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EXHIBIT 10.13
July 9, 1996
Xx. Xxxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Dear Xxxxx:
SUBJECT: AMENDMENT AND RESTATEMENT OF EMPLOYMENT AGREEMENT
DATED JUNE 9, 1995
We wish you to remain in the employ of Household International, Inc.
("Household" or the "Corporation") and to provide you with fair and equitable
treatment along with a competitive compensation package. Also, we wish to
assure your continued attention to your duties without any possible distraction
arising out of uncertain personal circumstances in a change in control
environment. We recognize that in the event of a Change in Control of
Household (as such term is defined herein) it is likely that your duties and
responsibilities would be substantially altered.
1. At present you are employed by Household as Group Executive. In
that capacity you are entitled to the following:
a. A minimum annual salary of $300,000;
b. An annual bonus having a targeted value equal to
90% of your annualized salary as of the end of the period
in which the bonus is earned. The amount of bonus for any
year that you actually receive, if any, will depend on the
achievement of the corporate goals and your individual
goals established for that year and the terms of the
Household International Corporate Executive Bonus Plan,
and any successor or substitute plan or plans (the "Bonus
Plan"). Your bonus will be prorated based on the number
of elapsed months in the performance period in the case of
death, permanent and total disability, or retirement under
the Household Retirement Income Plan or any successor tax
qualified defined benefit plan;
c. An annual grant of stock options under the Household
International 1996 Long-Term Executive Incentive
Compensation Plan, and any successor or substitute plan or
plans (the "Long-Term Plan"), having a
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targeted value of 25% of your then annual salary at the
time of the grant.
d. Other compensation, benefits and perquisites as described
in, and in accordance with, Household's compensation,
benefit and perquisite plans (the "Plans").
2. Subject to termination as provided herein, the term of this
Agreement shall be for 18 whole calendar months, shall commence
on the date hereof, and shall be "evergreen"; that is shall
continue monthly as an 18 month term, unless the Corporation
gives to you not less than 17 whole calendar months notice that
the term as monthly continued shall not be so continued; provided
further, that in no event shall the term be continued beyond your
sixty-fifth birthday.
3. During your employment with Household you will devote your
reasonably full time and energies to the faithful and diligent
performance of the duties inherent in, and implied by, your
executive position.
4. In consideration of your employment with Household, it is
mutually agreed that:
a. In the event your employment with Household is terminated
during the term of this Agreement by Household for any
reason other than:
i. willful and deliberate misconduct which is
detrimental in a significant way to the
interests of the Corporation;
ii. death;
iii. inability, for reasons of disability,
reasonably to perform your duties for 6
consecutive calendar months; or,
b. In the event that during the term of this Agreement you
resign your position with Household because within 6 whole
calendar months of your resignation one or more of the
following events occurred to you:
i. your annual salary was reduced;
ii. your annual target bonus or the targeted
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value of stock options calculated as provided
in paragraph 1c was reduced and compensation
equivalent in aggregate value was not
substituted;
iii. your benefits under the Household Retirement
Income Plan or any successor tax qualified
defined benefit plan were reduced for reasons
other than to maintain its tax qualified
status and such reductions were not
supplemented in the Household Supplemental
Retirement Income Plan ("HSRIP"); or your
benefits under HSRIP were reduced;
iv. your other benefits or perquisites were
reduced and such reductions were not
uniformally applied with respect to all
similarly situated employees;
v. you were reassigned to a geographical area
outside of the Chicago, Illinois metropolitan
area;
vi. any successor to the Corporation by
acquisition of stock or substantially all of
the assets, by merger or otherwise, failed to
expressly adopt or otherwise repudiated this
Employment Agreement; or
vii. you received written notice that your
employment contract was not renewed;
Household shall be required, and hereby agrees, to make promptly
a lump sum cash payment to you in an amount equal to 200% of your
then annual salary (prior to any of the aforesaid reductions)
plus 200% of the average of the last two years' bonuses;
provided, however, if the term of this Agreement is less than 18
months because you are within 18 months of becoming age 65, the
amount shall be multiplied by a fraction the numerator of which
is the number of months left in the term, and the denominator of
which is 18. This payment shall be in addition to all other
compensation and benefits accrued to the date of termination of
employment.
5. It is further mutually agreed that:
a. should your employment be terminated pursuant to the
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provisions of paragraph 4a, or
b. should you resign your position pursuant to the provisions
of paragraph 4b, or
c. should you resign your position because you are assigned
to a position of lesser rank or status than you had
immediately prior to the Change in Control
at any time within sixty (60) whole calendar months following a
Change in Control of Household, Household or its successor shall
pay to you the amounts (including the lump sum payment) described
in paragraph 4 regardless of whether you are otherwise entitled
to them under paragraph 4. In addition, Household or its
successor shall promptly make a lump sum cash payment to you in
an amount equal to 200% of your then annual salary (prior to any
reduction) plus 200% of the average of the last two years'
bonuses; provided, however, if the term of this Agreement is less
than 18 months because you are within 18 months of becoming age
65, the amount shall be multiplied by a fraction the numerator of
which is the number of months left in the term, and the
denominator of which is 18.
Because of the performance history of Household and your
performance with us, we hereby agree to an irrebuttable
presumption that a reduction in compensation shall be deemed to
have occurred in any year (within five years following a Change
in Control) in which you do not receive at least:
i. a bonus payment under the Bonus Plan, and
ii. an award of stock options under the Long-Term Plan for
years in which awards were payable under the Long-Term
Plan as it existed prior to the Change in Control,
both at corporate and individual target levels as those plans
existed prior to the Change in Control (or compensation, benefits
and perquisites equivalent in aggregate value) and should you
choose to resign, payments shall be made to you as outlined
earlier in this paragraph 5.
For purposes of this Agreement, a Change in Control of Household
shall be deemed to occur when and if:
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A. any "person" (as the term is used in Section 13(d) and
Section 14(d)(2) of the Securities Exchange Act of 1934)
other than a trustee or other fiduciary of securities held
under an employee benefit plan of Household becomes the
beneficial owner, directly or indirectly, of securities of
Household representing 20% or more of the combined voting
power of Household's then outstanding securities; or
B. persons who were directors of Household as of the
effective date hereof, or successor directors nominated by
those directors or by such successor directors cease to
constitute a majority of the Board of Directors of
Household or its successor by merger, consolidation or
sale of assets.
6. You are not required to mitigate the amount of any payments to be
made by Household pursuant to this Agreement by seeking other
employment, or otherwise, nor shall the amount of any payments
provided for in this Agreement be reduced by any compensation
earned by you as the result of self-employment or your employment
by another employer after the date of termination of your
employment with Household.
7. Except as provided below, it is the intent and desire of
Household that the salary, bonuses and other benefits provided
for herein shall be paid to you without any diminution by reason
of the assessment of any "golden parachute" excise tax pursuant
to the Internal Revenue Code of 1986, as from time to time
amended, (hereinafter the "Code"), or state law. Accordingly, in
the event that any excise tax is assessed against you pursuant to
the provisions of sections 280G and 4999 of the Code (or
successor provisions) or comparable provisions of state law,
whether with respect to any payments made to you pursuant to the
provisions of this Agreement or payments otherwise arising out of
your employment relationship, Household or any successor, upon
notification of such assessment, shall promptly pay to you such
amount as is necessary to provide you with the same after-tax
benefit that you would have received had there been no "golden
parachute" excise tax. For this purpose, Household or its
successor shall assume that you are taxed at the highest
individual federal and state income tax rates (without regard to
Section 1(g) of the Code or successor provisions thereto).
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However, if any part or all of the amounts to be paid to you
constitute "parachute payments" within the meaning of section
280G(b)(2)(A) of the Code, and a reduction of the amount by 10%
or less would totally avoid the imposition of any excise tax,
such amounts shall be reduced so that the aggregate present value
of the amounts constituting such parachute payments will be equal
to 299% of your "annualized includible compensation for the base
period," as such term is defined in section 280G(d)(1) of the
Code. For the purpose of this subparagraph, present value shall
be determined in accordance with section 280G(d)(4) of the Code.
8. If a dispute arises regarding the termination of your employment
or the interpretation or enforcement of this Agreement and you
obtain a final judgment in your favor from a court of competent
jurisdiction from which no appeal may be taken, whether because
the time to do so has expired or otherwise, or your claim is
settled by Household or its successor prior to the rendering of
such a judgment, all reasonable legal and other professional fees
and expenses incurred by you in contesting or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided for in this Agreement or in otherwise pursuing
your claim will be promptly paid by Household or its successor
with interest thereon at the highest statutory rate of your state
of domicile for interest on judgments against private parties
from the date of payment thereof by you to the date of
reimbursement to you by Household or its successor.
9. You agree that you will not, without prior written consent of the
Chief Executive Officer or the General Counsel of Household,
during the term of or after the termination of your employment
under this Agreement, directly or indirectly, disclose to any
individual, corporation, or other entity (other than Household,
or any subsidiary or affiliate thereof, or its officers,
directors, or employees entitled to such information, or any
other person or entity to whom such information is regularly
disclosed in the normal course of Household's business), or use
for your own benefit or for the benefit of such individual,
corporation or other entity, any information whether or not
reduced to written or other tangible form, which:
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a. is not generally known to the public or in the industry;
b. has been treated by Household as confidential or
proprietary; and
c. is of competitive advantage to Household and in the
confidentiality of which Household has a legally
protectible interest,
(such information being referred to herein as "Confidential
Information"). Confidential Information which becomes generally
known to the public or in the industry, or in the confidentiality
of which Household ceases to have a legally protectible interest,
shall cease to be subject to the restrictions of this paragraph.
10. The provisions of this Agreement shall be construed, to the
extent possible, so as to guarantee their enforceability. In
case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been
contained in it.
11. This Agreement is an Amendment and Restatement of the Employment
Agreement dated June 9, 1995, in furtherance of the objectives
authorized and deemed by the Board of Directors of Household to
serve the best interests of the Corporation.
12. Any successor to the Corporation, by acquisition of stock or
substantially all of the assets, by merger or otherwise, shall be
required to adopt and abide by the terms of this Agreement. This
Agreement, and any rights to receive payments hereunder, may not
be transferred, assigned or alienated by you.
13. All benefits under this Agreement shall be general obligations of
the Corporation which shall not require the segregation of any
funds or property. Notwithstanding the foregoing, in the
discretion of the Corporation, the Corporation may establish a
grantor trust or other vehicle to assist it in meeting its
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obligations hereunder, but any such trust or other vehicle shall
not create a funded account or security interest for you.
14. This Agreement may only be amended or terminated by written
agreement, signed by both of the parties.
Our signatures below indicate our mutual agreement and
acceptance of the foregoing terms and provisions, all as of the date first
above set forth.
Sincerely,
HOUSEHOLD INTERNATIONAL, INC.
By: ----------------------------
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
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Xxxxxxxx X. Xxxxx
