EXHIBIT 10.12(b)
EMPLOYMENT AGREEMENT
AGREEMENT by and between Household International, Inc., a company
incorporated under the laws of Delaware (the "Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(the "Executive") dated as of the 14th day of November, 2002.
The Company has determined that it is in the best interests of the
Company and its shareholders to assure that the Company will have the continued
dedication of the Executive following the pending merger (the "Merger") of H2
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
HSBC Holdings plc (the "Parent"), with and into the Company pursuant to the
Agreement and Plan of Merger dated as of November 14, 2002 and to provide the
surviving corporation after the Merger with continuity of management. Therefore,
in order to accomplish these objectives, the Parent has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the effective
date of the Merger.
2. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to enter into the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary thereof
(the "Employment Period").
3. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, the Executive shall serve as Chairman and Chief Executive
Officer of the Company until January 1, 2004 and thereafter as Chairman and
Chief Executive Officer of the Company and HSBC North America, Inc., which will
include the Company and all other North American businesses of Parent (excluding
HSBC ▇▇▇.▇▇▇, Inc. and other intellectual property companies), in each case,
with such authority, duties and responsibilities as are commensurate with such
positions, (x) shall serve as a member of Parent Board of Directors (the "Parent
Board"), (y) the Executive shall report directly to the Chairman of the Parent
and (z) the Executive's principal work location shall be within 35 miles of
Prospect Heights, Illinois.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his attention and time during normal
business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder,
to use the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it shall not be
a violation of this Agreement for the Executive to, consistent with and subject
to the policies applicable to members of the Parent Board (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. A schedule of such activities shall be provided
to the Company promptly following the date hereof.
(b) Compensation. (i) Initial Payment. On the Effective Date, the
Company shall make a lump sum payment to the Executive equal to the cash
payments to which the Executive would have been entitled to receive under
Sections 9(d)(i), 9(d)(ii), 9(d)(iii) and 9(d)(vi) of the Employment Agreement
between the Company and the Executive dated as of March 1, 2002 (the "Prior
Agreement") had he been terminated by the Company pursuant to a Qualifying
Termination (as defined therein) immediately after the Effective Date. For the
avoidance of doubt, and notwithstanding anything herein to the contrary, no
amounts payable pursuant to this Section 3(b) or Section 8 of this Agreement
shall be taken into account in computing any benefits under any plan, program or
arrangement of the Company. The Executive shall promptly pay to the Company any
refund with respect to any Excise Tax (as defined in Section 8 hereof) or
Gross-Up Payment (as defined in Section 8 hereof) due to a recalculation of any
amounts due, for whatever reason, it being understood that the Executive would
be kept in the same after-tax position (after payment of the Gross-Up Payment)
that the Executive would have been in had no Excise Tax been imposed.
(ii) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary") of no less than the
annual base salary paid to the Executive as of immediately prior to the date
hereof. During the Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase awarded to the Executive
prior to the date hereof and thereafter at least annually. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(iii) Annual Bonus. During the Employment Period, the
Executive shall receive an annual cash bonus ("Annual Bonus") in an amount at
least equal to the annual average of the Executive's bonuses earned with respect
to years 1999, 2000, and 2001 (the "Recent Annual Bonus"), pro rated in the case
of any partial year during the Employment Period.
(iv) Incentive Awards. A. Special Grant. Within 30 days of the
Effective Time, or, if the Effective Time occurs during the two-month period
prior to March 3, 2003, within 30 days thereafter, subject to the approval of
the trustee (the "Trustees") of Parent's Restricted Share Plan (the "Plan"), the
Executive will receive a one-time special retention grant of restricted shares
of the Parent (the "Special Restricted Shares") pursuant to the Plan, with a
value equal to $10,000,000 (the "Restricted Share Value"), based on the closing
price (the "Fair Market Value"), as of the date of grant of such Special
Restricted Shares, of ordinary shares of the Parent on the principal stock
exchange on which such shares are traded. The number of Special Restricted
Shares granted shall be determined by dividing the Restricted Share Value by the
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Fair Market Value on the date of grant of such Special Restricted Shares. The
Special Restricted Shares will vest with respect to 1/3 of the shares on each of
the first three (3) anniversaries of the Effective Date, provided the Executive
is still employed on each applicable vesting date. Upon a termination of
employment of the Executive by the Company without Cause or by the Executive for
Good Reason or by reason of his death or Disability, the Special Restricted
Shares shall immediately vest. All other terms and conditions of the Special
Restricted Shares will be governed by the Plan. To the extent the grant of
Special Restricted Shares is not approved by the Trustees or would violate rules
and regulations under the Plan or applicable law (the "Excess Amount"), the
Executive will receive a one-time special cash bonus (the "Special Cash Bonus")
equal to the Excess Amount. The Special Cash Bonus, if any, will be paid to the
Executive in three equal installments on each of the first three (3)
anniversaries of the Effective Date, provided the Executive is still employed by
the Company on each applicable anniversary. Upon a termination of employment of
the Executive by the Company without Cause or by the Executive for Good Reason,
the Special Cash Bonus shall immediately vest and be payable.
B. Subsequent Grants. Within 30 days of each of the first
anniversary and the second anniversary of the Effective Date, or if the
Effective Time occurs during the two-month period prior to March 3, 2003, within
30 days after each such anniversary, subject to the approval of the Trustees,
provided the Executive is still employed by the Company on each applicable
anniversary, the Executive will receive a grant of restricted shares (the
"Restricted Shares") pursuant to the Plan, with a value equal to at least
$5,500,000, based on the Fair Market Value on the date of the applicable grant.
The number of Restricted Shares granted shall be determined by dividing
$5,500,000 by the Fair Market Value on the date of the applicable grant. Such
Restricted Shares shall vest in equal installments on each of the first three
(3) anniversaries of the date of grant, provided the Executive is still employed
by the Company on each applicable anniversary. All other terms and conditions of
the Restricted Shares will be governed by the Plan. Upon a termination of
employment of the Executive by the Company without Cause or by the Executive for
Good Reason or by reason of his death or Disability, the Restricted Shares shall
immediately vest. To the extent any such grant of Restricted Shares is not
approved by the Trustees or would violate rules and regulations under the Plan
or applicable law, the Executive will receive a cash bonus equal to such excess
amount. The Cash Bonus, if any, will be paid in equal installments on each of
the first three (3) anniversaries of the date of grant, provided the Executive
is still employed by the Company on each applicable anniversary. Upon a
termination of employment of the Executive by the Company without Cause or by
the Executive for Good Reason, the Cash Bonus shall immediately vest and be
payable.
(v) Retirement Benefits. Effective as of the Effective Time,
the Executive's benefits under the Company's qualified and non-qualified excess
and supplemental defined benefit retirement plans (the "SERP") shall be frozen,
giving effect to Section 9(d)(v) of the Prior Agreement for purposes of
calculating such benefits (the "Retirement Benefits").
(vi) Other Employee Benefits and Perquisites. During the
Employment Period, except with respect to benefits under qualified and
non-qualified excess and supplemental defined benefit retirement plans, the
Executive shall receive employee benefits and perquisites no less favorable than
those provided to the Executive immediately prior to the date hereof.
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(vii) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the Company's policies.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company as in effect with respect to the senior
executives of the Company.
4. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 11(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days in a 365-day period as a result of incapacity due to
mental or physical illness which may be reasonably expected to be total and
permanent by a physician selected by the Company or its insurers and reasonably
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board which specifically identifies the manner in which the
Board believes that the Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company, or
(iii) commission of a felony or guilty or nolo contendere plea
by the Executive with respect thereto (other than any such commission or plea
relating to traffic violations).
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board of Directors of the Company (the "Board") or upon the
instructions of the Chief Executive Officer of the Parent or a senior officer of
the Parent or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by
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the Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i), (ii) or (iii) above, and
specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive with or without Good Reason. For purposes of this Agreement, "Good
Reason" shall mean in the absence of a written consent of the Executive:
(i) the assignment to the Executive of any duties inconsistent
in any material respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a) of this Agreement, or any other
action by the Company which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive; or
(ii) a material breach of the terms of this Agreement,
including, without limitation, any failure by the Company to comply with any of
the provisions of Section 3(b) or 10(c) of this Agreement; or
(iii) the Company's requiring the principal work location of
Executive to be located other than as provided in Section 3(a)(i)(z) hereof.
The Executive's mental or physical incapacity following the occurrence of an
event described above in clauses (i) through (iii) shall not affect the
Executive's ability to terminate employment for Good Reason.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
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(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability or the Executive resigns for Good Reason, the Date of
Termination shall be the date on which the Company or the Executive, as the case
may be, notifies the other party of such termination and (iii) if the
Executive's employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good Reason;
Other Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, and (2)
the product of (x) the Recent Annual Bonus and (y) a fraction, the
numerator of which is the number of days in the fiscal year in which
the Date of Termination occurs through the Date of Termination, and
the denominator of which is 365, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1)
and (2), shall be hereinafter referred to as the "Accrued
Obligations"); and
B. the amount equal to the product of (1) the number of months
and portions thereof from the Date of Termination until the third
anniversary of the Effective Date, divided by twelve and (2) the sum
of (x) the Executive's Annual Base Salary and (y) the Recent Annual
Bonus; and
(ii) notwithstanding any provision in an award agreement to
the contrary, effective as of the date of termination of the Executive's
employment, (A) each and every stock option, restricted stock award, restricted
stock unit award and other equity-based award and performance award or any cash
equivalents thereof that is outstanding as of the date of termination, shall
immediately vest and become exercisable, and (B) for purposes of exercising any
such award, the Executive will be deemed to be retirement eligible (the "Equity
Benefits"); and
(iii) for the remainder of the Executive's life and that of
his current spouse, the Company shall continue to provide medical and dental
benefits to the Executive and his current spouse, at no cost to the Executive or
his current spouse and otherwise on the same basis such benefits were provided
to the Executive immediately prior to the Date of Termination (collectively
"Medical Benefits"); and
(iv) the Executive shall be paid the Retirement Benefits in a
lump sum within 30 days after the Date of Termination; and
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(v) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies through the Date of Termination (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations, the
Retirement Benefits and the timely payment or provision of Other Benefits. In
addition, the Executive shall receive the Equity Benefits, subject to the
approval of the Trustees, where necessary. Accrued Obligations and the
Retirement Benefits shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 5(b) shall include death benefits as in effect on the
date of the Executive's death with respect to senior executives of the Company
and his beneficiaries and the provision of the Medical Benefits to the
Executive's current spouse.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations, the Retirement Benefits and the timely
payment or provision of Other Benefits. In addition, the Executive shall receive
the Equity Benefits, subject to the approval of the Trustees, where necessary.
Accrued Obligations and the Retirement Benefits shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 5(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits as in effect
at any time thereafter generally with respect to senior executives of the
Company and the provision of the Medical Benefits to the Executive and his
current spouse.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay or provide
to the Executive (i) the Annual Base Salary through the Date of Termination,
(ii) the Retirement Benefit in a lump sum within 30 days after the Date of
Termination, (iii) the Medical Benefits with respect to expenses incurred prior
to the date of termination, and (iv) the Other Benefits, in each case to the
extent theretofore unpaid.
(e) After Employment Period. If the Executive's employment shall
terminate for any reason following the Employment Period, the Company shall pay
or provide to the Executive, (i) the Retirement Benefit in a lump sum within 30
days after the date of termination, (ii) the Medical Benefits, and (iii) the
Other Benefits, to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Except as specifically provided,
nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Executive may
qualify. Amounts which are vested benefits or which the Executive is
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otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
7. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), provided the Executive brings or defends such
action in good faith.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company or its affiliates to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 8) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by KPMG LLP or
such other certified public accounting firm reasonably acceptable to the Company
as may be designated by the Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the Company. All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined
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pursuant to this Section 8, shall be paid by the Company to the Executive within
five days of the later of (i) the due date for the payment of any Excise Tax,
and (ii) the receipt of the Accounting Firm's determination. Any determination
by the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before
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any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that
if the Company directs the Executive to pay such claim and ▇▇▇ for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 8(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 8(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
9. Confidential Information; Restrictive Covenants. The Executive
shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it.
(a) Noncompetition. During the period Executive is actively employed
by the Company, and for the one-year period following the Executive's
termination of employment with the Company, other than a termination by the
Company without Cause or by the Executive for Good Reason (the "Restriction
Period), the Executive shall not become associated with any entity, whether as a
principal, partner, employee, consultant or shareholder (other than as a holder
of 1% or less of the outstanding voting shares of any publicly traded company)
that is actively engaged in any consumer lending business (including mortgage
and credit card lending) (a "Competitive Entity"). An entity will not be
considered a Competitive Entity if that entity and its affiliates (or their
predecessors) originated consumer loans in the most recently completed calendar
year in an amount less than $10 billion. Without limitation of the foregoing,
during the
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Restriction Period, the Executive shall not solicit the business of, or
otherwise attempt to establish any business relationship of a nature that is
competitive with the business or relationship of the Company or its subsidiaries
with, any person or entity who was a significant commercial customer or client
of the Company or its subsidiaries within 6 months immediately prior to the date
of the Executive's termination of employment, including, without limitation,
Saks, GM, Union Privilege and their affiliates.
(b) Nonsolicitation. During the Restriction Period, the Executive
will not directly or indirectly induce any employees of the Company or its
affiliates to terminate employment with any such entity, and shall not, directly
or indirectly, either individually or as owner, agent, employee, consultant or
otherwise, hire, employ or offer employment or assist in hiring, employing or
offering employment, to any person who is or was employed by the Company or an
affiliate unless such person shall have ceased to be employed by such entity for
a period of at least 6 months prior to the date of the Executive's termination
of employment.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) 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 assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. Any dispute, controversy or claim
between the parties arising out of or relating to or in connection with this
Agreement, or in any way relating to any other relationship that exists or has
existed between the parties hereto, or any amendment or modification hereof,
shall be settled by the courts of the State of Delaware. The parties hereby
explicitly agree to waive any legal or contractual right they or either of them
may have to contest any dispute, controversy or claim between the parties
arising out of or relating to or in connection with this Agreement, or any
amendment or modification hereof, in any other forum whether judicial or
otherwise. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
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If to the Executive:
Household International, Inc.
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to the Company:
Household International, Inc.
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(iii) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) From and after the Effective Date this Agreement shall supersede
any other employment, severance or change of control agreement between the
parties with respect to the subject matter hereof including without limitation
the Prior Agreement, except as expressly provided herein.
(g) This Agreement shall become effective if and only if the
Effective Time (as defined in the Merger Agreement) occurs..
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ ▇. ▇. ▇▇▇▇▇▇▇▇
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HOUSEHOLD INTERNATIONAL, INC.
By /s/ ▇. ▇. ▇▇▇▇▇
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