ADVANTA
SENIOR MANAGEMENT CHANGE OF CONTROL SEVERANCE PLAN
AMENDED AND RESTATED AS OF APRIL
2, 2007
The Company has
adopted this amendment and restatement of the Plan in order to
provide severance benefits, including medical cost subsidies and
outplacement assistance, to certain senior management employees
whose employment is terminated as a result of a Change of Control
or a Subsidiary Change of Control. The Plan, as herein amended and
restated, is applicable to terminations of employment in connection
with a Change of Control occurring on and after the Restatement
Effective Date. The Plan, as previously in effect, governs
terminations of employment that occurred prior to the Restatement
Effective Date.
2.1 The
“Benefits Committee” means a committee composed of the
Company’s General Counsel and the Company’s Vice
President of Human Resources, or such other person or persons as
may be designated by the Board of Directors to serve as the
Benefits Committee from time to time. Notwithstanding the
foregoing, on and after the Closing Date with respect to a Change
of Control, for a period of twelve months following such Closing
Date, no change to the membership of the Benefits Committee shall
be made except upon the resignation of a member of the Benefits
Committee, in which event the remaining member(s) of the Benefits
Committee shall appoint a new member who must have been an employee
of the Company or a Subsidiary prior to the time a Change of
Control occurs.
2.2 The
“Board of Directors” is the Board of Directors of the
Company.
2.3 A
“Change of Control” shall be deemed to have occurred
upon the earliest to occur of the following events: (i) the
date the stockholders of the Company (or the Board of Directors, if
stockholder action is not required) approve a plan or other
arrangement pursuant to which the Company will be dissolved or
liquidated, or (ii) the date the stockholders of the Company
(or the Board of Directors, if stockholder action is not required)
approve a definitive agreement to sell or otherwise dispose of all
or substantially all of the assets of the Company, or
(iii) the date the stockholders of the Company (or the Board
of Directors, if stockholder action is not required) and the
stockholders of the other constituent corporation (or its board of
directors if stockholder action is not required) have approved a
definitive agreement to merge or consolidate the Company with or
into such other corporation, other than, in either case, a merger
or consolidation of the Company in which holders of shares of the
Company’s Class A
Common Stock
immediately prior to the merger or consolidation will have at least
a majority of the voting power of the surviving corporation’s
voting securities immediately after the merger or consolidation,
which voting securities are to be held in the same proportion as
such holders’ ownership of Class A Common Stock of the
Company immediately before the merger or consolidation, or
(iv) the date any entity, person or group, within the meaning
of Section 13(d)(3) or Section 14(d)(2) of the Securities
Exchange Act of 1934, as amended (other than (a) the Company
or any of its subsidiaries or any employee benefit plan [or related
trust] sponsored or maintained by the Company or any of its
subsidiaries or (b) any person who, on the date the Plan is
effective, shall have been the beneficial owner of or have voting
control over shares of Common Stock of the Company possessing more
than twenty-five percent (25%) of the aggregate voting power of the
Company’s Common Stock) shall have become the beneficial
owner of, or shall have obtained voting control over, more than
twenty-five percent (25%) of the outstanding shares of the
Company’s Class A Common Stock, or (c) the first
day after the date this Plan is effective when directors are
elected such that a majority of the Board of Directors shall have
been members of the Board of Directors for less than two
(2) years, unless the nomination for election of each new
director who was not a director at the beginning of such two
(2) year period 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.
2.4 “Closing
Date” means the date on which a transaction that is treated
as a Change of Control or a Subsidiary Change of Control is
consummated.
2.5
“Code” means the Internal Revenue Code of 1986, as
amended.
2.6
“Company” means Advanta Corp., and any successor to its
business and/or assets which assumes and agrees or is otherwise
obligated to provide benefits under the Plan by operation of law,
or otherwise. Notwithstanding the foregoing, for purposes of
Section 2.3 (“Change of Control”) or
Section 2.14 (“Subsidiary Change of Control”), the
term “Company” shall only refer to “Advanta
Corp.”
2.7 An
“Employee” means a person
(a) who
has been selected by the Company’s Compensation Committee to
participate in or is shown on the Company’s books and records
as participating in the Company’s annual bonus program
generally known as “AMIP” or who is notified in writing
that the Office of the Chair has selected him or her to participate
in this Plan; and
(b) who
is employed by the Company or a Subsidiary at the time of a Change
of Control and as of the Closing Date or by a specific Subsidiary
at the time it undergoes a Subsidiary Change of Control and as of
the applicable Closing Date.
The term
“Employee” specifically excludes any person
(a) who is receiving severance pay or (b) who signed an
agreement pursuant to which his or her employment will terminate in
the future on a date certain. In addition, the term Employee shall
not
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include any
other individual who is a leased employee or is otherwise not
treated for tax or other purposes as an employee of the Company or
a Subsidiary, notwithstanding that such individual may be
subsequently be re-classified by a court, government agency,
tribunal or arbitrator as a common law employee of the
Company.
2.8
“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended.
2.9 “Full
Years of Service” of an Employee for purposes of determining
Severance Pay pursuant to Section 4.1(a) means the
Employee’s full years of continuous employment up to and
including the Employee’s Termination Date.
2.10
“Pay” means the base salary of an eligible Employee at
his or her stated weekly, monthly or annual rate as of the
Employee’s Termination Date. “Pay” does not
include overtime pay, bonuses of any kind, incentive pay or any
other remuneration. A “Week of Pay” shall be calculated
in accordance with the Company’s regular payroll practices
and procedures applicable immediately preceding the applicable
Closing Date.
2.11
“Plan” means the Advanta Senior Management Change of
Control Severance Plan, as set forth herein, as amended from time
to time.
2.12 The
“Restatement Effective Date” of the Plan is
April 2, 2007.
2.13
“Service” of an Employee, to the extent taken into
account for purposes of determining Severance Pay pursuant to
Section 4.1(a), means Full Years of Service, plus additional
periods of employment taken into account for purposes of these
calculations. These calculations are made taking into account
service performed from such Employee’s most recent date of
hire through the date of such Employee’s Termination Date;
provided, however, that prior periods of Service that would
otherwise be disregarded, may, at the discretion of the Benefits
Committee, be included as additional Service.
2.14
“Severance Pay” is a payment made to an eligible
Employee pursuant to Section 4.1 hereof. All Severance Pay due
to an eligible Employee must be paid to the eligible Employee
within two (2) years of the date that the first Severance Pay is
paid to that Employee and shall not exceed two (2) years of
Pay.
2.15
“Subsidiary” means any entity other than the Company
that is treated under Code Section 414(b) or (c) as a single
employer along with the Company; provided, however, that any such
entity shall not be considered to be a Subsidiary if the Board of
Directors or the Benefits Committee provides that such entity shall
be excluded from participation in the Plan. Notwithstanding the
foregoing, any other entity that does not otherwise qualify as a
Subsidiary may be designated as a Subsidiary for purposes of the
Plan by the Board of Directors or the Benefits
Committee.
2.16 A
“Subsidiary Change of Control” with respect to a
Subsidiary shall be deemed to have occurred if the Company or one
of its wholly-owned or majority-owned
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subsidiaries no
longer holds any shares of such Subsidiary, or if all or
substantially all of the assets of a such Subsidiary are sold to an
entity that is not owned or controlled, in whole or in part, by the
Company or one of its wholly-owned or majority-owned
subsidiaries.
2.17
“Termination Date” means the date upon which the
Employee’s employment with the Company or Subsidiary
ceases.
3.1 An Employee
shall be eligible to receive Severance Pay if and only if all of
the following conditions are met (and the Employee is not
disqualified from eligibility pursuant to
Section 3.2):
(a) The
Employee is an Employee of the Company or a Subsidiary after the
Restatement Effective Date of the Plan; and
(b) The
Employee is employed by:
(i) Advanta
Corp. at the time the Closing Date occurs;
(ii) A
Subsidiary at the time the Closing Date occurs; provided that
Advanta Corp. continues to hold at such time (directly or
indirectly) more than fifty percent (50%) of the outstanding
capital stock of the applicable entity; or
(iii) A
Subsidiary at the time it undergoes a Subsidiary Change of Control
and the time the applicable Closing Date occurs; and
(c) The
Employee is terminated from employment within twelve
(12) months after the applicable Closing Date; unless such
termination is: (1) because of the Employee’s death or
Extended Leave of Absence (as defined below), (2) because of
the Employee’s Willful Misconduct (as defined below), or
(3) by the Employee other than for Good Reason (as defined
below). In the event a person’s employment is terminated for
any reason prior to the occurrence of a Closing Date (either with
respect to a Change of Control or to a Subsidiary Change of
Control, as may be applicable) he or she shall not be entitled to
any benefits under the Plan by virtue of said Change of Control or
Subsidiary Change of Control.
(i)
Extended Leave of Absence . Except as otherwise required by
law, if an Employee shall have been absent from the full-time
performance of his or her duties by reason of such Employee’s
leave of absence for any reason for six (6) consecutive months
or more, the Employee may be terminated and shall not be entitled
to any benefits under the Plan.
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(ii)
Willful Misconduct . Termination of the Employee’s
employment for Willful Misconduct shall mean
termination:
(a) Upon
the willful and continued failure by the Employee to substantially
perform his or her duties which the Employee fails to cure (other
than any such failure resulting from incapacity due to physical or
mental illness or an Extended Leave of Absence or the
Employee’s termination of his or her employment for Good
Reason (as defined in Subsection 3.1(c)(iii))), after ten
(10) days from a written demand for substantial performance is
delivered to the Employee by the Company or Subsidiary by which he
or she is employed, which demand specifically identifies the manner
in which the Company or Subsidiary believes that the Employee has
not substantially performed his or her duties; or
(b) The
willful engaging by the Employee in conduct which is clearly and
materially injurious to the Company and/or Subsidiary, monetarily
or otherwise. For purposes of this subsection, no act, or failure
to act, on the Employee’s part shall be deemed
“willful” unless done, or omitted to be done, by the
Employee in bad faith and without reasonable belief that his or her
action or omission was in or not opposed to the best interest of
the Company and/or Subsidiary.
(c) Notwithstanding
the foregoing, the Employee shall not be deemed to have been
terminated for Willful Misconduct unless and until there shall have
been delivered to the Employee a copy of a written determination of
the Benefits Committee issued pursuant to a meeting of the Benefits
Committee (after reasonable notice to the Employee and an
opportunity for the Employee, together with his or her counsel, to
be heard before the Benefits Committee) finding that in the good
faith opinion of the Benefits Committee the Employee was guilty of
conduct set forth above in this Subsection 3.1(c)(ii) and
specifying the particulars thereof in detail.
(iii)
Good Reason . The Employee shall be entitled to terminate
his or her employment for Good Reason and receive Severance Pay, if
the Employee terminates his or her employment within twelve
(12) months after the applicable Closing Date and provides
written notice to the Benefits Committee no later than two weeks
after the Employee’s Termination Date of the Employee’s
election to resign and the circumstances constituting the Good
Reason to terminate his or her employment. The Employee’s
right to terminate his or her own employment pursuant to this
Subsection shall not be affected by his or her incapacity due to
physical or mental illness. The Employee’s continued
employment for any period of time following any applicable Closing
Date shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason. “Good
Reason” shall mean, without the Employee’s express
written consent, the occurrence after the Closing Date applicable
to a Change of Control of the Company or to a Subsidiary Change of
Control with respect to the Subsidiary by which he or she was
employed, of any of the following circumstances:
(a) The
Employee is demoted to a lower position;
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(b) The
Employee is assigned any duties inconsistent with the status of the
position that the Employee held immediately prior to the applicable
Closing Date or an adverse alteration in the nature or status of
the Employee’s responsibilities or authority or in the
quality or amount of office accommodations or assistance provided
to the Employee, from those in effect immediately prior to such
applicable Closing Date, which, taken in the aggregate, shall
constitute a constructive demotion;
(c) A
reduction in the Employee’s annual base salary as in effect
on the date immediately prior to the applicable Closing Date, or as
the same may be increased from time to time thereafter;
(d) The
Company’s or Subsidiary’s requirement that the
Employee’s site of principal employment be more than 50 miles
from the offices at which the Employee was principally employed
immediately prior to the date of the applicable Closing Date,
except for required travel on the Company’s or
Subsidiary’s business to an extent substantially consistent
with the Employee’s business travel obligations immediately
prior to such Closing Date;
(e) The
failure by the Company or Subsidiary to pay to the Employee any
portion of his or her compensation or compensation under any
deferred compensation program of the Company or Subsidiary within
fifteen (15) days of the date such compensation is
due;
(f) The
failure by the Company or Subsidiary to continue in effect any
compensation or benefit plan or perquisites in which the Employee
participates immediately prior to the applicable Closing Date,
which is material to his or her total compensation, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company or Subsidiary which experienced the Change
of Control to continue the Employee’s participation therein
(or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Employee’s participation
relative to other participants, than existed at the time of the
applicable Closing Date;
(g) The
failure by the Company or Subsidiary to continue to provide the
Employee with benefits substantially similar to those enjoyed by
him or her under any of the Company’s or Subsidiary’s
life insurance, medical, dental, accident or disability plans in
which the Employee was participating at the time of the applicable
Closing Date, the taking of any action by the Company or Subsidiary
which would directly or indirectly materially reduce any of such
benefits, or the failure by the Company or Subsidiary to provide
the Employee with the number of paid vacation days or Paid Time Off
days to which the Employee is entitled in accordance with the
vacation or Paid Time Off policy applicable and in effect at the
time of the applicable Closing Date;
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(h) The
failure of the Company or Subsidiary to obtain the unqualified
agreement from any successor to assume or adopt this Plan;
or
(i) Any
termination of the Employee’s employment that is not effected
pursuant to a Notice of Termination satisfying the requirements of
Subsection 3.1(c)(iv) hereof (and, if applicable, the requirements
of Subsection 3.1(c)(ii) hereof);
(iv) Any
purported termination of Employee’s employment by the Company
or the Subsidiary or by the Employee shall be communicated by
written Notice of Termination to the other party. “Notice of
Termination” shall mean a notice that shall indicate the
specific termination provision in the Plan relied upon and shall
set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Employee’s employment
under the provision so indicated. The Notice to the Company or the
Subsidiary (if only the Subsidiary has experienced a Change of
Control) shall be to the Benefits Committee. All such notices shall
be sent (i) by certified or registered mail and shall be
deemed received three (3) business days after the date of
mailing; (ii) by Federal Express or similar overnight courier
and shall be deemed received one (1) business day after
delivery to Federal Express or similar overnight courier; or
(iii) by personal service and shall be deemed received on the
same day as service.
3.2 An Employee
may not receive Severance Pay if any of the following disqualifying
events occur:
(a) The
Employee is receiving Severance Pay at the time the applicable
Closing Date occurs;
(b) The
Employee has signed an agreement pursuant to which his or her
employment will terminate in the future on a date
certain;
(c) The
Employee is not employed by the Company or by the specific
Subsidiary at the time of the Closing Date with respect to a Change
of Control or a Subsidiary Change of Control, as the case may be,
or if no Closing Date occurs with respect to either a Change of
Control or a Subsidiary Change of Control with respect to the
specific Subsidiary by which he or she is employed prior to the
termination of his or her employment; or
(d) The
Employee is party to an agreement that expressly provides that such
Employee is not entitled to severance or is not entitled to
benefits under this Plan.
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SECTION 4.
SEVERANCE BENEFIT AMOUNT
4.1 Except as
otherwise provided in this Section 4, Severance Pay to be
provided to an eligible Employee shall be as follows:
(a) Severance
Pay based upon the Employee’s AMIP Level as reflected on the
Company’s books and records as of the date there is a Change
of Control or Subsidiary Change of Control shall be the greater of:
(A) (i) Employees who are AMIP Level A will receive one
hundred and four (104) Weeks of Pay; (ii) Employees who
are AMIP Level B shall receive one hundred and four
(104) Weeks of Pay; (iii) Employees who are AMIP
Level
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