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Exhibit 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of the 15th day of October, 1997
(the "Agreement"), between ASSOCIATES CORPORATION OF NORTH AMERICA (A Texas
Corporation), a corporation existing under the laws of the State of Texas (the
"Company"), and ___________________________________________ (the "Executive"),
WITNESSETH:
WHEREAS, the Company and the Executive desire to enter into an agreement
relating to the employment of the Executive;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT
1.1 Effective on the date of the Agreement (the "Effective Date"),
the Executive hereby agrees to serve, upon the terms and conditions herein
contained, as an executive of the Company, an indirect subsidiary of Ford Motor
Company ("Ford"). The Executive shall have such duties as the Board of
Directors of the Company may determine.
1.2 Unless automatically renewed, the Agreement and the term of
employment hereunder shall commence on the Effective Date and, subject to the
terms hereof, shall terminate on the day prior to the third anniversary of such
date. This Agreement and the three-year term of employment shall automatically
renew each month, beginning on the first day of the first month immediately
following the Effective Date and thereafter on the first day of each subsequent
month, unless either party provides written notice of non-renewal prior to the
first day of each such month. The original three-year term and any renewals
thereof are referred to as the "Employment Term."
1.3 During the Executive's employment hereunder, the Executive shall
devote the Executive's best efforts and substantially all the Executive's
business time and services to the business and affairs of the Company.
2. SALARY
2.1 During the Executive's employment hereunder, the Executive shall
be entitled to receive a base salary at the rate of $_______________ per annum,
payable in accordance with the Company's payroll policy from time to time in
effect.
2.2 The Company may, in its sole discretion, increase the Executive's
per annum base salary.
3. BONUSES
During the Executive's employment hereunder, the Executive shall be
eligible to receive bonuses on the terms specified in any bonus plan applicable
to executives of the Company. In the event that a Change in Control as defined
in Sections 4.5A(i), 4.5A(ii), 4.5A(iii), or 4.5A(v) occurs during the
Employment Term, then for the remaining Employment Term, the Executive shall
receive (a) an annual award of corporate annual performance pay ("XXXX") under
the Associates First Capital Corporation Incentive Compensation Plan (or any
predecessor or successor plan) (the "ICP") at least equal to 80% of the norm
award for the Executive for the year and (b) an annual award of long-term
performance pay ("LTPP") under the Associates First Capital Corporation Long-
Term Performance Plan at least equal to 80% of the norm award for the Executive
for the year. Any such cash incentive compensation shall be payable at the
same time and in the same
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manner as such awards are generally payable to other executives of the Company
and subject to the terms and conditions of the applicable plan, program or
arrangement.
4. TERMINATION
4.1 The employment of the Executive hereunder may be terminated by
the Company by fifteen (15) days' written notice given at any time, with or
without Cause. As used herein, the term "Cause" shall be limited to (a) action
by the Executive involving willful malfeasance, (b) the Executive's
unreasonable neglect or refusal to perform the executive duties assigned to the
Executive under this Agreement, (c) the Executive being convicted of a felony,
(d) the Executive engaging in any activity that is directly or indirectly in
competition with the Company or any affiliate or in any activity that is
inimical to the best interests of the Company or any affiliate, or (e) the
Executive's violation of Company policy covering standards of corporate
conduct; provided that the determination of Cause shall be made by the
Company's Board of Directors. If the Company terminates the Executive's
employment for Cause, all of the Company's obligations under this Agreement
shall thereupon cease and terminate.
4.2 The Executive may voluntarily terminate the Agreement and his
employment hereunder at any time by written notice to the Company. If the
Executive voluntarily terminates his employment hereunder for any reason
whatsoever, including without limitation by retirement, subject to any benefit
continuation requirements of applicable laws, all obligations of the Company
under the Agreement shall cease as of the effective date of the termination,
except to the extent that applicable law requires payment of any compensation
or benefits earned or accrued but unpaid through such date.
4.3 In the event that the Executive's employment is terminated by the
Company other than for Cause or a Change in Control occurs that results in
termination other than for Cause during the period beginning 6 months prior to
and ending 15 months after a Change in Control, including "Constructive
Termination," the Executive shall be entitled, in lieu of any other
compensation and benefits provided for herein, (i) to receive a lump sum in an
amount equal to (x) [two/three] times the sum of the Executive's then-current
annual base salary and an amount equal to the average of the XXXX amounts paid
to the Executive during each of the three years immediately preceding the year
of termination (or, if the Executive has not been employed by the Company for
at least three years immediately preceding the year of termination, during such
years as the Executive has been employed by the Company immediately preceding
the year of termination; provided, however, that if the Executive is terminated
prior to receiving any XXXX payments, any XXXX payment amount guaranteed to
such Executive pursuant to his engagement letter with the Company shall be
taken into account for purposes of this Section 4.3), plus (y) a pro rata
amount, based on the portion of the current performance year preceding
termination, equal to the average of the XXXX and LTPP amounts paid to the
Executive during each of the three years immediately preceding the year of
termination (or, if the Executive has not been employed by the Company for at
least three years immediately preceding the year of termination, during such
years as the Executive has been employed by the Company immediately preceding
the year of termination; provided, however, that if the Executive is terminated
prior to receiving any XXXX or LTPP payments, any XXXX and LTPP payment amounts
guaranteed to such Executive pursuant to his engagement letter with the Company
shall be taken into account for purposes of this Section 4.3); (ii)
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to be immediately vested in full as of the termination date in any outstanding
stock options granted under the ICP and to have all restrictions lapse as of
the termination date on any restricted stock awarded to the Executive under the
ICP; and (iii) to continue to receive, for [two/three] years from the date of
termination, at the Company's expense, life insurance and medical, dental,
disability and other welfare benefits at least comparable to those provided by
the Company to the Executive on the date of termination of employment, provided
that such benefits shall cease if the Executive obtains other employment with
comparable benefits.
4.4 Notwithstanding any other provision, the right of the Executive
to any benefits provided in this Agreement shall cease if the Board of
Directors of the Company determines that the Executive has violated Sections
8.2 or 8.3 herein, or has engaged in any activity that is inimical to the best
interests of the Company or any affiliate.
4.5A "Change in Control" means any of the following:
(i) Any merger, consolidation or similar combination with or
involving the Company, as of the date of the conclusion of such event,
other than a merger, consolidation or similar combination of the Company
with Ford or any of its affiliates;
(ii) Any transaction or series of transactions that results in
the sale or divestiture of all or substantially all of the Company's
assets, as of the conclusion of such transaction or series of
transactions;
(iii) Any capital reorganization, transaction or series of
transactions that results in Ford and its affiliates owning common stock
of the Company having less than 50% of the combined voting power of
outstanding capital stock of the Company (other than any transaction
described in Section 4.5A(iv)), as of the date of the conclusion of such
reorganization, transaction or series of transactions;
(iv) The successful completion of a public offering, or
distribution to the public by dividend or spinoff, that results in Ford
and its affiliates owning common stock of the Company having less than
50% of the combined voting power of the outstanding capital stock of the
Company; or
(v) Any transaction or series of transactions that results in
the transfer of management control of the Company to any third party
unaffiliated with the Company or Ford, regardless of whether Ford and
its affiliates continue to own common stock of the Company having 50% or
more of the combined voting power of the Company's outstanding capital
stock, as of the date such transfer of management control becomes
effective.
4.5B If a Change in Control as defined in Sections 4.5A(i), 4.5A(ii),
4.5A(iii), or 4.5A(v) occurs during the Employment Term, as of the date of such
Change in Control, (a) the Executive shall become immediately 100% vested in
any outstanding stock options granted under the ICP, (b) any restrictions shall
lapse immediately on any restricted stock awarded to the Executive under the
ICP, and (c) the Executive's rights and interests shall become immediately 100%
vested and nonforfeitable in any accounts or benefits payable under any of the
Company's nonqualified plans in which the Executive participates or has
participated prior to the Change in Control.
4.5C In the event that a Change in Control as defined in Sections
4.5A(i), 4.5A(ii), 4.5A(iii), or 4.5A(v) occurs during the Employment Term, the
Company shall fund a trust with sufficient funds to guarantee payment of all
benefits payable to the Executive under
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any of the Company's nonqualified plans in which the Executive participates or
has participated prior to the Change in Control.
4.6 Unless consented to in writing by the Executive, "Constructive
Termination" shall occur if any of the following results from a Change in
Control as defined in Sections 4.5A(i), 4.5A(ii), 4.5A(iii), or 4.5A(v):
(i) The assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices,
titles and reporting requirement), authority, duties or responsibilities
or any other action which results in a substantial 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 employer promptly after receipt
of notice thereof given by the Executive;
(ii) Any failure to (x) continue to provide the Executive with
the opportunity to participate, on terms substantially comparable in the
aggregate to those in effect immediately prior to the Change in Control,
in substantially the same benefit or compensation plans and programs,
including the Company's life, disability, health and retirement plans in
which the Executive was participating immediately prior to the date of
the Change in Control, or their equivalent, or (y) provide the Executive
with all other fringe benefits (or their equivalent) from time to time
in effect for the benefit of any executive, management or administrative
group of the Company which customarily includes a person holding the
employment position with the Company then held by the Executive; or
(iii) Without the Executive's express written consent, a
substantial reduction, without good business reasons, of the facilities
and perquisites available to the Executive immediately prior to such
reduction.
4.7 Notwithstanding any provision herein to the contrary, total
compensation paid to the Executive under this Agreement as a result of a Change
in Control that constitutes a change in control for purposes of Section 280G of
the Internal Revenue Code of 1986, as amended, as determined by Ford, shall not
exceed 2.99 times the Executive's Compensation. "Executive's Compensation"
for purposes of this Section 4.7 shall have the same meaning as the meaning
given to the term "annualized includible compensation for the base period" in
Section 280G(d)(1) of the Internal Revenue Code of 1986, as amended.
5. PERMANENT DISABILITY OR DEATH
In the event of the Executive's permanent disability, as defined in the
long-term disability plan applicable to employees of the Company on the date
hereof ("Permanent Disability"), while employed hereunder during the Employment
Term, the Executive shall receive monthly for a period of six months after the
determination of Permanent Disability an amount equal to the Executive's then-
current monthly base salary plus one-twelfth of the average of the XXXX amounts
paid to the Executive during each of the three years immediately preceding the
year of Permanent Disability (or, if the Executive has not been employed by the
Company for at least three years immediately preceding the year of Permanent
Disability, during such years as the Executive has been employed by the Company
immediately preceding the year of Permanent Disability; provided, however, that
if the Executive is terminated prior to receiving any XXXX payments, any XXXX
payment
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amount guaranteed to such Executive pursuant to his engagement letter with the
Company shall be taken into account for purposes of this Section 5), less any
amounts received through any disability or salary continuation plan provided
pursuant to Section 7 hereof. In the event of the Executive's death while
employed hereunder during the Employment Term, the Executive's estate or
designated beneficiaries shall receive a lump sum equal to the Executive's
then-current annual base salary plus the average of the XXXX amounts paid to
the Executive during each of the three years immediately preceding the year of
death (or, if the Executive has not been employed by the Company for at least
three years immediately preceding the year of death, during such years as the
Executive has been employed by the Company immediately preceding the year of
death; provided, however, that if the Executive is terminated prior to
receiving any XXXX payments, any XXXX payment amount guaranteed to such
Executive pursuant to his engagement letter with the Company shall be taken
into account for purposes of this Section 5). In the event of the Executive's
Permanent Disability or death as specified in this Section 5, the employment of
the Executive and all obligations of the Company hereunder (other than the
obligation (i) for the compensation specified in this Section 5, and (ii) to
pay amounts for which the Company is responsible under applicable benefit
plans, policies and practices in the event of death or Permanent Disability)
shall terminate.
6. EXPENSES
During the Executive's employment hereunder, the Executive is authorized
to incur reasonable expenses for promoting the business of the Company,
including expenses for travel and similar items, in accordance with the
Company's policy as in effect from time to time. The Company will reimburse
the Executive for all such reasonable expenses as determined by management in
accordance with Company policy upon presentation by the Executive from time to
time of an itemized account of such expenditures.
7. EXECUTIVE BENEFITS
7.1 During the Executive's employment hereunder, the Executive shall
be included in any and all plans providing benefits for (a) the Company's
employees generally and (b) the Company's executives of comparable status. In
furtherance and not in limitation of the foregoing, throughout the Employment
Term, the Company shall provide to the Executive life insurance, medical,
dental, disability and other employee welfare benefits and defined benefit
pension plan benefits that, on an overall basis, shall be no less favorable to
the Executive than those in effect for employees (of comparable pay grade or
status) of the Company from time to time.
7.2 During the Executive's employment hereunder, the Executive shall
remain eligible to participate in all incentive, profit sharing, bonus, stock
option, or other similar or comparable plans applicable to Company executives
of a similar class and station, in accordance with the terms thereof in effect
from time to time.
8. RESTRICTIVE COVENANTS
8.1 The Executive agrees to execute and deliver from time to time the
Company's standard confidentiality, conflict of interest and proprietary
information agreements.
8.2 The Executive and the Executive's agents will not, during the 12-
month period following any termination of employment hereunder, or in
contemplation of termination of employment, induce, entice or solicit any
employee of the Company or its affiliates, to leave employment with the Company
or its affiliates.
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8.3 If the Executive receives benefits or compensation of any kind
from the Company pursuant to Section 4.3, the Executive will not, either
directly or indirectly, for a period of one year following termination of
employment, compete with the Company, in any manner or capacity (e.g., as an
employee, advisor, principal, agent, partner, officer or director) in any phase
of the business which the Company or any of its subsidiaries conduct during the
Employment Term. The obligations of this covenant not to compete ("Covenant")
shall apply to any geographic area in which the Company and its subsidiaries
have engaged in business during the Employment Term. The Executive agrees and
acknowledges that it would be difficult to fully compensate the Company for the
damages resulting from a breach of this Covenant, and that the Company will,
therefore, be entitled to temporary and permanent injunctive relief in the
event of any actual or threatened breach. Such relief may be granted without
the necessity of proving actual damages, but this provision does not diminish
the Company's right to recover damages in addition to injunctive relief.
9. NOTICE
All notices or communications hereunder shall be in writing, addressed
as follows:
To the Company:
Associates Corporation of North America (A Texas Corporation)
000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: General Counsel
To the Executive:
Any notice or communication shall be sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other
address as a party may designate in writing from time to time), and the actual
date of receipt, as shown by the receipt therefor, shall determine the time at
which notice was given.
10. SEPARABILITY
If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such provision shall be modified, to the
extent practical, consistent with the intent of the parties, in order to render
it enforceable, but such invalidity or unenforceability shall not affect the
remaining provisions hereof, which shall remain in full force and effect.
11. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of the Executive and the assigns and successors of
the Company. Neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive, and any such
attempted assignment or hypothecation shall be void. This Agreement shall be
assignable by the Company in connection with any transfer of all or
substantially all of the Company's business or any transfer of a portion of the
Company's business for which the Executive has responsibility; provided,
however, that the Company shall remain responsible for all the obligations of
the Company set forth herein for the remainder of the initial period of the
Employment Term or the remainder of the then-current renewal period, as
applicable.
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12. ENTIRE AGREEMENT; AMENDMENT
This Agreement represents the entire agreement of the parties relating
to its subject matter and shall supersede any and all previous written or oral
employment agreements between the Company or any of its affiliates and the
Executive. This Agreement may be modified or amended only by a writing signed
by both parties hereto.
13. DISPUTE RESOLUTION.
13.1 Any dispute between the Executive and the Company under this
Agreement shall be resolved (except as provided otherwise in this Section 13)
through binding arbitration conducted by the American Arbitration Association,
pursuant to the American Arbitration Association Employment Arbitration rules,
or other mutually agreeable arbitration service or rules. The arbitrator shall
be selected by mutual agreement, through alternative strikes from a designated
list, or as required by the American Arbitration Association. The arbitrator
shall be duly licensed to practice law in the State of Texas and shall have
experience in employment law arbitration. All proceedings shall be conducted
in the City of Dallas, State of Texas, unless otherwise agreed by all parties.
13.2 The arbitrator shall permit reasonable pre-hearing discovery of
facts, to the extent necessary to establish a claim or a defense to a claim,
subject to supervision by the arbitrator. Each party shall be entitled to
present evidence and argument to the arbitrator. Each party shall have the
right to be represented by legal counsel of the party's choosing. The
arbitrator shall have the right only to interpret and apply the provisions of
this Agreement and may not change any of its provisions. The arbitrator does
not have authority (i) to render a decision that contains a reversible error of
state or federal law, or (ii) to apply a cause of action or remedy not
otherwise provided for under applicable state or federal law. The arbitrator
shall be required to state in a written opinion all facts and conclusions of
law relied upon to support the decision rendered and shall give written notice
to the parties of the decision and furnish each party a signed copy of such
decision. The determination of the arbitrator shall be conclusive and binding
upon the parties, and judgment upon the same may be entered in any court having
jurisdiction thereof. The parties will resolve any dispute over the
enforceability of an award through declaratory relief to be disposed of through
motion proceedings in the applicable court of law. Either party may move for
dismissal through summary judgment in accordance with the Federal Rules of
Civil Procedure and the standard of proof under federal law for a motion for
summary judgment. The expenses of arbitration, including reasonable expenses
of legal counsel retained by the Executive in connection with such arbitration,
shall be borne by the Company.
13.3 Notwithstanding the foregoing, the Company shall not be required
to seek or participate in arbitration regarding any breach of the Executive's
obligations pursuant to Sections 8.2 or 8.3 hereof, but may pursue its remedies
for such breach in a court of competent jurisdiction in Dallas, Texas.
14. GOVERNING LAW
This Agreement shall be construed, interpreted and governed in
accordance with the laws of Texas.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
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[Executive]
ASSOCIATES CORPORATION OF NORTH AMERICA
(A Texas Corporation)
By:
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Xxxxx X. Xxxxxx
Chief Executive Officer
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