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CHANGE OF CONTROL
SEVERANCE BENEFITS AGREEMENT
THIS CHANGE OF CONTROL SEVERANCE BENEFITS AGREEMENT
(this "Agreement") is made and entered into as of the 5th
day of February, 1996, by and between PERSONNEL
MANAGEMENT, INC., an Indiana corporation (the
"Corporation"), and ROBERT R. MILLARD (the "Executive").
WITNESSETH:
WHEREAS, the Executive and the Corporation have
entered into an Employment Agreement dated of even date
herewith; and
WHEREAS, the Executive and the Corporation have
agreed for their mutual benefit to provide certain
severance benefits to the Executive that will be payable
by the Corporation if the Executive's employment with the
Corporation is terminated under certain circumstances;
NOW, THEREFORE, in consideration of the foregoing,
the mutual covenants and promises contained herein and
other valuable consideration, including services to be
performed by the Executive, it is hereby agreed by and
between the parties as follows:
Section 1. Effect; Effective Date. This
Agreement shall be effective February 5, 1996. Anything
in this Agreement to the contrary notwithstanding,
neither this Agreement nor any provision hereof shall be
operative unless and until there has been a Change of
Control of the Corporation (as "Change of Control of the
Corporation" is defined in Section 7 of this Agreement).
Upon a Change of Control of the Corporation this
Agreement shall become operative immediately.
Section 2. Employment. This Agreement shall not
be construed as creating a contract of employment between
the Executive and the Corporation. The Executive is,
however, employed by the Corporation at the time this
Agreement is executed, and the Executive and the
Corporation have executed an Employment Agreement of even
date herewith with respect to such employment.
Section 3. Obligation to Provide Severance
Entitlement. If the Executive's employment with the
Corporation is terminated under any circumstances other
than a Disqualifying Termination (as defined in Section
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8 of this Agreement) and if such termination of
employment occurs concurrently with or within three
months immediately preceding or twenty-four months
immediately following a Change of Control of the
Corporation, then the Corporation shall provide to the
Executive a severance benefit in the manner and amount as
provided in Section 4 of this Agreement (the "Severance
Entitlement").
Section 4. Manner and Amount of Severance
Entitlement. If the Corporation is obligated to provide
a Severance Entitlement to the Executive pursuant to
Section 3 of this Agreement, the manner in which the
Corporation shall provide such Severance Entitlement and
the amount thereof shall be as follows:
(a) The Corporation shall cancel all
indebtedness of the Executive to the Corporation
(if any) up to, but not in excess of, the amount of
the Severance Entitlement (as provided in Section
4(c) below).
(b) If the amount of indebtedness of the
Executive to the Corporation cancelled pursuant to
Section 4(a) above is less than the amount of the
Severance Entitlement to be provided to the
Executive by the Corporation, the Corporation shall
pay to the Executive, by check, an amount of money
equal to the difference between the amount of the
Executive's indebtedness that is cancelled and the
amount of the Severance Entitlement to be provided
to the Executive.
(c) The Severance Entitlement to be provided
by the Corporation to the Executive shall consist
of the cancellation of indebtedness and/or the
payment of money as provided in Sections 4(a) and
4(b) above. The aggregate dollar amount of the
Severance Entitlement, whether in debt cancellation
or money or both, shall be equal to the higher of
two times the current amount of base salary paid by
the Corporation to the Executive on an annualized
basis, or two times the highest amount of base
salary paid by the Corporation to the Executive for
any full calendar year during which the Executive
was employed by the Corporation; provided, however,
that if such Severance Entitlement, either alone or
together with other payments which the Executive
has the right to receive from any PMI Company,
would constitute an "excess parachute payment"
within the meaning of Section 280G of the Internal
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Revenue Code of 1986, as amended (the "Code"), then
the Corporation shall pay an additional amount of
money to the Executive that will equal (based upon
the Executive's good faith representations of the
Executive's income tax position for the year(s) of
payment(s)) the sum of (i) all excise tax imposed
upon the Executive by Section 4999 of the Code and
(ii) all additional state and federal income taxes
attributable to the additional payments to the
Executive pursuant to this proviso clause
(including all state and federal taxes on the
additional income tax payments). The determination
of the amounts of such payments pursuant to the
immediately preceding proviso shall be made by the
Corporation in good faith, and such determination
shall be conclusive and binding.
Section 5. Provision of Severance Entitlement.
With respect to a Severance Entitlement to be provided to
the Executive hereunder,the Corporation shall provide to
the Executive satisfactory written evidence of the amount
of any debt cancellation, and/or shall pay to the
Executive any money, to which the Executive is entitled
as a Severance Entitlement not later than 30 days after
the later of (i) the occurrence of the Change of Control
of the Corporation or (ii) the termination of the
Executive's employment.
Section 6. Withholding. The Corporation may
withhold or otherwise deduct from any Severance
Entitlement to be provided hereunder all federal, state,
city, county or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
Section 7. Change of Control of the Corporation.
For purposes of this Agreement, a "Change of Control of
the Corporation" shall be deemed to have occurred if,
after the date hereof either:
(a) there shall have been consummated (i) any
reorganization, consolidation or merger of the
Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to
which shares of the Corporation's common stock
shall have been converted into cash, securities or
other property, or (ii) any sale, lease, exchange
or other transfer, directly or indirectly, (in one
transaction or a series of related transactions) of
all, or substantially all, of the assets of the
Corporation and its consolidated subsidiaries
unless, following such reorganization, merger,
consolidation, or transfer of assets,
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(A) more than 60 percent of the
then outstanding shares of common stock
of the corporation resulting from such
reorganization, merger or consolidation
(or of the corporation receiving the
transferred assets) (the "Continuing
Corporation") and of the then outstanding
voting securities of the Continuing
Corporation entitled to vote generally in
the election of Directors are then
beneficially owned, directly or
indirectly, by all or substantially all
of the individuals and entities who were
the beneficial owners, respectively, of
the outstanding shares of common stock of
the Corporation and of the outstanding
voting securities of the Corporation
entitled to vote generally in the
election of Directors immediately prior
to such reorganization, merger,
consolidation or transfer of assets in
substantially the same proportions as
their ownership, immediately prior to
such reorganization, merger,
consolidation or transfer of assets, of
the outstanding shares of common stock of
the Corporation and of the outstanding
voting securities of the Corporation,
(B) no "person" (as that term is
used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as
amended) (excluding (aa) the Corporation,
(bb) any employee benefit plan (or
related trust) sponsored or maintained by
the Corporation or any entity controlled,
directly or indirectly, by the
Corporation or the Continuing Corporation
and (cc) any "person" beneficially
owning, immediately prior to such
reorganization, merger, consolidation or
transfer of assets, directly or
indirectly, 20 percent or more of the
outstanding shares of common stock of the
Corporation or the outstanding voting
securities of the Corporation)
beneficially owns, directly or
indirectly, 20 percent or more of,
respectively, the then outstanding shares
of common stock of the Continuing
Corporation or of the combined voting
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power of the then outstanding voting
securities of the Continuing Corporation
entitled to vote generally in the
election of Directors, and
(C) at least a majority of the
members of the Board of Directors of the
Continuing Corporation were members of
the Board of Directors of the Corporation
at the time of the execution of the
initial agreement providing for such
reorganization, merger, consolidation or
transfer of assets;
(b) any "person" or "group" of persons
(as those terms are used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and
Regulations 13D-G and 14D thereunder) shall
have become the "beneficial owner" (within the
meaning of Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the
Corporation representing 20 percent or more of
the combined voting power of the Corporation's
then outstanding voting securities entitled to
vote generally in the election of Directors
(excluding (i) the Corporation, (ii) any
employee benefit plan (or related trust)
sponsored or maintained by the Corporation or
any entity controlled, directly or indirectly,
by the Corporation, (iii) any "person" who, on
the date of this Agreement, is the "beneficial
owner", directly or indirectly, of 20 percent
or more of the Corporation's outstanding
common stock, and (iv) any "group" of persons
that includes Don R. Taylor); or
(c) during any period of two consecutive
years, individuals who constitute the Board of
Directors of the Corporation at the beginning
of such period cease for any reason to
constitute at least a majority thereof,
excluding individuals whose election, or
nomination for election by the Corporation's
shareholders was approved by a vote of at
least two-thirds of the Directors then still
in office who were Directors at the beginning
of such period, unless, for this purpose, any
such new Director's initial assumption of
office occurs as a result of either an actual
or threatened election contest (as such terms
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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 of Directors of the
Corporation.
Section 8. Disqualifying Termination. For
purposes of this Agreement, a "Disqualifying Termination"
of the Executive's employment with the Corporation shall
mean a termination of the Executive's employment under
any of the following circumstances:
(a) termination of the Executive's employment
by the Corporation for Cause (as defined in Section
9); or
(b) termination of the Executive's employment
by the Corporation for Disability (as defined in
Section 10); or
(c) termination of the Executive's employment
by the Executive without Good Reason (as defined in
Section 11) to do so; or
(d) termination of the Executive's employment
as a result of the death of the Executive.
(As provided in Section 3, the Executive shall not be
entitled to a Severance Entitlement under this Agreement
if the Executive's employment with the Corporation was
terminated under circumstances constituting a
Disqualifying Termination.)
Section 9. Termination by the Corporation for
Cause. For purposes of this Agreement, the Corporation
shall be deemed to have terminated the Executive's
employment with the Corporation for "Cause" only if the
Corporation terminated the Executive's employment with
the Corporation for any of the following reasons:
(a) the continued failure of the Executive to
substantially perform any of the Executive's
significant duties or responsibilities in
connection with the Executive's employment (other
than any such failure resulting from the
Executive's incapacity due to physical or mental
illness) if such failure is not corrected or cured
within 30 days after demand for substantial
performance is made in writing upon the Executive
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by the Corporation specifically identifying the
manner in which the Corporation believes the
Executive has failed to substantially perform one
or more of the Executive's significant duties or
responsibilities (repetition of the same failure as
previously described in any such written demand
after the 30-day cure period following such written
demand shall be deemed to be "continued failure" to
substantially perform by the Executive); or
(b) any act that constitutes on the part of
the Executive common law fraud or dishonesty
regardless of whether such fraud or dishonesty
resulted in, or was intended to result in, a
benefit to the Executive at the expense of the
Corporation; or
(c) the conviction of the Executive of, or
the plea by the Executive of nolo contendere to, a
felony or a crime involving moral turpitude; or
(d) any continuing violation by the Executive
in any material respect of any of the Corporation's
policies or of any term or provision of any
employment or other agreement between the Executive
and the Corporation which, in any such case, is not
corrected or abated by the Executive within 30 days
after written notice of such violation is given by
the Corporation to the Executive (repetition of the
same violation as previously described in any such
written notice after the 30 day correction period
following such written notice shall be deemed to be
a "continuing violation" by the Executive); or
(e) the Executive's unexcused total
abandonment or neglect of the Executive's duties
and responsibilities in connection with the
Executive's employment with the Corporation (other
than absences due to illness, physical or mental
incapacity, vacations, or other excused absences)
for a continuous period of ten working days.
Section 10. Termination by the Corporation for
Disability. For purposes of this Agreement, the
Executive shall be considered to have suffered a
"Disability" and the Corporation shall be deemed to have
terminated the Executive's employment with the
Corporation for Disability if such termination is made
after (and is identified by the Corporation as being on
account of the occurrence of) either of the following:
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(a) the actual receipt by the Executive of
income continuation benefits or similar benefits
pursuant to a disability insurance policy as a
result of a determination under such policy that
the Executive is disabled, or
(b) the Executive's inability by reason of
physical and/or mental incapacity to substantially
perform the essential functions of the Executive's
duties and responsibilities to the Corporation on a
full-time basis for a period of 26 consecutive
weeks.
Section 11. Termination by the Executive for Good
Reason. For purposes of this Agreement, the Executive
shall be deemed to have terminated the Executive's
employment with the Corporation for "Good Reason" only if
the Executive terminated his employment with the
Corporation within 90 days after the Executive's base
salary was either (a) reduced to an amount that was less
than 95 percent of the Executive's base salary as of the
date of this Agreement, or (b) reduced by more than 5
percent for any calendar year from the amount paid in the
prior calendar year.
Section 12. No Mitigation. The Executive is not
required to mitigate the amount of the Severance
Entitlement to be provided by the Corporation pursuant to
this Agreement by seeking other employment or otherwise,
nor shall the amount of the Severance Entitlement payable
pursuant to this Agreement be reduced by any compensation
earned by the Executive as the result of employment by
another employer, or which might have been earned by the
Executive had the Executive sought other employment,
after the date of termination of the Executive's
employment with the Corporation.
Section 13. Notices. Any notice, request, demand
and other communication to be given hereunder shall be in
writing and personally delivered or mailed in the
continental United States by registered or certified
mail, postage prepaid, at the address stated below or to
such changed address as the addressee may have given by
a similar notice:
To the Company: Personnel Management, Inc.
1499 Windhorst Way
Suite 100
Greenwood, Indiana 46143
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To the Executive: Robert R. Millard
8125 Springwater Drive West
Indianapolis, Indiana 46256
Section 14. Legal Expenses. In the event that
either of the parties institutes any legal action to
enforce its rights under, or to recover damages for
breach of, this Agreement, the prevailing party shall be
entitled to recover from the other party any actual
expenses for attorney's fees, costs, expenses and
disbursements incurred by the prevailing party.
Section 15. Successors to the Executive. This
Agreement shall be binding upon and shall inure to the
benefit of the Executive, the Executive's heirs,
beneficiaries, devisees, successors and legal
representatives. No right or interest to or in any
payments hereunder shall be assignable by the Executive
except assignments to the Corporation in accordance with
applicable law; provided, however, that this provision
shall not preclude the Executive from designating one or
more beneficiaries to receive any amount that may be
payable after the Executive's death and shall not
preclude the legal representative of the Executive's
estate from assigning any right hereunder to the person
or persons entitled thereto under the Executive's will
or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable
to the Executive's estate. The term "beneficiaries" as
used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount,
or, if no beneficiary has been so designated, the legal
representative of the Executive's estate. In the event
of the Executive's death, reference in this Agreement to
the Executive shall be deemed, where appropriate, to
refer to the Executive's legal representative or, where
appropriate, to the Executive's beneficiary or
beneficiaries.
Section 16. Successors to the Corporation. This
Agreement shall be binding upon and inure to the benefit
of the Corporation and any successor of the Corporation,
including, without limitation, any corporation or
corporations acquiring directly or indirectly all or
substantially all of the assets of the Corporation
whether by merger, consolidation, sale or otherwise (and
such successor shall thereafter be deemed the
"Corporation" for the purposes of this Agreement).
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Section 17. Headings; Pronouns. The titles to
sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be
construed by reference to the title of any section. All
pronouns in this Agreement and any variations thereof
shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person
or persons may require.
Section 18. Governing Law. The validity,
interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
Indiana.
Section 19. Amendment or Modification; Waiver. No
provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver
shall be authorized by the Board of Directors of the
Corporation or any authorized committee of the Board of
Directors of the Corporation and shall be agreed to in
writing, signed by the Executive and by an officer of the
Corporation thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no
waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this
Agreement to be performed by such other party shall be
deemed a waiver of a subsequent breach of such condition
or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or
subsequent time.
Section 20. Severability. The invalidity or
unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full
force and effect to the fullest extent permitted by law.
Section 21. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together
will constitute the same instrument.
Section 22. PMI Companies. Although the
Corporation is the only one of the PMI Companies formally
executing this Agreement, the Executive understands,
acknowledges and agrees that this Agreement is made for
the benefit of all of the PMI Companies, as applicable,
each of whom shall be entitled to enforce this Agreement
as their respective interests may appear.
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IN WITNESS WHEREOF, the Corporation and the
Executive have executed this Agreement as of the date and
year first above written.
PERSONNEL MANAGEMENT, INC.
By /s/ Don R. Taylor
Don R. Taylor
President
ATTEST:
/s/ Elizabeth McFarland
Elizabeth McFarland
Vice-President - Operations
"EXECUTIVE"
/s/ Robert R. Millard
Robert R. Millard
0669\EDGAR\SEV-BEN.MIL