EXHIBIT 10(f)
EMPLOYMENT AGREEMENT
The Agreement is made as of September 1, 1995 between PIONEER FINANCIAL
SERVICES, INC., a Delaware corporation with its principal place of business at
0000 X. Xxxx Xxxx, Xxxxxxxxxx, XX 00000 (hereinafter "Pioneer Financial"); and
XXXXX X. XXXXXX, an individual residing at 000 X. Xxxx Xxxxxx, Xxxxxxxx, XX
00000 ( "Xxxxxx").
W I T N E S S E T H:
WHEREAS, Pioneer Financial is an insurance holding company which has life
and accident and health insurance subsidiaries and affiliated administrative
service and marketing companies; and
WHEREAS, Xxxxxx is currently Chairman and Chief Executive Officer of
Pioneer Financial and Xxxxxx possesses valuable skills, expertise and abilities
in the life and accident and health insurance business; and
WHEREAS, Pioneer Financial is desirous of retaining the services of Xxxxxx
as a key managerial employee; and
WHEREAS, Xxxxxx desires to be employed by Pioneer Financial on the terms
set forth herein;
NOW, THEREFORE, for and in consideration of the covenants contained herein,
Pioneer Financial hereby employs Xxxxxx and Xxxxxx accepts such employment with
Pioneer Financial upon the terms and conditions hereinafter set forth.
1. Employment. Pioneer Financial hereby employs Xxxxxx and Xxxxxx hereby
agrees to be employed by Pioneer Financial for a continually renewing term of
three (3) years commencing on September 1, 1995, and continuing, without further
action on the part of Pioneer Financial or Xxxxxx, until terminated as provided
herein (the "Term"), to perform the duties set forth herein.
2. Duties. Subject to the control of the Board of Directors of Pioneer
Financial, Xxxxxx shall serve during the Term as Chairman and Chief Executive
Officer of Pioneer Financial, and in such capacity shall render such services as
the Board of Directors of Pioneer Financial shall direct. In addition, Xxxxxx
shall serve in such other offices or capacities as the Board of Directors of
Pioneer Financial may from time to time determine. Xxxxxx shall have such
executive powers and authority as may reasonably be required by him in order to
discharge such duties in an efficient and proper manner.
3. Compensation. Pioneer Financial shall in the aggregate pay to Xxxxxx
for all services to be rendered hereunder:
(a) an annual base salary in an amount of not less than One Million
Dollars ($1,000,000); provided that the Board of Directors of Pioneer Financial
shall annually make a review of Xxxxxx'x salary and increase such annual base
salary as it deems appropriate; and
(b) such annual bonus, as may be determined by the Compensation
Committee of the Board of Directors of Pioneer Financial, based upon the
achievement of such Pioneer Financial company-wide performance standards as may
be established by such Committee and approved by the stockholders of Pioneer
Financial, provided, however, that Xxxxxx shall be entitled to receive a bonus
for 1995 based upon the criteria heretofore established by the Committee.
4. Prior Employment Agreements. This Agreement supersedes all other
existing employment agreements between Pioneer Financial or its subsidiaries and
Xxxxxx; provided, however, that Section 4 of that certain Employment Agreement,
dated as of December 3, 1993, between Pioneer Financial and Xxxxxx, all other
provisions of such Agreement relating to the transactions contemplated in such
Section 4, and the rights and obligations of the parties thereunder and under
the Note relating to the transactions contemplated in such Section 4, shall
remain in full force and effect in accordance with their respective terms.
5. Stock Options. Simultaneously with the execution and delivery of this
Agreement, Pioneer Financial is issuing to Xxxxxx options to purchase an
aggregate of 500,000 shares of Pioneer Financial common stock. Such options are
being issued subject to the approval by the stockholders of Pioneer Financial of
an appropriate amendment to the Pioneer Financial 1994 Omnibus Stock Incentive
Program (the "Plan") which would, among other things, increase the number of
options which may be granted under the Plan to any participant in any year.
Such options are exercisable as follows: 100,000 on or after the date of the
execution and delivery of this Agreement at $15.25 per share; 100,000 on or
after September 1, 1996 at $16.75 per share; 100,000 on or after September 1,
1997 at $18.50 per share; 100,000 on or after September 1, 1998 at $20.25 per
share; and 100,000 on or after September 1, 1999 at $22.25 per share; provided,
however, that none of such options are exercisable within six months of the date
of grant. Such options (x) are exercisable only if Xxxxxx is employed by PFS
or one of its subsidiaries at the time they can first be exercised; and (y) have
been issued on such other terms and conditions as are contained in the Option
Agreement relating thereto.
6. Benefits. During his employment hereunder, Xxxxxx shall be entitled
to participate in all employee benefits made available to management personnel
of Pioneer Financial and its subsidiaries.
7. Death. Xxxxxx'x employment by Pioneer Financial will terminate
immediately upon his death; provided, however, that in the event of Xxxxxx'x
death during the Term, Xxxxxx'x estate shall be entitled to receive the payment
described in the last sentence of Section 9(c).
8. Disability. If during Xxxxxx'x employment hereunder, Xxxxxx becomes
totally or partially disabled, Pioneer Financial shall continue to pay to Xxxxxx
as long as such disability continues during the Term (or until Xxxxxx'x
employment is terminated by Pioneer Financial in accordance with Section 9 (if
earlier)) the level of annual salary payable to Xxxxxx at the date his
disability is determined, reduced dollar-for-dollar to the extent of any
disability insurance payments paid to Xxxxxx through insurance programs, the
premiums for which were paid by Pioneer Financial or its subsidiaries. For
purposes of this Agreement, the term "total disability" shall mean Xxxxxx'x
inability due to illness, accident or other physical or mental incapacity to
engage in the full time performance of his duties under this Agreement as
reasonably determined by the Board of Directors of Pioneer Financial based on
such evidence as such Board shall deem appropriate. For purposes of this
Agreement, "partial disability" shall mean Xxxxxx'x ability due to illness,
accident or other physical or mental incapacity to engage in only the partial
performance of his duties under this Agreement, as reasonably determined by the
Board of Directors of Pioneer Financial based on such evidence as such Board
shall deem appropriate.
9. Termination.
(a) End of Term. Pioneer Financial shall have the right at any time
during the Term, by action of its Board of Directors, to terminate this
Agreement upon thirty-six (36) months prior written notice to Xxxxxx.
(b) For Cause. Pioneer Financial shall have the right to terminate
Xxxxxx'x employment hereunder at any time during the Term "for cause". For
purposes of this Agreement, "for cause" shall mean any of the following actions
(or inactions) by Xxxxxx: illegal conduct of a severity greater than a
misdemeanor, gross neglect of, and the continued failure to perform
substantially, Xxxxxx'x duties under this Agreement. Notwithstanding anything
herein to the contrary, Xxxxxx'x inability to perform the duties of his position
due to his total or partial disability (as defined herein) shall not be deemed
to constitute cause.
If, in the opinion of the Board of Directors of Pioneer Financial,
Xxxxxx'x employment shall become subject to termination for cause, such Board of
Directors shall give Xxxxxx notice to that effect, which notice shall describe
the matter or matters constituting such cause. If, at the end of such thirty
(30) day period, Xxxxxx has not substantially eliminated or cured each such
matter or matters, then Pioneer Financial shall have the right to give Xxxxxx
notice of the termination of his employment. Xxxxxx'x employment hereunder
shall be considered terminated for cause as of the date specified in such notice
of termination unless and until there is a final determination by a court of
competent jurisdiction that the cause of termination of Xxxxxx'x employment did
not exist at the time of giving said notice of termination. Upon termination of
Xxxxxx'x employment "for cause", this Agreement shall terminate without further
obligations to Xxxxxx other than Pioneer Financial's obligation (a) to pay to
Xxxxxx in a lump sum in cash within thirty (30) days after the date of
termination Xxxxxx'x base salary through the date of termination to the extent
not theretofore paid and (b) to the extent not theretofore paid or provided, to
pay or provide to pay, to Xxxxxx on a timely basis any other amounts or benefits
required to be paid or provided or which Xxxxxx is eligible to receive under any
plan, program, policy or practice or contract or agreement of Pioneer Financial.
(c) Without Cause. Pioneer Financial shall have the right to
terminate Xxxxxx'x employment hereunder without cause at any time during the
Term. If the Board of Directors determines to terminate Xxxxxx'x employment
without cause, Pioneer Financial shall give notice of such termination to Xxxxxx
and Xxxxxx'x employment hereunder shall be considered terminated without cause
as of the date specified in such notice of termination. Upon the date of the
termination of Xxxxxx'x employment without cause, Xxxxxx shall be paid an amount
equal to the present value, discounted to the present at an annual rate of 8%,
of the salary which would have been payable during a period equal to the
remainder of the Term, commencing on the date of termination at the rate of
annual base salary payable to Xxxxxx at the date of termination.
(d) By Xxxxxx. Xxxxxx may terminate his employment hereunder at any
time by retirement or resignation, upon notice to Pioneer Financial. Upon such
termination by Xxxxxx, no compensation for any period after the date of such
termination shall be payable to Xxxxxx; provided, however, that if such
termination by Xxxxxx is for "good reason" (as defined in Section 10(c)), then
Xxxxxx shall be entitled to the payment described in the last sentence of
Section 9(c).
(e) Change in Control Effect. No payments shall be made to Xxxxxx
pursuant to this Section 9 in the event that Xxxxxx is entitled to Change in
Control Compensation pursuant to Section 10.
10. Change in Control.
(a) Change in Control Severance Compensation. If (x) within 180 days
following a Change of Control (as defined in Section 10(b)) is terminated by
Xxxxxx for any reason whatsoever, or (y) within two years following a Change in
Control, Xxxxxx'x employment is terminated by Pioneer Financial other than "for
cause" (as defined in Section 9(b) or is terminated by Xxxxxx for "good reason"
(as defined in Section 10(c)), then Xxxxxx shall be entitled to receive from
Pioneer Financial a lump sum cash payment in an amount ("Change in Control
Compensation") equal to three times the average income reflected on the W-2
form or forms issued to Xxxxxx by Pioneer Financial or its subsidiaries for
services performed for them for the five (5) calendar years preceding the year
in which such Change of Control occurs. Pioneer Financial shall pay such amount
to Xxxxxx within thirty (30) days of the date of termination. If Xxxxxx'x
employment is terminated by Pioneer Financial for cause, by reason of Xxxxxx'x
death or retirement, or by Xxxxxx without good reason, the Change in Control
Compensation will not be paid. If Xxxxxx was totally or partially disabled as
of the Change in Control, the Change in Control Compensation will not be paid.
b) Change In Control. For purposes of this Agreement, "Change in Control"
shall mean the occurrence of any of the following events:
(i) any person or persons acting as a group, other than a person
which as of the date of this Agreement is the beneficial owner of voting
securities of Pioneer Financial and other than Xxxxxx or a group including
Xxxxxx, shall become the beneficial owner of securities of Pioneer Financial
representing at least thirty-four percent (34%) of the combined voting power of
Pioneer Financial's then outstanding securities; or
(ii) any consolidation or merger to which Pioneer Financial is a
party, if following such consolidation or merger, stockholders of Pioneer
Financial immediately prior to such consolidation or merger shall not
beneficially own securities representing at least sixty-seven percent (67%) of
the combined voting power of the outstanding voting securities of the surviving
or continuing corporation; or
(iii) any sale, lease, exchange or other transfer (in one
transaction or in a series of related transactions) of all, or substantially
all, of the assets of Pioneer Financial, other than to an entity (or entities)
of which Pioneer Financial or the stockholders of Pioneer Financial immediately
prior to such transaction beneficially own securities representing at least
sixty-seven percent (67%) of the combined voting power of the outstanding voting
securities.
(c) Good Reason. For purposes of this Agreement, "good reason" shall
mean any of the following:
(i) a change in Xxxxxx'x status or position, the assignment to
Xxxxxx of any duties or responsibilities which are inconsistent with Xxxxxx'x
status and position or a reduction in the duties and responsibilities to be
exercised by Xxxxxx;
(ii) any action by Pioneer Financial which renders Xxxxxx unable
to effectively discharge his duties and responsibilities hereunder;
(iii) the failure to maintain Xxxxxx'x minimum annual base
salary in accordance with Section 3(a) or; in the event that such salary is
increased during the Term as provided herein, any reduction in Xxxxxx'x then
current annual base salary.
(iv) a failure by Pioneer Financial to continue in effect,
without material change, any benefit or incentive plan or arrangement in which
Xxxxxx and all other executive officers of Pioneer Financial participate, or the
taking of any action by Pioneer Financial which would materially and adversely
affect Xxxxxx'x participation in, or materially reduce Xxxxxx'x benefits under,
any such plan or arrangement;
(v) a relocation of Xxxxxx'x workplace by Pioneer Financial to
any place outside the Chicago, Illinois metropolitan area, except for required
travel by Xxxxxx on Pioneer Financial's business to an extent substantially
consistent with Xxxxxx'x business travel obligations hereunder prior to such
relocation;
(vi) a reduction by Pioneer Financial in Xxxxxx'x eligibility for
paid vacation benefits under a program or policy applicable to Xxxxxx and all
other executive officers of Pioneer Financial; or
(vii) any failure by Pioneer Financial to obtain the
assumption of this Agreement by any successor or assignee thereto.
11. Confidential Information and Trade Secrets.
(a) Nature. During Xxxxxx'x employment by Pioneer Financial, Xxxxxx
will enjoy access to Pioneer Financial's "confidential information" and "trade
secrets". For purposes of this Agreement, "confidential information" shall mean
information which is not publicly available, including without limitation,
information concerning customers, material sources, suppliers, financial
projections, marketing plans and operation methods, Xxxxxx'x access to which
derives solely from Xxxxxx'x employment with Pioneer Financial. For purposes of
this Agreement, "trade secrets" shall mean Pioneer Financial's processes,
methodologies and techniques known only to those employees of Pioneer Financial
who need to know such secrets in order to perform their duties on behalf of
Pioneer Financial. Pioneer Financial takes numerous steps, including these
provisions, to protect the confidentiality of its confidential information and
trade secrets, which it considers unique, valuable and special assets.
(b) Restricted Use and Non-Disclosure. Xxxxxx, recognizing Pioneer
Financial's significant investment of time, efforts and money in developing and
preserving its confidential information, shall not, during his employment
hereunder and for a two (2) year period after the end of Xxxxxx'x employment
hereunder, use for his direct or indirect personal benefit any of Pioneer
Financial's confidential information or trade secrets. For a two (2) year
period after the end of Xxxxxx'x employment hereunder, Xxxxxx shall not disclose
to any person any of Pioneer Financial's confidential information or trade
secrets.
(c) Return of Pioneer Financial Property. Upon termination of
Xxxxxx'x employment with Pioneer Financial, for whatever reason and in whatever
manner, Xxxxxx shall return to Pioneer Financial all copies of all writings and
records relating to Pioneer Financial's business, confidential information or
trade secrets which are in Xxxxxx'x possession of such time.
12. Non-Competition and Non-Solicitation.
(a) Pioneer Financial's Investment. Pioneer Financial is spending
and will spend much time, money and effort in building relationships with agents
and insureds, and will pay Xxxxxx valuable consideration pursuant hereto in
exchange for Xxxxxx'x promises herein, including without limitation the
covenants in Section 11 and in this Section 12. Pioneer Financial has engaged
Xxxxxx as Chairman and Chief Executive Officer of Pioneer Financial in order to,
among other reasons, take advantage of Xxxxxx'x unique knowledge of, and
contacts within, the life and accident and health insurance industry. Further,
Pioneer Financial will invest significant time and money in the further
development of Xxxxxx'x business ability, image and standing. As Xxxxxx is
Chairman and Chief Executive Officer of Pioneer Financial, the reputation and
success of Xxxxxx will be closely tied to the reputation and success of Pioneer
Financial and, during the Term, Xxxxxx will be heavily identified with Pioneer
Financial's business.
(b) Non-Competition. During Xxxxxx'x employment hereunder and for a
twelve (12) month period after termination of such employment, unless such
termination is made by Pioneer Financial without cause or unless there has been
a Change in Control prior to such termination, Xxxxxx shall not engage, directly
or indirectly, whether as an owner, partner, employee, officer, director, agent,
consultant or otherwise, in any location where Pioneer Financial or any of its
subsidiaries is engaged in business after the date hereof and prior to the
termination of Xxxxxx'x employment, in a business the same as or similar to, any
business now, or at any time after the date hereof and prior to Xxxxxx'x
termination, conducted by Pioneer Financial or any of its subsidiaries,
provided, however, that the mere ownership of 5% or less of the stock of a
company whose shares are traded on a national securities exchange or are quoted
on the National Association of Securities Dealers Automated Quotation System
shall not be deemed ownership which is prohibited hereunder.
(c) Non-Solicitation. During the twenty-four (24) month period
following termination of Xxxxxx'x employment with Pioneer Financial, Xxxxxx
shall not, directly or indirectly induce employees of Pioneer Financial or any
of its subsidiaries to leave such employment with the result that such employees
would engage in business activities which are substantially similar or are
closely related to the business activities such employee performed on behalf of
Pioneer Financial and which compete against Pioneer Financial. Notwithstanding
the above, in the event Xxxxxx is terminated by Pioneer Financial without cause,
then the twenty-four (24) month period referred to in this Section 12(c) shall
be reduced to twelve (12) months.
(d) Enforceability. The necessity of protection against the
competition of Xxxxxx and the nature and scope of such protection has been
carefully considered by the parties hereto. The parties hereto agree and
acknowledge that the duration, scope and geographic areas applicable to the non-
competition covenant in this Section 12 are fair, reasonable and necessary, that
adequate compensation has been received by Xxxxxx for such obligations, and that
these obligations do not prevent Xxxxxx from earning a livelihood. If, however
for any reason any court determines that the restrictions in this Agreement are
not reasonable, that consideration is inadequate or that Xxxxxx has been
prevented from earning a livelihood, such restrictions shall be interpreted,
modified or rewritten to include as much of the duration, scope and geographic
area identified in this Section 12 as will render such restrictions valid and
enforceable.
13. Retention of Pioneer Financial Stock. During the Term, Xxxxxx shall
retain, directly or indirectly, ownership of not less than 1,000,000 shares of
Pioneer Financial common stock unless, and except to the extent, released from
this obligation by a written release from Pioneer Financial. For purposes of
this Agreement, "retain indirectly" shall mean and refer to any shares of
Pioneer Financial common stock, which would be considered to be owned by Xxxxxx
under Section 267(c) of the Code, or the income of which would be taxable to
Xxxxxx, his spouse or his children, or to any trust of which Xxxxxx would be
deemed the owner under any of Sections 671 through 677, inclusive, of the Code.
14. Right of First Refusal. During the Term, Xxxxxx shall not transfer
any shares of stock of Pioneer Financial for consideration to any person other
than a relative of Xxxxxx, unless Xxxxxx has offered to transfer such shares to
Pioneer Financial on the same terms, provided, however, that this provision
shall not apply at any time when the average last reported sale price for Common
Stock of Pioneer Financial on the New York Stock Exchange for the immediately
preceding five (5) trading days is greater than or equal to $12.00 per share.
15. Breach or Threatened Breach of Non-Competition Covenant. In the event
of a breach or threatened breach by Xxxxxx of any provision of Section 11 or 12
hereof, Xxxxxx acknowledges that the remedy at law would be inadequate and that
Pioneer Financial shall be entitled to an injunction restraining Xxxxxx from
such act or threatened breach. Nothing herein contained shall be construed as
prohibiting Pioneer Financial from pursuing any other remedies available to it
for such breach or threatened breach, including the recovery of monetary
damages.
16. Business Days. Any date specified in this Agreement which is a
Saturday, Sunday or legal holiday shall be extended to the first regular
business day after such date which is not a Saturday, Sunday or legal holiday.
17. Choice of Law. This Agreement has been executed and made in
accordance with the laws of the State of Illinois and is to be construed,
enforced and governed in accordance therewith.
18. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
19. Entire Agreement Amendments. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof
and, except as provided in Section 4 above, supersedes all other existing
employment agreements between Pioneer Financial or its subsidiaries and Xxxxxx.
No change or modification of this Agreement, or any waiver of the provisions
hereof, shall be valid unless the same is in writing and signed by the parties
hereto. Waiver by any party hereto of a breach by the other party of any
provisions of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by such party.
20. Headings. The headings used herein are for ease of interpretation and
shall have no effect on the interpretation of any provision of this Agreement.
21. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall, until receipt of contrary written
instructions, be delivered personally to, or mailed by certified or registered
mail with proper postage prepaid, to the party at the address as follows:
TO PIONEER FINANCIAL: Pioneer Financial Services, Inc.
0000 X. Xxxx Xxxx
Xxxxxxxxxx, XX 00000
TO XXXXXX: Xx. Xxxxx X. Xxxxxx
000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
22. Severability. If any provision of this Agreement is held for any
reason to be invalid, it will not invalidate any other provisions of this
Agreement which are in themselves valid, nor will it invalidate the provisions
of any other agreement between the parties hereto. Rather, such invalid
provision shall be construed so as to give it the maximum effect allowed by
applicable law. Any other written agreement between the parties hereto shall be
conclusively deemed to be an agreement independent of this Agreement.
23. Successors and Assigns. This Agreement and all the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns. This
Agreement and the rights and obligations hereunder may not be assigned by either
party without the prior written consent of the other.
24. Time of the Essence. Time is of the essence of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be executed on December 22, 1995, but to be effective as of the
date first above written.
Attest: "Pioneer Financial"
PIONEER FINANCIAL SERVICES, INC.
_____________________________ By: ___________________________________
Title: __________________________________
Witness: "Xxxxxx"
______________________________ ________________________________________
Xxxxx X. Xxxxxx
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