savings Plan
and under the Deferred Compensation Plan for the 12 month
period following the Executive's employment termination had
he not terminated employment and had he made contributions
and deferrals under the Plans at the same level as he made
during the 12 month preceding his employment termination.
(e) Executive shall receive any and all benefits
accrued under any Retirement Plan, Welfare Plan, Incentive
Plan or other plan or program in which he participates at
the date of termination of employment, to the date of
termination of employment, the amount, form and time of
payment of such benefits to be determined by the terms of
such Retirement Plan, Welfare Plan, Incentive Plan and other
plan or program. Executive's employment shall be deemed to
have terminated by reason of retirement, and without regard
to vesting limitations in all such Plans and other plans or
programs not subject to the qualification requirements of
Section 401(a) of the Internal Revenue Code of 1986
("Code"), under circumstances that have the most favorable
result for Executive thereunder for all purposes of such
Plans and other plans or programs. Payment shall be made at
the earliest date permitted under any such Plan.
(f) If upon the date of termination of Executive's
employment, Executive holds any options with respect to
stock of Premier, all such options will immediately become
fully vested and exercisable upon such date and will be
exercisable for 200 days thereafter. Any restrictions on
stock of Premier owned by Executive on the date of
termination of his employment will lapse on such date. To
the extent such acceleration of exercise of such options, or
such lapse of restrictions, is not permissible under the
terms of any plan pursuant to which the options or
restricted stock were granted, Premier will pay to
Executive: (i) an amount equal to the excess, if any, of the
aggregate fair market value of all stock of Premier subject
to such options, determined on the date of termination of
employment, over the aggregate exercise price of such stock,
and Executive will surrender all such options unexercised;
and (ii) the aggregate fair market value on the date of
termination of employment of all such restricted stock and
Executive shall transfer such stock to Premier. Payments
pursuant to the preceding sentence will be made to Executive
in a lump sum within 90 days after his date of termination
of employment; provided, however, Executive, by written
notice to Premier, may elect to receive such payments on any
date that is not earlier than the later to occur of (i) the
date 10 days after the date of termination, and (ii) the
date 10 days after receipt of such notice.
If the employment of Executive with Premier is terminated by
Premier for Good Cause or by Executive other than for Good
Reason, Executive's Base Salary shall be paid through the date of
his termination, and Premier shall have no further obligation to
Executive or any other person under this Agreement. Such
termination shall have no effect upon Executive's other rights,
including but not limited to rights under the Retirement, Welfare
and Incentive Plans.
Notwithstanding anything herein to the contrary, in the
event Premier or an Affiliate shall terminate the employment of
Executive for Good Cause hereunder, Premier shall give Executive
at least thirty (30) days prior written notice specifying in
detail the reason or reasons for Executive's termination.
This Agreement shall have no effect, and Premier shall have
no obligations hereunder, if Executive's employment terminates
for any reason at any time other than during the 24 months
following a Change in Control.
4. Excise Tax. It is the intention of Premier and
Executive that no portion of any payment under this Agreement, or
payments to or for the benefit of Executive under any other
agreement or plan, be deemed to be an "Excess Parachute Payment"
as defined in Section 280G of the Code, or its successors. It is
agreed that the present value of and payments to or for the
benefit of Executive in the nature of compensation, receipt of
which is contingent on the Change in Control of Premier, and to
which Section 280G of the Code applies (in the aggregate "Total
Payments") shall not exceed an amount equal to one dollar less
than the maximum amount that Premier may pay without loss of
deduction under Section 280G(a) of the Code. Present value for
purposes of this Agreement shall be calculated in accordance with
Section 280G(d)(4) of the Code. Within sixty (60) days following
the earlier of (i) the giving of the notice of termination or
(ii) the giving of notice by Premier to Executive of its belief
that there is a payment or benefit due Executive which will
result in an excess parachute payment as defined in Section 280G
of the Code, Executive and Premier, at Premier's expense, shall
obtain the opinion of such legal counsel and certified public
accountants as Executive may choose (notwithstanding the fact
that such persons have acted or may also be acting as the legal
counsel or certified public accountants for Premier), which
opinions need not be unqualified, which sets forth: (i) the
amount of the Base Period Income of Executive (as defined in Code
Section 280G), (ii) the present value of Total Payments; and
(iii) the amount and present value of any excess parachute
payments. In the event that such opinion determines that there
would be an excess parachute payment, the payment hereunder or
any other payment determined by such counsel to be includable in
Total Payments shall be modified, reduced or eliminated as
specified by Executive in writing delivered to Premier within
thirty (30) days of his receipt of such opinions or, if Executive
fails to so notify Premier, then as Premier shall reasonably
determine, so that under the bases of calculation set forth in
such opinions there will be no excess parachute payment. In the
event that the provisions of Sections 280G and 4999 of the Code
are repealed without succession, this Section shall be of no
further force or effect.
5. Set-Off. No payments or benefits payable to or with
respect to Executive pursuant to this Agreement shall be reduced
by any amount that: (i) Executive or his spouse or Beneficiary,
or any other beneficiary under the Retirement and Welfare Plans,
may earn or receive from employment with another employer or from
any other source, except as expressly provided in subsection
3(b); or (ii) Premier claims is owed to Premier or an Affiliate
by Executive.
6. Death. Upon Executive's death following his
termination of employment: (i) all unpaid amounts payable to
Executive under subsections 3(a), (b), (c), (d) and (f), if any,
shall be paid to his Beneficiary, all amounts payable under
subsection 3(e) shall be paid pursuant to the terms of said
subsection to his spouse or other beneficiary under the
Retirement Plan; and (ii) the Executive's spouse and other
dependents shall continue to be covered under all applicable
Welfare Plans during the remainder of the Severance Period, if
any, pursuant to subsection 3(b).
7. No Solicitation of Representatives and Employees.
Executive agrees that he shall not, during the Term or the
Severance Period, directly or indirectly, in his individual
capacity or otherwise, induce, cause, persuade (or attempt to
induce or persuade), any representative, agent or employee of
Premier or any of its Affiliates to terminate such person's
employment relationship with Premier or any of its Affiliates, or
to violate the terms of any agreement between said
representative, agent or employee and Premier or any of its
Affiliates.
8. Confidentiality. Executive acknowledges that
preservation of a continuing business relationship between
Premier or its Affiliates and their respective customers,
representatives, and employees is of critical importance to the
continued business success of Premier and its Affiliates and that
it is the active policy of Premier and its Affiliates to guard as
confidential certain information not available to the public and
relating to the business affairs of Premier and its Affiliates.
In view of the foregoing, Executive agrees that he shall not
during the Term and at any time thereafter, without the prior
written consent of Premier, disclose to any person or entity any
such confidential information that was obtained by Executive in
the course of his employment by Premier or any of its Affiliates.
This section shall not be applicable if and to the extent
Executive is required to testify in a legislative, judicial or
regulatory proceeding pursuant to an order of Congress, any state
or local legislature, a judge, or an administrative law judge or
is otherwise required by law to disclose such information.
9. Forfeiture. If Executive shall at any time violate any
obligation of his under Sections 7 or 8 in a manner that results
in material damage to the Premier or its business, he shall
immediately forfeit his right to any benefits under this
Agreement, and Premier thereafter shall have no further
obligation hereunder to Executive or his spouse, Beneficiary or
any other person.
10. Executive Assignment. No interest of Executive, his
spouse or any Beneficiary, or any other beneficiary under the
Retirement, Welfare or Incentive Plans, or under this Agreement,
or any right to receive any payment or distribution hereunder,
shall be subject in any manner to sale, transfer, assignment,
pledge, attachment, garnishment, or other alienation or
encumbrance of any kind, nor may such interest or right to
receive a payment or distribution be taken, voluntarily or
involuntarily, for the satisfaction of the obligations or debts
of, or other claims against, Executive or his spouse, Beneficiary
or other beneficiary, including claims for alimony, support,
separate maintenance, and claims in bankruptcy proceedings.
11. Benefits Unfunded. All rights under this Agreement of
Executive and his spouse, Beneficiary or other beneficiary shall
at all times be entirely unfunded, and no provision shall at any
time be made with respect to segregating any assets of Premier
for payment of any amounts due hereunder. None of Executive, his
spouse, Beneficiary or any other beneficiary under the
Retirement, Welfare or Incentive Plans shall have any interest in
or rights against any specific assets of Premier, and Executive
and his spouse, Beneficiary or other beneficiary shall have only
the rights of a general unsecured creditor of Premier.
Notwithstanding the preceding provisions of this Section, the
parties hereto may at any time mutually agree that amounts
payable to Executive or his Beneficiary hereunder be paid to the
trustee of a trust established by Premier for the benefit of
Executive and his Beneficiary that contains terms and conditions
mutually satisfactory to the parties.
12. Waiver. No waiver by any party at any time of any
breach by the other party of, or compliance with, any condition
or provision of this Agreement to be performed by such other
party shall be deemed a waiver of any other provisions or
conditions at the same time or at any prior or subsequent time.
13. Litigation Expenses. Premier shall pay Executive's
reasonable attorneys' fees and legal expenses in connection with
any judicial proceeding to enforce this Agreement, or to construe
or determine the validity of this Agreement or otherwise in
connection therewith, if Executive is successful in such
litigation.
14. Applicable Law. This Agreement shall be construed and
interpreted pursuant to the laws of Illinois.
15. Entire Agreement. This Agreement contains the entire
Agreement between Premier and the Executive and supersedes any
and all previous agreements, written or oral, between the parties
relating to the subject matter hereof. No amendment or
modification of the terms of this Agreement shall be binding upon
the parties hereto unless reduced to writing and signed by
Premier and Executive.
16. No Employment Contract. Nothing contained in this
Agreement shall be construed to be an employment contract between
Executive and Premier.
17. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original.
18. Severability. In the event any provision of this
Agreement is held illegal or invalid, the remaining provisions of
this Agreement shall not be affected thereby.
19. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, representatives and successors. In the event of a Change
in Control of Premier, Premier shall cause its purchaser,
transferee or successor to adopt and assume this Agreement. This
Agreement shall not be terminated by a transfer or sale of assets
of Premier, or by the merger or consolidation of Premier into or
with any other corporation or other entity, rather this Agreement
shall be continued after such sale, merger or consolidation by
the transferee, purchaser or successor entity.
20. Employment with an Affiliate. For purposes of this
Agreement: (i) employment or termination of employment of
Executive shall mean employment or termination of employment with
Premier and all Affiliates; (ii) Base Salary shall include
remuneration received by Executive from Premier and all
Affiliates; and (iii) the terms Incentive Plan, Retirement Plan
and Welfare Plan maintained or made available by Premier shall
include any such plans of any Affiliate of Premier.
21. Notice. Notices required under this Agreement shall be
in writing and sent by registered mail, return receipt requested,
to the following addresses or to such other address as the party
being notified may have previously furnished to the other party
by written notice:
If to Premier: Premier Financial Services, Inc.
00 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Director of Human Resources
If to Executive: Xxxxxxx X. Xxxxx
c/o Premier Financial Services, Inc.
00 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
IN WITNESS WHEREOF, Executive has hereunto set his hand, and
Premier has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
PREMIER FINANCIAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxx
Title: Executive Vice President & CFO
/s/ Xxxxxxx X. Xxxxx
Executive
