1
CHANGE IN CONTROL AGREEMENT
This Agreement, made and entered into by and between Young America
Corporation, a Minnesota corporation (the "Company"), with its principal offices
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the
"Employee"), residing at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, this Agreement is intended to specify the financial arrangements
that the Company will provide to the Employee upon the Employee's separation
from employment with the Company under any of the circumstances described
herein; and
WHEREAS, this Agreement is entered into by the Company in the belief that
it is in the best interest of the Company to provide stable conditions of
employment for the Employee notwithstanding the possibility, threat, or
occurrence of certain types of changes in control, thereby enhancing the
Company's ability to attract and retain highly qualified people;
NOW, THEREFORE, in consideration of the mutual covenants, promises,
payments, and undertakings of the parties hereto, the parties agree as follows:
1. Effect of Agreement; Term. The Employee shall be employed on an at-will
basis. This Agreement is not, and shall not be construed as, an employment
contract affecting in any way the duration of the Employee's employment or any
terms and conditions thereof except those set forth herein. Except as set forth
herein, the Employee or the Company may terminate their employment relationship
at any time, for any reason, or for no reason.
This Agreement will commence on the date hereof and shall continue
in effect until the second anniversary of the date hereof; and, commencing on
the first anniversary of the date hereof and on each anniversary thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than 90 days prior to any such date of automatic extension of
this Agreement, the Company shall have given notice to the Employee that the
Agreement will not be so extended; provided, however, if a Change in Control (as
defined in section 3(a) hereof) shall have occurred during the original or any
extended term of this Agreement, this Agreement shall continue in effect for a
period of 24 months following such Change in Control (as defined in section 3(a)
hereof), after which 24 month period this Agreement shall terminate.
2. Termination of Employment.
(a) Prior to a Change in Control. Prior to a Change in Control (as
defined in section 3(a) hereof), the Employee or the Company may terminate their
employment relationship at any time, for any reason, or for no reason.
2
(b) After a Change in Control.
(i) From and after the date of a Change in Control (as defined
in section 3(a) hereof) during the term of this Agreement, the Company shall not
terminate the Employee from employment with the Company except as provided in
this section 2(b), or as a result of the Employee's Disability (as defined in
section 3(d) hereof) or his death.
(ii) From and after the date of a Change in Control (as
defined in section 3(a) hereof) during the term of this Agreement, the Company
shall have the right to terminate the Employee from employment with the Company
at any time during the term of this Agreement for Cause (as defined in section
3(c) hereof), by written notice to the Employee, specifying the particulars of
the conduct of the Employee forming the basis for such termination.
(iii) From and after the date of a Change in Control (as
defined in section 3(a) hereof) during the term of this Agreement: (a) the
Company shall have the right to terminate the Employee's employment without
Cause (as defined in section 3(c) hereof), at any time; and (b) the Employee
shall, upon the occurrence of such termination by the Company without Cause or
upon the voluntary termination of the Employee's employment by the Employee for
Good Reason (as defined in section 3(b) hereof), be entitled to receive the
benefits provided in section 4 hereof. The Employee shall evidence a voluntary
termination for Good Reason by written notice to the Company given within ten
(10) days after the date of the occurrence of any event that the Employee knows
or should reasonably have known constitutes Good Reason for voluntary
termination. Such notice need only identify the Employee and set forth in
reasonable detail the facts and circumstances claimed by the Employee to
constitute Good Reason. Any notice given by the Employee pursuant to this
section 2 shall be effective ten (10) days after the date it is given by the
Employee.
3. Definitions.
(a) A "Change in Control" shall mean any of the following:
(i) A sale of all or substantially all of the assets of the
Company.
(ii) The acquisition of securities of the Company representing
more than 50% of the combined voting power of the Company's then outstanding
securities by any person or group of persons, except a Permitted Shareholder as
hereinafter defined, acting in concert. A "Permitted Shareholder" means a
holder, as of the date of this Agreement, of voting capital stock of the
Company.
2
3
(iii) A consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's outstanding capital stock are converted into cash,
securities or other property, other than a consolidation or merger of the
Company in which Company shareholders immediately prior to the consolidation or
merger have the same proportionate ownership of voting capital stock of the
surviving corporation immediately after the consolidation or merger.
(iv) In the event that the shares of voting capital stock of
the Company are traded on an established securities market: a public
announcement that any person has acquired or has the right to acquire beneficial
ownership of securities of the Company representing more than 50% of the
combined voting power of the Company's then outstanding securities, and for this
purpose the terms "person" and "beneficial ownership" shall have the meanings
provided in Section 13(d) of the Securities and Exchange Act of 1934, as amended
or related rules promulgated by the Securities and Exchange Commission or; the
commencement of or public announcement of an intention to make a tender offer or
exchange offer for securities of the Company representing more than 50% of the
combined voting power of the Company's then outstanding securities.
(v) The Board of Directors of the Company, in its sole and
absolute discretion, determines that there has been a sufficient change in the
share ownership of the Company to constitute a change of effective ownership or
control of the Company.
(b) "Good Reason" shall mean the occurrence of any of the following
events, except for the occurrence of such an event in connection with the
termination or reassignment of the Employee's employment by the Company for
Cause (as defined in section 3(c) hereof), due to the Employee's Disability (as
defined in section 3(d) hereof), or due to the Employee's death:
(i) The assignment to the Employee of employment
responsibilities which are not of comparable responsibility and status as the
employment responsibilities held by the Employee immediately prior to a Change
in Control;
(ii) a reduction by the Company in the Employee's base salary
as in effect immediately prior to a Change in Control;
(iii) the reduction by the Company in the Employee's
commission rate in effect immediately prior to a Change in Control;
(iv) the Company's requiring the Employee to be based at a
location that is in excess of 50 miles from the location of the Employee's
principal office immediately prior to the Change in Control;
3
4
(v) the failure by the Company to provide employee benefit
plans, programs, policies and practices (including, without limitation,
retirement plans and medical, dental, life and disability insurance coverage) to
the Employee and the Employee's family and dependents (if applicable) that
provide substantially similar benefits, in terms of aggregate monetary value, to
the Employee and the Employee's family and dependents (if applicable) at
substantially similar costs to the Employee as the benefits provided by those
plans, programs, policies and practices in effect immediately prior to the
Change in Control; or
(c) "Cause" shall mean:
(i) Repeated neglect by the Employee of any of his duties or
his repeated failures or omissions to carry out lawful and reasonable orders
which, in the reasonable judgment of the Company, are willful and deliberate and
which are not cured within a reasonable period after the Employee's receipt of
written notice thereof from the Company;
(ii) Any act or acts of personal dishonesty by the Employee
intended to result in the personal enrichment of the Employee at the expense of
the Company;
(iii) Any willful and deliberate misconduct that is materially
and demonstrably injurious to the Company; or
(iv) Any criminal indictment, presentment, charge or
conviction of the Employee for a felony, whether or not the Company is the
victim of such offense.
(d) "Disability" shall mean any physical or mental condition which
causes the Employee to fail to render services to the Company for a period of
ninety (90) days during any one hundred eighty (180) day period. The existence
or nonexistence of the Employee's Disability will be determined in good faith by
the Board of Directors after notice in writing given to the Employee at least
thirty (30) days prior to such determination. During such thirty (30) day
period, the Employee shall be permitted to make a presentation to the Board of
Directors for its consideration.
(e) "Company" shall mean the Company and any successor to its
business and/or assets which executes and delivers the Agreement provided for in
section 5(a) or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
4
5
4. Benefits Upon Termination Under section 2(b)(iii).
(a) Upon the termination (voluntary or involuntary) of the
employment of the Employee pursuant to section 2(b)(iii) hereof, the Company
shall pay to the Employee, in lieu of any further compensation to the Employee
for periods subsequent to the date that the termination of the Employee's
employment becomes effective, as severance pay, a lump sum cash amount equal to
the Employee's annual base salary in effect at the time the notice of
termination is given or immediately prior to the Change in Control (whichever is
greater), plus the total commissions earned by the Employee during the twelve
months preceding the notice of termination. Such payment shall be subject to any
applicable payroll or other taxes required by law to be withheld. In addition,
for the 12-month period after termination (voluntary or involuntary) of the
employment of the Employee pursuant to section 2(b)(iii) hereof, the Company
will arrange to provide the Employee and the Employee's dependents (if
applicable) with welfare benefits (including, without limitation, medical
insurance coverage), perquisites and other employee benefits that provide
substantially similar benefits, in terms of aggregate monetary value, to the
Employee and the Employee's dependents (if applicable) at substantially similar
costs to the Employee as the welfare benefits, perquisites and other employee
benefits (i) in effect immediately prior to the Change in Control (or as in
effect following the Change in Control, if greater); but benefits otherwise
receivable by the Employee pursuant to this section shall be discontinued as of
the date the Employee obtains full-time employment during the 12-month period
following the Employee's termination.
(b) The Employee shall not be required to mitigate the amount of any
payment provided for in this section 4 by seeking other employment or otherwise.
The amount of any payment provided in this section 4 shall not be reduced by any
compensation earned by the Employee as a result of any employment by another
employer.
5. Successors and Binding Agreement.
(a) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or of the assets of the Company to
expressly assume and agree to perform this Agreement.
(b) This Agreement is personal to the Employee, and the Employee may
not assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
heirs, distributees, devisees, and legatees.
5
6
6. Limitation of Damages. If for any reason the Employee believes the
severance provisions of this Agreement have not been properly adhered to by the
Company, and if it is determined that the Company has not, in fact, properly
adhered to the severance provisions of this Agreement, the sole and exclusive
remedy to which the Employee is entitled is the severance payment to which the
Employee is entitled under the provisions of this Agreement.
7. Modification; Waiver; No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a writing signed by the Employee and such officer as may be specifically
designated by the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
8. Notice. All notices, requests, demands, and all other communications
required or permitted by either party to the other party by this Agreement
(including, without limitation, any notice of termination of employment) shall
be in writing and shall be deemed to have been duly given when delivered
personally or received by certified or registered mail, return receipt
requested, postage prepaid, at the address of the other party as first written
above (directed to the attention of the Board of Directors in the case of the
Company). Either party hereto may change its address for purposes of this
section by giving fifteen (15) days' prior written notice to the other party
hereto.
9. Severability. If any term or provision of this Agreement or the
application hereof to any person or circumstances shall to any extent be
determined to be invalid or unenforceable, the remainder of this Agreement or
the application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
10. Governing Law. This Agreement has been executed and delivered in the
State of Minnesota and shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, including all
matters of construction, validity, and performance.
11. Effect of Agreement; Entire Agreement. The Company and the Employee
understand and agree that this Agreement is intended to reflect their agreement
only with respect to the subject matter hereof and is not intended to create any
obligation on the part of either party to continue employment. This Agreement
supersedes any and all other oral or written agreements or policies made
relating to the subject matter hereof and constitutes the entire agreement of
the
6
7
parties relating to the subject matter hereof; provided that this Agreement
shall not supersede or limit in any way the Employee's rights under any benefit
plan or program in accordance with its terms.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement by their signatures below.
Dated: February 21, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Its President
---------------------------
Dated: February 20, 1997 /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
7