Exhibit 10.9

 

HOUSEHOLD INTERNATIONAL

NON-QUALIFIED DEFERRED COMPENSATION PLAN

 

Section 1. Purpose. The purpose of this Plan is to provide certain executives of
Household International, Inc. (the “Company”) and certain of its direct and
indirect subsidiaries (the Company and such subsidiaries being referred to as
the “Employers”) the opportunity to defer receipt of compensation and provide
for future savings of compensation earned. The provision of such an opportunity
is designed to aid the Company in attracting and retaining as executives,
persons whose abilities, experience and judgment can contribute to the well
being of the Company.

 

Section 2. Name, Effective Date. The Company previously maintained a deferred
compensation plan known as the Household International Non-Qualified Deferred
Compensation Plan (the “Prior Plan”) which had an effective date of December 1,
1996. The Company now desires to substantially change the provisions of the
Prior Plan especially with respect to eligibility, investment options and
deferral elections. Accordingly, this plan also known as the Household
International Non-Qualified Deferred Compensation Plan (the “Plan”) is to be
effective as of May 1, 2004 (the “Effective Date”).

 

Section 3. Plan Year. The initial Plan Year shall begin on May 1, 2004 and end
on December 31, 2004. Thereafter, a Plan Year shall be the calendar year.

 

Section 4. Administration of the Plan. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
“Committee”). The Committee shall conclusively interpret the provisions of the
Plan, decide all claims, and shall make all determinations under the Plan. The
Committee shall act by vote or written consent of a majority of its members.
However, the Committee may appoint one or more persons or an entity as its
delegate to handle various administrative matters on its behalf such as
recordkeeping and other administrative duties with respect to the Plan.

 

Section 5. Eligibility. Any executive of the Employers who is on the United
States payroll, other than as a secondee, and whose compensation is at least
$150,000 as of February 15, 2004 is eligible to participate in the Plan for the
initial Plan Year beginning on May 1, 2004. For Plan Years thereafter, an
executive of the Employers who is on the United States payroll, other than as a
secondee, must have compensation of at least $150,000 as of the November 1
preceding the Plan Year for which an election is made in order to be eligible to
participate in the Plan for that Plan Year. Compensation shall be determined
prior to any reduction for any salary contributions to a cafeteria plan
established pursuant to Section 125 of the Internal Revenue Code of 1986, as
amended (the “Code”) or to a plan qualified pursuant to Section 401(k) of the
Code or due to a transportation fringe under Section 132(f) of the Code. For
purposes of eligibility, compensation means annualized base salary for the
current calendar year plus annual bonus, commission, and performance based
incentive awards earned in the previous calendar year and paid by the time of
the eligibility determination date. A participant must meet the annual minimum
for each Plan Year in order to make a deferral election for that Plan Year
although the $150,000 minimum may be changed by the Committee.

 

Section 6. Deferred Compensation Account. An unfunded deferred compensation
account shall be established for each person who elects to participate in the
Plan. A separate account shall be established for each Plan Year’s deferrals. An
amount equal to the compensation deferred will be credited to the participant’s
deferred compensation account for that Plan Year within three business days of
the date such compensation would otherwise be initially payable.

 

Section 7. Amount of Deferral. For Plan Year 2004 and for each Plan Year
thereafter, a participant may elect to defer receipt of up to 80% of the
unearned salary, commissions and performance based incentive awards that would
otherwise be paid in that year and/or up to 80% of the annual bonus earned for
that year which generally becomes payable to the participant in the following
year. No deferral election shall reduce a participant’s compensation below the
amount necessary to satisfy the amounts needed for applicable employment taxes,
benefit plan withholding requirements or income tax or other tax withholding.
The annual aggregate deferral election made by a participant for a particular
Plan Year must be at least $5,000.

 

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Section 8. Election of Deferral. An election to defer compensation for each Plan
Year shall be made on forms provided by the Committee for that purpose and shall
be effective on the date indicated, but not before the date filed with the
Committee. For the initial Plan Year of the Plan, valid elections must be filed
by April 23, 2004 and will be effective with the first pay date on or after May
1, 2004. Any deferral election made under the Prior Plan with respect to
compensation earned for 2004, shall become ineffective with respect to any
amounts that would become payable on or after May 1, 2004. For 2005 and Plan
Years thereafter, the elections must be filed by December 15 to be effective for
unearned compensation that would otherwise be paid in the following Plan Year.
At the time that the participant makes a deferral election for a particular Plan
Year, he or she shall also select a time for distribution as well as the form of
distribution. A participant may elect to receive the deferrals for a particular
Plan Year either at termination of employment, including retirement due to
disability, or at a future specified date while employed. For purposes of the
Plan, termination of employment refers to termination of employment from all the
Employers and their subsidiaries and affiliates. Any future deferred
distribution date chosen by a participant must be at least two years after the
end of the Plan Year for which the election is made. If a participant has failed
to select a future deferred distribution date for a Plan Year deferral or if he
or she terminates employment, including retirement due to disability, for a
reason other than death, prior to reaching the selected future deferred
distribution date, then distribution of such deferred compensation will be made
or commence in the calendar year following the date of the participant’s
termination of employment.

 

The usual form of distribution is a lump sum. However, at the time of deferral,
a participant is eligible to select an optional form of distribution consisting
of annual installments of up to 10 years if he or she has or will have 10 years
of Company service as of the date such installments begin. Notwithstanding the
foregoing, if at initial valuation the amount to be distributed (i.e., a common
distribution date and a common installment method) is less than $25,000, then
distribution will be in a lump sum. The method of distribution (from one form of
installments to another form of installments or to a lump sum and vice versa)
can be changed by filing a form with the Committee at least 12 months prior to
the distribution date. However, subject to Section 18, the election to receive a
Plan Year’s deferrals at termination of employment or at some future date while
employed is irrevocable.

 

Section 9. Hypothetical Investment. Each deferred compensation account for a
particular Plan Year will be credited with earnings from the date on which
deferred compensation is credited to the account until the date of payment. The
participant can elect to have the amount credited to his or her account for a
particular Plan Year invested hypothetically in various benchmark funds. The
benchmark funds that initially will be available under the Plan are as follows:
1) Van Kampen Real Estate Securities – A Shares 2) Oppenheimer Global – A Shares
3) AIM Small Cap Growth – Class A 4) HSBC Investor Small Cap Equity – Class Y 5)
Fidelity Advisor Mid Cap Stock – Class A 6) Dreyfus S&P 500 Index 7) HSBC
Investor Growth & Income – Class Y 8) HSBC Investor Fixed Income – Class Y 9)
HSBC Investor Money Market – Class Y. The benchmark funds may be subsequently
changed by the Committee or its delegate as it sees fit. In the absence of an
investment election for a Plan Year, the participant’s deferred compensation
account balance for that Plan Year will be deemed invested in the HSBC Investor
Money Market – Class Y.

 

The participant can change his or her investment election as to the amount for a
particular Plan Year already credited or to be credited to his or her account in
whole percentages on a monthly basis by filing an appropriate election form with
the Committee by the 25th day of the month prior to the first day of the month
in which the election is to be effective. Each Plan Year of deferrals may have a
separate investment allocation. There is no guarantee a participant’s deferred
compensation account deemed invested in a particular benchmark fund will
increase; amounts may decrease based on the performance of the benchmark fund.

 

Section 10. Prior Plan Deferrals. Amounts that were previously deferred by a
participant for a Plan Year under the Prior Plan and which have not been
distributed as of the Effective Date will be credited to the participant’s
deferred compensation account under this Plan known as the Prior Plan Balance.
Amounts credited to the Prior Plan Balance for any prior plan year will be
distributed according to the participant’s previous deferral election for that
plan year under the Prior Plan subject to the participant’s right to change the
manner of distribution in accordance with Section 8, if eligible. The amounts
credited to the participant’s account under the Prior Plan which were
hypothetically invested in Fund A (the Stock Fund) shall continue to be
hypothetically

 

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invested in such Stock Fund until such time as the participant elects to have
such amounts transferred to one or more of the benchmark funds offered under the
Plan but no deemed dividends on such amounts nor new deferrals nor transfers
from other benchmark funds can be hypothetically invested in the Stock Fund.
However, any amounts that are credited or would be credited to the participant’s
account under the Prior Plan invested in Fund B (the Treasury Fund) will be
invested in the HSBC Investor Money Market – Class Y. The participant may make
an election to have amounts representing the Prior Plan Balance for each prior
plan year invested hypothetically in the benchmark investment funds offered
under this Plan and the investment election for any plan year can be changed
from time to time in accordance with Section 9.

 

Section 11. Value of Deferred Compensation Accounts. The value of each
participant’s deferred compensation account shall include compensation deferred,
adjusted for any increase or decrease thereon, pursuant to Section 9 of the
Plan.

 

Section 12. Payment of Deferral. Subject to Section 18, a distribution may be
made from the participant’s deferred compensation account as soon as practicable
in the calendar year following the date of the termination of the participant’s
employment, including retirement due to disability, unless an earlier date for
distribution while employed is specified by the participant in his or her
election to defer compensation or in the event of the participant’s death. If a
participant elected to defer any Plan Year’s compensation to a specific date
while employed, such Plan Year’s deferred compensation and earnings or losses
thereon will be payable in cash in a lump sum or installments, if applicable, on
the date specified unless it is paid earlier due to termination of employment or
death. If a participant terminates employment, including retirement due to
disability, for a reason other than death, before the date chosen for
distribution, then distribution will occur in the calendar year following
termination. The account balance will be distributed in the same form of
distribution elected for termination of employment subject to the minimum
requirements for installments. If a participant terminates employment while
receiving in-service installments, then the remaining installments will be
distributed as they fall due.

 

Section 13. Withholding. There shall be deducted from all deferrals and payments
under the Plan the amount of any taxes required to be withheld by any federal,
state or local government. The participants and their beneficiaries,
distributees, and personal representatives will bear any and all federal,
foreign, state, local or other income or other taxes imposed on amounts deferred
or paid under the Plan.

 

Section 14. Designation of Beneficiary. A participant may designate a
beneficiary or beneficiaries which shall be effective upon filing written notice
with the Committee on the form provided by the Committee for that purpose. If a
Participant is married and has not designated his or her spouse as the sole
primary beneficiary of his or her account, then such spouse must provide written
consent to the participant’s beneficiary designation form or else the account
will be paid to such spouse, if living, upon the death of the participant. If no
beneficiary is designated, the beneficiary will be the participant’s estate. If
more than one beneficiary statement has been filed, the beneficiary or
beneficiaries designated in the statement bearing the most recent date will be
deemed the valid beneficiary or beneficiaries.

 

Section 15. Death of Participant or Beneficiary. In the event of a participant’s
death before he or she has received the full value of his or her deferred
compensation account, the then current value of the participant’s deferred
compensation account shall be determined and such amount shall be paid to the
beneficiary or beneficiaries of the deceased participant as soon as practicable
thereafter in cash in a lump sum. If no designated beneficiary has been named or
survives the participant, the beneficiary will be the participant’s estate.

 

Section 16. Participant’s Rights Unsecured. The right of any participant or
beneficiary to receive payment under the provisions of the Plan shall be an
unsecured claim against the general assets of the Company, and any successor
company in the event of a merger, consolidation, reorganization or any other
event which causes the Company’s assets or business to be acquired by another
company. No provisions contained in the Plan shall be construed to give any
participant or beneficiary at any time a security interest in the deferred
compensation account or any other assets of the Company.

 

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Section 17. Statement of Account. Statements will be sent to participants
following the end of each calendar quarter reflecting the value of their
deferred compensation accounts as of the end of that quarter. The accounts will
be valued daily but recorded monthly.

 

Section 18. Hardship Withdrawals. Notwithstanding anything in this Plan to the
contrary, a participant may request a hardship withdrawal of all or a portion of
the balance of his or her deferred compensation account by filing a written
request with the Committee in a form acceptable to the Committee for that
purpose. A hardship withdrawal will be granted on a limited basis and only due
to the participant’s or dependant’s illness or accident, casualty loss of the
participant’s property or similar circumstances arising out of events beyond the
control of the participant. A participant requesting a hardship withdrawal will
be requested to submit documentation of the hardship and proof that the loss is
not covered by other means. This request may be granted, solely in the absolute
discretion of the Committee. No member of the Committee may vote on, or
otherwise influence, a decision of the Committee concerning his or her request
for a hardship withdrawal. A hardship withdrawal by a participant shall have no
effect on any amounts remaining in the participant’s account and shall not have
any effect on any current or future deferral election after the hardship
withdrawal.

 

Section 19. Assignability. No right to receive payments hereunder shall be
transferable or assignable by a participant or a beneficiary.

 

Section 20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.

 

Section 21. Amendment or Termination of Plan. This Plan may at any time or from
time to time be amended, modified or terminated by the Committee. No amendment,
modification or termination shall, without the consent of a participant,
adversely affect such participant’s accruals on his or her prior elections.
Rights accrued prior to termination of the Plan will not be canceled by
termination of the Plan.

 

Section 22. Payment of Certain Costs of the Participant. If a dispute arises
regarding the interpretation or enforcement of this Plan and the participant
(or, in the event of his or her death, his or her beneficiary) obtains a final
judgment in his or her 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 his or her claim is settled by the Company prior to the rendering
of such a judgment, all reasonable legal and other professional fees and
expenses incurred by the participant in contesting or disputing any such claim
or in seeking to obtain or enforce any right or benefit provided for in the Plan
or in otherwise pursuing his claim will be promptly paid by the Company with
interest thereon at the highest Illinois statutory rate for interest on
judgments against private parties from the date of payment thereof by the
participant to the date of reimbursement to him or her by the Company.

 

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