EXHIBIT 10.25
CONFIDENTIAL
November 6, 1996
Xxxxxxxx X. Xxxxx
President & COO
Providian Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Dear Xxxxxxxx:
This will set forth our mutual agreements concerning certain matters
relating to employment between you ("Executive") and Providian Corporation (the
"Corporation"). The parties agree that, except as otherwise expressly provided
herein, this letter agreement is intended to supplement, and not to supersede,
the Employment Agreement dated as of February 21, 1996 between Executive and the
Corporation (the "Existing Employment Agreement"). Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to them in the
Existing Employment Agreement; provided that, to the extent that any such
capitalized term is defined in the Existing Employment Agreement by reference to
the date of a Change in Control, for purposes of the definition of such term as
used in this letter agreement, the earlier of January 1, 1998 or the date of
termination of Executive's employment shall be substituted for the date of a
Change in Control.
1. Except as otherwise expressly provided herein, in the event that
either (a) Executive is terminated without Cause prior to January 1, 1998 or (b)
Executive has not been offered the position of Chief Executive Officer of the
Corporation prior to January 1, 1998 and Executive submits his resignation from
employment with the Corporation at any time from January 1, 1998 through January
31, 1988, then, in either event, the Corporation shall pay to the Executive:
(i) his Base Salary through the date of termination of his employment;
(ii) a bonus, if not previously paid, in respect of the
corporation's last completed fiscal year prior to the date of termination of his
employment, calculated in accordance with the formula under the Corporation's
bonus plan applicable to the Executive for such year;
(iii) in addition to any bonus payable pursuant to the
foregoing subparagraph (ii), but only in the event of a termination of
employment under clause (a) of this paragraph 1, a bonus equal to the product of
(A) his Base Salary in effect on the date of termination of his employment
prorated to the date of such termination, and (B) the bonus Percentage;
(iv) his Base Salary, at the rate in effect at termination of his
employment, until the third anniversary of his termination of employment;
(v) any other bonus or compensation deferred under any plans
and programs of the Corporation in accordance with such plans and programs,
except as otherwise provided pursuant to the terms of any such plan or program;
(vi) continued vesting following termination of his employment in any
awards of restricted stock made to the Executive, until the third anniversary of
his termination of employment;
(vii) continuation in all employee benefit plans or programs
in which he was participating at the termination of his employment, until the
third anniversary of his termination of employment, but (A) only to the extent
such plans or programs permit continued participation after termination of
employment and (B) in no event beyond the date, if any, that Executive becomes
employed by a subsequent employer; and
(viii) other benefits in accordance with the plans and programs of the
Corporation.
In the event there is a termination of the Executive's employment under
clause (a) of this paragraph 1, the Corporation shall, upon the Executive's
written request furnished to the Corporation within 20 days following such
termination, make a lump sum payment to the Executive in an amount equal to the
Spread on the Payment Date with respect to the relevant options in each option
grant, multiplied in each case by the number of relevant options in each option
grant. In the event that the Executive does not request such payment, or in the
event of a termination of the Executive's employment under clause (b) of this
paragraph 1, each option grant shall become fully exercisable as of the date of
termination of employment and shall remain outstanding for three years following
termination of employment or, if shorter, for the remainder of the originally
scheduled term of such option grant; provided that, to the extent the terms of
any option grant do not permit the option to remain outstanding for such period,
the corporation shall make a lump sum payment to the executive in an amount
equal to the Spread on the Payment Date with respect to the relevant options in
each such option grant, multiplied in each case by the number of relevant
options in each such option grant. For the purpose of the immediately preceding
two sentences, "relevant options" in any referenced option grant means any
options granted by the Corporation to the Executive to purchase its common stock
that (i) are outstanding on the date of termination of his employment and remain
unexercised on the Payment Date (whether or not such options expire by their
terms prior to the Payment Date) and (ii) by their terms were exercisable on the
date of termination of his employment or which would have become exercisable if
his employment had continued until the third anniversary of his termination of
employment. The Corporation shall make any such lump sum payment on the Payment
Date (or, if later, promptly following the Executive's request) and, as a
condition to making such payment, the Executive agrees that all outstanding
options granted to him with respect to which such payment is made shall
thereupon be canceled.
For purposes of the foregoing, "Spread" shall mean the excess, if any,
of the Fair Market Value of a share of the common stock of the Corporation over
the purchase price of such share pursuant to any option to purchase such share
granted by the Corporation to the Executive; and "Payment Date" shall mean the
first business day following termination of the Executive's employment on or
after which he is no longer subject to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, with respect to any payments
required to be made to him by the Corporation pursuant to the foregoing
provisions of this paragraph 1. "Fair Market Value" shall mean the mean between
the highest and lowest sale price of the common stock of the Corporation as
reflected on the consolidated tape of New York Stock Exchange issues on the date
preceding the date as of which such value is being determined. If the commons
stock of the Corporation is not sold on such day, the value shall be determined
on the next preceding day on which the common stock of the Corporation is sold.
2. Executive and the Corporation agree that, in the event of a
termination of the Executive's employment entitling the Executive to payments
under the provisions of paragraph 1, such provisions of paragraph 1 will
supersede the provisions of the Existing Employment Agreement, and no payments
will be due to the Executive under the Existing Employment Agreement in the
event of a Change in Control of the Corporation following termination of
Executive's employment with the Corporation. Executive and the Corporation
further agree that, in the event of a Change in Control of the Corporation prior
to any termination of Executive's employment, the provisions of the Existing
Employment Agreement shall govern and this letter agreement shall be of no
further force or effect.
3. Notwithstanding any provision of the Existing Employment Agreement
or this letter agreement to the contrary, in the event of a spin-off or other
separation transaction with respect to Providian Bancorp, Inc. (the
"Subsidiary"), or all or substantially all the assets of the Subsidiary, in
connection with which the Subsidiary (or the successor to all or substantially
all the assets of the Subsidiary) becomes a separate publicly traded
company and the Executive is appointed to and accepts the position of Chairman
and Chief Executive Officer of the Subsidiary (or such successor), then upon
consummation of such spin-off or other transaction, all the provisions of this
letter agreement and of the Existing Employment Agreement shall expire and shall
cease to have any further force or effect.
4. (a) During the period beginning on the date of the Executive's
termination of employment and ending one year thereafter, the Executive shall
not personally solicit any existing customer or partner of the Corporation or
any prospective customer or partner identified in the business proposals of the
Corporation outstanding on the date of the Executive's termination of
employment, in either case as limited to those concerns known by the Executive
either to be, or to have the possibility of becoming, customers or partners of
the Corporation and, in the latter case, limited to business proposals with
which the Executive was familiar, for the purpose of inducing any such existing
or prospective customers or partners to reduce or forego using the insurance or
financial services business of the Corporation within the United States of
America.
(b) During the period described in subparagraph (a) above,
except when acting on behalf of the Corporation or any affiliate thereof, the
Executive shall not solicit any employee of the Corporation or any affiliate
thereof to terminate his employment.
(c) During the period described in subparagraph (a) above, the
Executive shall not (i) do or say anything that reasonably may be expected to
have the effect of diminishing or impairing the goodwill and good reputation of
the Corporation and its officers, directors and products, (ii) intentionally
disparage or injure the reputation of the Corporation by making any material
negative statements about the Corporation's methods of doing business, the
effectiveness of its business policies or the quality of any of its products or
personnel, (iii) make any substantive statements or issue any releases regarding
the internal business affairs of the Corporation or the circumstances of the
termination of his employment to any member of the print or broadcast media
except after consultation with the Corporation and after giving due
consideration to the reasonable suggestions of the Corporation in connection
with any such statements or releases.
(d) During the period described in subparagraph (a) above, the
Corporation shall not (i) whether by authorizing or knowingly condoning such
conduct by its personnel, intentionally disparage the Executive or injure his
reputation by making any negative statement about him or his talents, (ii) make
any substantive statements or issue any releases regarding the circumstances of
the termination of the Executives employment to any member of the print of
broadcast media except after consultation with the Executive and after giving
due consideration to the reasonable suggestions of the Executive in connection
with any such statements or releases. The foregoing notwithstanding, the
Corporation may publicly or privately (i) disclose the fact that such
termination has occurred, (ii) make any statement that conforms to the
announcement previously issued within the Corporation (the terms of which shall
have previously been furnished to the Executive for his approval), or (iii)
provide any disclosure required by applicable law, without obligation to consult
the Executive.
(e) In no event shall an asserted violation by the Executive
of the provisions of this paragraph 4 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this letter
agreement.
5. This letter agreement is personal to Executive and without the prior
written consent of the Corporation shall not be assignable by Executive
otherwise than by will or the laws of descent and distribution. This letter
agreement shall inure to the benefit of and be enforceable by Executive's legal
representatives. This letter agreement shall inure to the benefit of and be
binding upon the Corporation and its successors.
6. (a) This letter agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky, without reference to
principles of conflict of laws. This letter 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 given in the
manner set forth in the Existing Employment Agreement.
(c) The invalidity or unenforceability of any provision of
this letter agreement shall not affect the validity or enforceability of any
other provision of this letter agreement.
(d) The Corporation may withhold from any amounts payable
under this letter agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) Executive's failure to insist upon strict compliance with
any provision of this letter agreement shall not be deemed to be a waiver of
such provision or any other provisions hereof.
(f) This letter agreement and the Existing Employment
Agreement contain the entire understanding of the Corporation and Executive with
respect to the subject matter hereof and thereof and supersede all prior
agreements, representations and understandings of the parties with respect to
the subject matter hereof. Except as expressly modified or superseded by this
letter agreement, the Existing Employment Agreement is hereby reconfirmed in all
respects.
IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Corporation has caused
this letter agreement to be executed in its name on its behalf, all as of the
date and year first above written.
PROVIDIAN CORPORATION
/s/ Xxxxxx X. Xxxxxx XX
Chairman and Chief Executive Officer
Accepted and Agreed:
/s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
