Document:

ex4-4regrightsagmt.htm

  

  

  

Exhibit 4.4

$1,938,669,000

HSBC FINANCE CORPORATION

6.676% Senior Subordinated Notes due January 15, 2021

REGISTRATION RIGHTS AGREEMENT

December 3, 2010

 

HSBC Securities (USA) Inc.

452 Fifth Avenue, Tower 3

New York, New York 10018

Dear Sirs:

HSBC Finance Corporation, a Delaware corporation (the “Company”), has made an offer to exchange the 6.676% Senior Subordinated Notes due January 15, 2021 (the “Initial Securities”) of the Company for certain of its issued and outstanding 5.5% Senior Notes due January 19, 2016, 5% Senior Notes due June 30, 2015, 5.25% Senior Notes due January 15, 2014 and 5.25% Senior Notes due April 15, 2015 (together, the “First Exchange Offer Notes” and the exchange offer for such First Exchange Offer Notes, the “First Exchange Offer”) and 7.625% Senior Notes due May 17, 2032 and 7.35% Senior Notes due November 27, 2032 (together, the “Second Exchange Offer Notes” and the exchange offer for such Second Exchange Offer Notes, the “Second Exchange Offer” and, together with the First Exchange Offer, the “Exchange Offers”) upon the terms and conditions set forth in the offering memoranda relating to the respective Exchange Offers, each dated October 28, 2010 (each, an “Offering Memorandum” and together, the “Offering Memoranda”).  For the avoidance of doubt, unless otherwise specified, references herein to (i) an Offering Memorandum shall be construed to apply to both Offering Memoranda and (ii) an exchange offer shall be construed to apply to both Exchange Offers.  The Initial Securities will be issued upon the terms set forth in the Offering Memorandum, for which HSBC Securities (USA) Inc. has agreed to act as dealer manager (the “Dealer Manager”), pursuant to a dealer manager agreement, dated as of October 28, 2010 (the “Manager Agreement”) between the Company and the Dealer Manager.  The Initial Securities will be issued pursuant to the indenture, dated as of December 17, 2008, among the Company and The Bank of New York Mellon Trust Company, N.A., a national banking association, as trustee (the “Trustee”), as amended and supplemented by a supplemental indenture, dated as of the date hereof (such indenture as amended and supplemented, the “Indenture”).  As an inducement to the Dealer Manager, the Company agrees with the Dealer Manager, for the benefit of the holders of the Initial Securities (including, without limitation, the Dealer Manager and the Market Maker (as defined in Annex E herein)) and the Exchange Securities (as defined below) (collectively the “Holders”), as follows:

1.  Registered Exchange Offer.  The Company shall, at its own cost, prepare and, not later than 180 days after (or if the 180th day is not a business day, the first business day thereafter) the date of original issue of the Initial Securities (the “Issue Date”), file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Exchange Offer Registration Statement”) on an appropriate form under the Securities Act of 1933, as amended (the “Securities Act”), with respect to a proposed offer (the “Registered Exchange Offer”) to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities (the “Exchange Securities” and together with the Initial Securities, the “Securities”) of the Company issued under the Indenture and identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in Section 6 hereof) that would be registered under the Securities Act.  The Company shall use its reasonable best efforts to promptly cause such Exchange Offer Registration Statement to become effective under the Securities Act within 270 days (or if the 270th day is not a business day, the first business day thereafter) after the Issue Date of the Initial Securities and shall keep the Exchange Offer Registration Statement effective for not less than  30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the “Exchange Offer Registration Period”).

If the Company effects the Registered Exchange Offer the Company will be entitled to close the Registered Exchange Offer 30 days after the commencement thereof provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer.

Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall as soon as practicable (but in any event not later than 20 days after such effectiveness) thereafter commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities (as defined in Section 6 hereof) electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder’s business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.

The Company acknowledges that, pursuant to current interpretations by the Commission’s staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder that is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an “Exchanging Dealer”), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section, and (c) Annex C hereto in the “Plan of Distribution” section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) a Dealer Manager that elects to sell Exchange Securities acquired in exchange for Securities constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.

The Company shall use its reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or the Dealer Manager, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Dealer Manager have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus, and any amendment or supplement thereto, available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer.

In connection with the Registered Exchange Offer, the Company shall:

(a)  mail, or caused to be mailed, to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;

(b)  keep the Registered Exchange Offer open for not less than 20 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;

(c)  utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;

(d)  permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and

(e)  otherwise comply with all applicable laws.

As soon as practicable after the close of the Registered Exchange Offer the Company shall:

(x)  accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer;

(y)  deliver, or cause to be delivered, to the Trustee for cancellation all the Initial Securities so accepted for exchange; and

(z)  cause the Trustee to authenticate and deliver promptly to each Holder of Initial Securities, or Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange.

The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.

Interest on each Exchange Security issued pursuant to the Registered Exchange Offer will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the Issue Date.

Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.

Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

2.  Shelf Registration.  If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within 315 days of the Issue Date, (iii) the Dealer Manager so requests with respect to the Initial Securities not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer) is not eligible to participate in the Registered Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on the date of the exchange, the Company shall take the following actions:

(a)  The Company shall, at its cost, as promptly as practicable (but in no event more than 60 days after so required or requested pursuant to this Section 2) file with the Commission and thereafter shall use its reasonable best efforts to cause to be declared effective (unless it becomes effective automatically upon filing) a registration statement on an appropriate form under the Securities Act, (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, a “Registration Statement”), relating to the offer and sale of the Transfer Restricted Securities (as defined in Section 6 hereof) by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the “Shelf Registration”); provided, however, that no Holder (other than a Dealer Manager) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.

(b)  The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the Issue Date or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement have been sold pursuant thereto.  The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law.

(c)  Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of its respective effective date, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3.  Registration Procedures.  In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:

(a)  The Company shall (i) furnish to the Dealer Manager, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that the Dealer Manager (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as the Dealer Manager reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the “Description of the Exchange Offer” section and in Annex C hereto in the “Plan of Distribution” section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by the Dealer Manager, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled “Plan of Distribution,” reasonably acceptable to the Dealer Manager, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a “Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Dealer Manager based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include in the prospectus included in the Shelf Registration Statement (or, if permitted by Commission Rule 430B(b), in a prospectus supplement that becomes a part thereof pursuant to Commission Rule 430B(f)) that is delivered to any Holder pursuant to Section 3(d) and (f), the names of the Holders, who propose to sell Securities pursuant to the Shelf Registration Statement, as selling securityholders.

(b)  The Company shall give written notice to the Dealer Manager, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

(i)  when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

(ii)  of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

(iii)  of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, of the issuance by the Commission of a notification of objection to the use of the form on which the Registration Statement has been filed, and of the happening of any event that causes the Company to become an “ineligible issuer,” as defined in Commission Rule 405;

(iv)  of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(v)  of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.

(c)  The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement.

(d)  The Company shall furnish to each Holder, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment or supplement thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).  The Company shall not, without the prior consent of the Dealer Manager, make any offer relating to the Securities that would constitute a “free writing prospectus,” as defined in Commission Rule 405.

(e)  The Company shall deliver to the Dealer Manager, and to each Exchanging Dealer and Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Dealer Manager or any such Exchanging Dealer or Holder requests, all exhibits thereto (including those incorporated by reference).

(f)  The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request.  The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.

(g)  The Company shall deliver to the Dealer Manager, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request.  The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by the Dealer Manager, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.

(h)  Prior to any public offering of the Securities, pursuant to any Registration Statement, the Company shall use its reasonable best efforts to register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or “blue sky” laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject.

(i)  The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.

(j)  Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  If the Company notifies the Dealer Manager, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Dealer Manager, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Dealer Manager, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j).  During the period during which the Company is required to maintain an effective Shelf Registration Statement pursuant to this Agreement, the Company will, prior to the three-year expiration of that Shelf Registration Statement file, and use its reasonable best efforts to cause to be declared effective (unless it becomes effective automatically upon filing) within a period that avoids any interruption in the ability of Holders of Securities covered by the expiring Shelf Registration Statement to make registered dispositions, a new registration statement relating to the Securities, which shall be deemed the “Shelf Registration Statement” for purposes of this Agreement.

(k)  Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Exchange Securities and provide the applicable trustee with printed certificates for the Exchange Securities in a form eligible for deposit with The Depository Trust Company.

(l)  The Company will (a) comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and (b) will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period, provided, however, that compliance by the Company with the periodic, current and other reporting requirements of the Exchange Act shall satisfy the Company’s obligations under this paragraph (l)(b).

(m)  The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification.  In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

(n)  The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request.

(o)  Subject to Section 8, the Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.

(p)  In the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney or accountant agent retained by the Holders of the Securities or any such underwriters, all relevant financial and other records, pertinent corporate documents and properties of the Company, and (ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by any such persons, in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated by the Dealer Manager on its own behalf or, if on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof.

(q)  Subject to Section 8, in the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) their counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement in form, substance and scope customarily covered in opinions delivered in connection with sales of securities pursuant to shelf registrations, (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Shelf Registration Statement to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with sales of securities pursuant to shelf registrations; subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.

(r)  In the case of the Registered Exchange Offer, if requested by the Dealer Manager or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Dealer Manager or such Participating Broker-Dealer signed opinions in substantially similar forms to those delivered pursuant to Sections 8(c), (d), (e) and (f) of the Manager Agreement with such changes as are customary in connection with the preparation of a Registration Statement and sales thereunder and (ii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Registration Statement to deliver to such Dealer Manager or such Participating Broker-Dealer a comfort letter, in such form as is customary in connection with the preparation of a Registration Statement and sales thereunder.

(s)  If a Registered Exchange Offer is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other person as directed by the Company) in exchange for the Exchange Securities, the Company shall mark, or cause to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities; in no event shall the Initial Securities be marked as paid or otherwise satisfied.

(t)  The Company will use its reasonable best efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm the ratings that will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any.

(u)  In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “Rules”) of the Financial Industry Regulatory Authority, Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a “qualified independent underwriter” (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.

(v)  The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.

4.  Registration Expenses.  The Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses, if any, of counsel for the Dealer Manager and the Market Maker incurred in connection with the Registered Exchange Offer), whether or not the Registered Exchange Offer or a Shelf Registration is filed or becomes effective, and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Initial Securities covered thereby to act as counsel for the Holders of the Initial Securities in connection therewith.

5.  Indemnification.  (a)  The Company agrees to indemnify and hold harmless (i) each Holder of the Securities, any Participating Broker-Dealer, the Market Maker and each person, if any, who controls such Holder, such Participating Broker-Dealer or Market Maker within the meaning of the Securities Act or the Exchange Act (each Holder and any Participating Broker-Dealer and Market Maker and such controlling persons are referred to collectively as the “Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or “issuer free writing prospectus,” as defined in Commission Rule 433 (“Issuer FWP”), relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or Issuer FWP relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder, Participating Broker-Dealer, the Market Maker or other person and furnished to the Company by or on behalf of such Holder, Participating Broker Dealer, the Market Maker or other person specifically for inclusion therein; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party and (ii) the Market Maker from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), that arise out of, or are based upon, any breach by the Company of their representations, warranties and agreements contained in this Annex E hereof.  The Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders.

(b)  Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or Issuer FWP relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof.  This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any such controlling persons.

(c)  The Market Maker Agrees to indemnify and hold harmless the (i) Company and its respective directors and officers who sign the Market Making Registration Statement (as defined in Annex E hereto) and (ii) any person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company and its respective officers, directors, partners, employees, representatives and agents of each such Person (any person referred to in clause (i) or (ii) may hereinafter be referred to as a “Company Indemnified Party”) to the same extent as the foregoing indemnity from the Company to each of the Indemnified Parties, but only with respect to claims and actions based on information relating to the Market Maker furnished in writing by the Market Maker expressly for use in the Market Making Registration Statement and any prospectus forming a part of the Market Making Registration Statement.

(d) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under subsection (a), (b) or (c) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection  (a), (b) or (c) above.  In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(e)  If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a), (b) or (c) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a), (b) or (c) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the exchange of the Securities, pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations.  The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder, Participating Broker Dealer, Market Maker or such other indemnified party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (e).  Notwithstanding any other provision of this Section 5(e), neither the Holders of the Securities, any Participating Broker Dealer, nor the Market Maker shall not required to contribute any amount in excess of the amount by which the net proceeds received by such Holders, Participating Broker Dealer or Market Maker from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders, Participating Broker Dealer or Market Maker have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  For purposes of this paragraph (e), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.

(f)  The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

6.  Additional Interest Under Certain Circumstances.  (a)  Additional interest (the “Additional Interest”) with respect to the Initial Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iii) below a “Registration Default”:

(i)  If the Company fails to file the Exchange Offer Registration Statement with the Commission on or prior to the 180th day after the Issue Date;

(ii)  If the Exchange Offer Registration Statement is not declared effective by the Commission on or prior to the 270th day after the Issue Date;

(iii)  If neither the Registered Exchange Offer is consummated nor, if required in lieu thereof, the Shelf Registration Statement has not become effective within 315 days of the Issue Date;

(iv)  If after the Exchange Offer Registration Statement becomes effective (A) such Exchange Offer Registration Statement thereafter ceases to be effective (unless such ineffectiveness is cured within the 270-day period described above); or (B) such Exchange Offer Registration Statement or the related prospectus ceases to be usable in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Exchange Offer Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or (2) it shall be necessary to amend such Exchange Offer Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder;

(v)  If required in lieu of the Exchange Offer Registration Statement, the Shelf Registration Statement after it becomes effective (A) thereafter ceases to be effective; or (B) such Shelf Registration Statement or the related prospectus ceases to be usable (except as permitted in paragraph (b)) in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Shelf Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, (2) it shall be necessary to amend such Shelf Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder, or (3) such Shelf Registration Statement has expired before a replacement Shelf Registration Statement has become effective; and such Shelf Registration Statement has been declared effective but ceases to be effective or usable for more than 90 days, whether or not consecutive, during any twelve-month period.

Additional Interest shall accrue on the Initial Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured.  Additional Interest shall accrue at a rate of 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase to a maximum of 1.00% per annum thereafter.  Following the cure of all Registration Defaults, the accrual of Additional Interest on the Initial Securities will cease and the interest rate will revert to the applicable original rate set forth in the title of the Securities.

(b)  A Registration Default referred to in Section 6(a)(v)(B) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 90 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured.

(c)  Any amounts of Additional Interest due pursuant to clause (i), (ii), (iii), (iv) or (v) of Section 6(a) above will be payable in cash on the regular interest payment dates with respect to the Initial Securities.  The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Initial Securities, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.

(d)  “Transfer Restricted Securities” means each Security until (i) the date on which such Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of a Initial Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement or (iii) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement.

7.  Rules 144 and 144A.  The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Initial Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A.  The Company covenants that it will take such further action as any Holder of Initial Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Initial Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).  The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Dealer Manager upon request.  Upon the request of any Holder of Initial Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements.  Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.

8.  Underwritten Registrations.  If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering (“Managing Underwriters”) will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering and shall be reasonably acceptable to the Company (such acceptance not to be unreasonably withheld or delayed).

No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

9.  Miscellaneous.

(a)  Amendments and Waivers.  The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company, the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents, and in the case of any of the provisions of Annex E or hereof or Section 5 hereof as they relate to the Market Maker, the written consent of the Market Maker.

(b)  Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:

(1)  if to a Holder of the Securities, at the most current address given by such Holder to the Company.

(2)  if to the Dealer Manager;

        c/o HSBC Securities (USA) Inc.

452 Fifth Avenue, Tower 3

New York, New York 10018

Attention:  Transaction Management

Fax: 212-525-0238

Telephone: 212-525-3652

with a copy to:

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022

Attention: Stuart K. Fleischmann

Fax:  646-848-7527

Telephone:  212-848-7527

(3)           if to the Company, at its address as follows:

HSBC Finance Corporation

2625 North Riverwoods Blvd.

Mettawa, Illinois  60045

Attention:  Senior Vice President – Money and Capital Markets

Fax: (224) 552-4443

Telephone: (224) 544-4443

with a copy to:

HSBC Finance Corporation

2625 North Riverwoods Blvd.

Mettawa, Illinois 60045

Attention:  Mick Forde, Senior Vice President,

                  General Counsel - Treasury and

                  Assistant Secretary

Fax: 224-552-2945

Telephone: 224-544-2945

(4)  if to the Market Maker;

        c/o HSBC Securities (USA) Inc.

452 Fifth Avenue, Tower 3

New York, New York 10018

Attention:  Transaction Management

Fax: 212-525-0238

Telephone: 212-525-3652

with a copy to:

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022

Attention: Stuart K. Fleischmann

Fax:  646-848-7527

Telephone:  212-848-7527

All such notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.

(c)  No Inconsistent Agreements.  The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders or the Market Maker herein or otherwise conflicts with the provisions hereof.

(d)  Successors and Assigns.  This Agreement shall be binding upon the Company and its successors and assigns.

(e)  Counterparts.  This Agreement may be executed in any number of counterparts (which may be in electronic form, i.e., “PDF”) and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(f)  Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(g)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

(h)  Severability.  If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(i)  Securities Held by the Company.  Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

NYDOCS01/1248513.4

  

  

  

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Dealer Manager and the Company in accordance with its terms.

Very truly yours,

HSBC Finance Corporation

By:    /s/ William H. Kesler

                         Name:  William H. Kesler

                         Title:  Executive Vice President and Treasurer

[Signature Page to Registration Rights Agreement]

  

  

  

The foregoing Registration

Rights Agreement is hereby confirmed

and accepted as of the date first

above written.

HSBC SECURITIES (USA) INC.

By: /s/ Diane M. Kenna

Name:  Diane M. Kenna

Title:  Senior Vice President

HSBC SECURITIES (USA) INC.,

    in its role as Market Maker

By: /s/ Diane M. Kenna

Name:  Diane M. Kenna

Title:  Senior Vice President

[Signature Page to Registration Rights Agreement]

  

  

  

ANNEX A

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.  The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.  This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities.  The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale.  See “Plan of Distribution.”

  

  

  

ANNEX B

Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.  See “Plan of Distribution.”

  

  

  

ANNEX C

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.  This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities.  The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale.  In addition, until                   , 20   ,  all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.(1)

The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers.  Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices.  Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities.  Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act.  The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal.  The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

  

	
  

	
(1)  In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus, if required.

  

  

  

ANNEX D

[   ]           CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:  ____________________________________________

Address: ___________________________________________

              ___________________________________________

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities.  If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

  

  

  

ANNEX E

Market Making.

(a)           For so long as any of the Securities or Exchange Securities are outstanding and HSBC Securities (USA) Inc. (in such capacity, the “Market Maker”) or any of its affiliates (as defined in the rules and regulations of the Commission) owns any equity securities of the Company or any of its affiliates and proposes to make a market in the Securities or Exchange Securities as part of its business in the ordinary course, the following provisions shall apply for the sole benefit of the Market Maker:

	
(i)  

	
The Company shall (A) on the date that the Exchange Offer Registration Statement or, if required hereby, the Shelf Registration Statement is filed with the Commission, file a registration statement (the “Market Making Registration Statement”, including all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the prospectus contained therein, all exhibits thereto and any document incorporated by reference therein) (which may be the Exchange Offer Registration Statement or the Shelf Registration Statement if permitted by the rules and regulations of the Commission) and use their reasonable efforts to cause such Market Making Registration Statement to be declared effective by the Commission on or prior to the consummation of the Exchange Offer or the effective date of the Shelf Registration Statement, as applicable; (B) periodically amend such Market Making Registration Statement so that the information contained therein complies with the requirements of Section 10(a) under the Securities Act; (C) amend the Market Making Registration Statement or amend or supplement the related prospectus when necessary to reflect any material changes in the information provided therein; and (D) amend the Market Making Registration Statement when required to do so in order to comply with Section 10(a)(3) of the Securities Act; provided, however, that (1) prior to filing the Market Making Registration Statement, any amendment thereto or any supplement to the related prospectus, the Company will furnish to the Market Maker copies of all such documents proposed to be filed, which documents will be subject to the review of the Market Maker and its counsel and (2) the Company will not file the Market Making Registration Statement, any amendment thereto or any amendment or supplement to the related prospectus to which the Market Maker and its counsel shall reasonably object unless the Company is advised by counsel that such Market Making Registration Statement, amendment or supplement is required to be filed under applicable securities laws and the Company will provide the Market Maker and its counsel with copies of the Market Making Registration Statement, the related prospectus and each amendment and supplement thereto filed.

	
(ii)  

	
The Company shall notify the Market Maker and, if requested by the Market Maker, confirm such advice in writing, (A) when any Market Making Registration Statement, any post-effective amendment to the Market Making Registration Statement or any amendment or supplement to the related prospectus has been filed, and, with respect to any Market Making Registration Statement or any post-effective amendment, when the same has become effective; (B) of any request by the Commission for any post-effective amendment to the Market Making Registration Statement, any supplement or amendment to the related prospectus or for additional information; (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Market Making Registration Statement or the initiation of any proceedings for that purpose, including the receipt of the Company of any notice of objection of the Commission to the use of Market Making Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act; (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities or Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; and (E) of the happening of any event that makes any statement made in the Market Making Registration Statement, the related prospectus or any amendment or supplement thereto untrue or that requires the making of any changes in the Market Making Registration Statement, such prospectus or any amendment or supplement thereto, in order to make the statements therein not misleading.

	
(iii)  

	
If any event contemplated by (a)(ii)(B) through (E) herein occurs during the period for which the Company is required to maintain an effective Market Making Registration Statement, the Company shall promptly prepare and file with the Commission a post-effective amendment to the Market Making Registration Statement or an amendment or supplement to the related prospectus or file any other required document so that the prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

	
(iv)  

	
In the event of the issuance of any stop order suspending the effectiveness of the Market Making Registration Statement, any notice of objection pursuant to Rule 401(g)(2) under the Securities Act or of any order suspending the qualification of the Securities or Exchange Securities for sale in any jurisdiction, the Company shall promptly use its reasonable efforts to obtain its withdrawal, including by filing an amendment to the Market Making Registration Statement on the proper form as necessary.

	
(v)  

	
The Company shall furnish to the Market Maker, without charge, (i) at least one conformed copy of the Market Making Registration Statement and any post-effective amendment thereto; and (ii) as many copies of the related prospectus and any amendment or supplement thereto as the Market Maker may reasonably request.

	
(vi)  

	
The Company shall consent to the use of the prospectus contained in the Market Making Registration Statement or any amendment or supplement thereto by the Market Maker in connection with its market-making activities.

	
(vii)  

	
Notwithstanding the foregoing provisions of this Annex E, the Company may for valid business reasons, including, without limitation, a potential material acquisition, divestiture of assets or other material corporate transaction, notify the Market Maker in writing that the Market Making Registration Statement is no longer effective or the prospectus included therein is no longer usable for offers and sales of Securities or Exchange Securities; provided that the use of the Market Making Registration Statement or the prospectus contained therein shall not be suspended for more than 90 consecutive days.  The Market Maker agrees that upon receipt of any notice from the Company pursuant to this clause (a)(vii), it will discontinue use of the prospectus contained in the Market Making Registration Statement until receipt of copies of the supplemented or amended prospectus relating thereto or until advised in writing by the Company that the use of the prospectus contained in the Market Making Registration Statement may be resumed.

(b)           In connection with the Market Making Registration Statement, the Company shall (i) make reasonably available for inspection by a representative of, and counsel acting for, the Market Maker all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) use its reasonable efforts to have its officers, directors, employees, accountants and counsel supply all relevant information reasonably requested by such representative or counsel or the Market Maker, in each case as shall be reasonably necessary to enable the Market Maker to conduct a reasonable investigation within Section 11 of the Securities Act.

(c)           In connection with the Market Making Registration Statement and prior to the initial effective date thereof, the Company shall use its reasonable efforts to register or qualify the Securities or Exchange Securities for offer and sale under the securities or blue sky laws of such jurisdictions as the Market Maker reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities or Exchange Securities covered by the Market Making Registration Statement; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to subject itself to service of process in any such jurisdictions or (iii) subject itself to taxation in any such jurisdiction if it not so then subject.

(d)           The Company represents and agrees that the Market Making Registration Statement, any post-effective amendments thereto, any amendments or supplements to the related prospectus and any documents filed by them under the Exchange Act will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission thereunder and will not, as of the effective date of such Market Making Registration Statement or post-effective amendments and as of the filing date of amendments or supplements to such prospectus or filings under the Exchange Act, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Market Making Registration Statement or the related prospectus in reliance upon and in conformity with written information furnished to the Company by the Market Maker specifically for inclusion therein, which information the parties hereto agree will be limited to the statements concerning the market making activities of the Market Maker to be set forth on the cover page and in the “Plan of Distribution” section of the prospectus (the “Market Maker’s Information”).

(e)           At the time of effectiveness of the Market Making Registration Statement and concurrently with each time the Market Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented, the Company shall (if requested by the Market Maker) furnish the Market Maker with a certificate of its Chief Executive Officer or any Senior Vice President and its Chief Financial Officer to the effect that:

	
(i)  

	
the Market Making Registration Statement has been declared effective;

	
(ii)  

	
in the case of an amendment to the Market Making Registration Statement, such amendment has become effective under the Securities Act as of the date and time specified in such certificate, if applicable; and in the case of an amendment or supplement to the prospectus, such amendment or supplement to the prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such certificate on the date specified therein;

	
(iii)  

	
to the knowledge of such officers, no stop order suspending the effectiveness of the Market Making Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission; and

	
(iv)  

	
such officers have examined the Market Making Registration Statement and the prospectus (and, in the case of an amendment or supplement, such amendment or supplement) and, to the knowledge of such officers, as of the date of such Market Making Registration Statement, prospectus, amendment or supplement, as applicable, the Market Making Registration Statement and the related prospectus, as amended or supplemented, if applicable, did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

(f)           At the time of effectiveness of the Market Making Registration Statement and concurrently with each time the Market Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented, the Company shall (if requested by the Market Maker) furnish the Market Maker with the written opinion of counsel for the Company satisfactory to the Market Maker to the effect that:

	
(i)  

	
the Market Making Registration Statement has been declared effective;

	
(ii)  

	
in the case of an amendment to the Market Making Registration Statement, such amendment has become effective under the Securities Act as of the date and time specified in such opinion, if applicable; and in the case of an amendment or supplement to the prospectus, such amendment or supplement to the prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such opinion on the date specified therein;

	
(iii)  

	
to the knowledge of such counsel, no stop order suspending the effectiveness of the Market Making Registration Statement has been issued, including any notice of objection of the Commission to the use of the Market Making Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act, and no proceeding for that purpose is pending or threatened by the Commission; and

	
(iv)  

	
such counsel has reviewed the Market Making Registration Statement and the prospectus (and, in the case of an amendment or supplement, such amendment or supplement) and participated with officers of the Company and independent public accountants for the Company in the preparation of such Market Making Registration Statement and prospectus (and, in the case of an amendment or supplement, such amendment or supplement) and has no reason to believe that (except for the financial statements and other financial and statistical data contained therein as to which such counsel need express no belief) as of the date of such Market Making Registration Statement, prospectus, amendment or supplement, as applicable, the Market Making Registration Statement and the prospectus, as amended or supplemented, if applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

(g)           At the time of effectiveness of the Market Making Registration Statement and concurrently with each time the Market Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented to include audited annual financial information, the Company shall (if requested by the Market Maker) furnish the Market Maker and its counsel with a letter of  a firm of independent public accountants for the Company of nationally recognized standing in form satisfactory to the Market Maker, addressed to the Market Maker and dated the date of delivery of such letter, (i) confirming that they are independent public accountants within the rules and regulations of the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act and (ii) in all other respects, substantially in the form of the letter delivered to the Initial Purchasers pursuant to Section 8(h) of the Manager Agreement, with, in the case of an amendment or supplement that includes audited financial information, such changes as may be necessary to reflect the amended or supplemented financial information.

(h)           The Company, on the one hand, and the Market Maker, on the other hand, hereby agrees to indemnify each other, and, if applicable, contribute to the other, in accordance with Section 5 of this Agreement.

(i)           The Company will comply with the provisions of this Annex E at its own expense and will reimburse the Market Maker for its expenses associated with this Annex E (including reasonable fees of counsel for the Market Maker).

(j)           The agreements contained in this Annex E and the representations, warranties and agreements contained in this Agreement shall survive all offers and sales of the Securities and Exchange Securities and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

(k)           For purposes of this Annex E, (i) any reference to the terms “amend,” “amendment” or “supplement” with respect to the Market Making Registration Statement or the prospectus contained therein shall be deemed to refer to and include the filing under the Exchange Act of any document deemed to be incorporated therein by reference and (ii) any reference to the terms “Securities” or “Exchange Securities” shall be deemed to refer to and include any securities issued in exchange for or with respect to such Securities or Exchange Securities.WebFilings | EDGAR view

 

Employment Agreement
 
This Employment Agreement ("Agreement") is effective as of the 15th day of September, 2010 (the “Effective Date”), by and between Hooper Holmes, Inc., a New York corporation, with its principal office at 170 Mt. Airy Road, Basking Ridge, New Jersey 07920 (the "Company") and Ransom J. Parker ("Executive").
 
RECITALS
 
WHEREAS, the Company desires to embody in this Agreement the terms and conditions of Executive's employment with the Company.
 
NOW, THEREFORE, in consideration of the mutual promises and agreements contained in this Agreement, including the compensation to be paid to Executive, the parties hereby agree as follows:
 
1.    Employment; Term; Duties and Responsibilities.
 
1.1.     Employed as President and Chief Executive Officer. The Company wishes to employ Executive as its President and Chief Executive Officer, and Executive hereby accepts such employment, subject to the terms and conditions of this Agreement. Executive represents and warrants to the Company that he is not a party to any agreement that would restrict or prohibit him from being employed by the Company. 
 
1.2.    Term. The provisions of his Agreement shall be effective as of the Effective Date and shall continue in force until the second anniversary of the Effective Date or the termination of Executive's employment as provided in Section 3 of this Agreement, whichever shall occur first. This Agreement will automatically renew for one additional one-year term upon its expiration unless, at least 30 days prior to the expiration of the initial Term, the employment of Executive has been terminated or the Company shall have given Executive notice of its intent not to renew the Agreement. Both the initial two-year term and the one year renewal term, if any, will herein be referred to as the “Term.”
 
1.3.    Location of Employment. Executive shall be based at the Company's headquarters in Basking Ridge, New Jersey.
 
     1.4.     Duties and Responsibilities. In his capacity as President and Chief Executive Officer of the Company, Executive shall report directly to the Hooper Holmes, Inc. Board of Directors (the “Board”). Executive shall have such duties and responsibilities, and the power and authority, normally associated with the position of President and Chief Executive Officer, as well as any additional duties and responsibilities of an executive character as shall, from time to time, be delegated or assigned to him by the Board). As President and Chief Executive Officer, Executive shall keep the Board fully informed of any and all matters of a material nature, and seek Board approval of appropriate matters, in accordance with his fiduciary duties to the Company and its shareholders. 
 

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1.5.    Devotion of Time. During the Term, Executive shall expend all of his working time, care and attention to his duties, responsibilities and obligations to the Company. Executive may serve on the boards of (i) civic and charitable entities, and (ii) with the prior written consent of the Board, other corporate entities; provided, however, that such activities do not, either individually or in the aggregate, interfere with Executive's duties and responsibilities as President and Chief Executive Officer of the Company.
 
1.6.    Elected Officer of the Company. The Company and Executive acknowledge that Executive currently serves as an elected Officer of the Company. 
 
2.    Compensation; Benefits.
 
As compensation and consideration for the services to be rendered by Executive as President and Chief Executive Officer of the Company in accordance with the terms and conditions of this Agreement, and while Executive is employed with the Company as President and Chief Executive Officer, Executive shall be entitled to the compensation and benefits set forth in this Section 2 (subject, in each case, to the provisions of Section 3 of this Agreement).
 
2.1.    Base Salary. Executive shall receive an annual base salary (“Base Salary”) of Four Hundred Thousand Dollars ($400,000) per year, payable in accordance with the Company's standard payroll dates and practices, provided such payments shall not be made less frequently than twice in each calendar month. The Base Salary shall be reviewed at least annually by the Compensation Committee (the “Committee”) of the Board and may be adjusted by the Committee, in its sole discretion, based on the Committee's consideration of the Company's performance, financial and otherwise. If the Base Salary is adjusted, the adjusted amount will thereafter be the Base Salary for all purposes of this Agreement. However, the Base Salary shall never be lower than $400,000 per year.
 
2.2.    Annual Bonus. Executive shall be entitled to receive a bonus award targeted at $200,000, and ranging up to $400,000, payable after one year of employment, based upon Executive achieving mutually agreed upon performance measures approved by the Company's Board. Thereafter, Executive shall be eligible to participate in such annual bonus or incentive compensation plans and programs as may be in effect from time to time in accordance with the Company's compensation practices and the terms and provisions of any such plans or programs as may be approved by the Committee. Except as otherwise provided by the terms of this Agreement, any annual bonus earned shall be paid at the same time and in the same manner as corresponding awards to other senior executives of the Company generally.
 
2.3.    Long-Term and Equity Compensation. Executive shall be eligible to participate in any long-term incentive compensation plan (including any equity compensation plan) that may be adopted by the Company from time to time during the Term. The specific awards under any such plan will be made by the Committee in its sole discretion, commensurate with Executive's position as President and Chief Executive Officer.

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2.4.    Participation in Other Benefit Plans. While Executive is employed with the Company:
 
(a)    Executive shall be eligible to participate in all retirement and other benefit plans and programs of the Company generally available from time to time to employees of the Company and for which Executive qualifies under the terms thereof. Nothing in this Agreement shall limit the Company's ability to change, modify, cancel, amend or discontinue any of such plans. 
 
2.5.    Reimbursement of Expenses. The Company shall pay directly or reimburse Executive for reasonable business-related expenses and disbursements incurred by him for and on behalf of the Company in connection with the performance of his duties as the President and Chief Executive Officer of the Company, subject, however, to the Company's written policies relating to business-related expenses as in effect from time to time. Executive shall submit to the Company, no later than the month after the month during which he incurred any such business-related expenses and disbursements, a report of such expenses and disbursements in the form normally used by the Company and receipts with respect thereto, and the Company's obligations under this Section 2.5 shall be subject to compliance therewith. Reimbursement of any business-related expenses and disbursements shall be made in accordance with the Company's written policies relating to business-related expenses as in effect from time to time. In no event will reimbursement of any business-related expenses and disbursements be made later than the last day of the calendar year following the calendar year in which any such expense or disbursement was incurred. 
 
2.6.    Vacation. Executive shall be entitled to paid vacation in accordance with the Company's Paid Time Off (PTO) policy in effect from time to time. 
 
2.7.    Executive Officer Company Car Benefit. Executive shall be eligible to participate in the Executive Officer Company Car benefit in accordance with the terms and provisions of the Hooper Holmes, Inc. Executive Officer Company Car Policy. Executive shall be responsible for taxes that are due as a result of receiving this benefit. Nothing in this Agreement shall limit the Company's ability to change, modify, cancel, amend or discontinue the Hooper Holmes, Inc. Executive Officer Company Car Policy at any time, at the sole discretion of the Compensation Committee. 
 
2.8    Executive Change-in-Control Agreement. Executive acknowledges that in connection with Executive's employment, Executive has entered into an Executive Change-in-Control Agreement with the Company. 
 
2.9.    Indemnification; Insurance.
 
(a)    Executive acknowledges that, upon commencement of Executive's employment with the Company, Executive was offered and accepted indemnification in accordance with the Company's bylaws, subject to applicable law.

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(b)    Executive shall be covered by directors' and officers' liability insurance during the Term and for any applicable statute of limitations period thereafter, to the same extent as other officers of the Company.
 
2.10.    Deductions; Withholdings. All compensation payable to Executive under the terms of this Agreement shall be subject to any applicable income, payroll or other tax withholding requirements and such other deductions or amounts, if any, as may be authorized by Executive.
 
3.    Termination.
 
3.1.    Termination by the Company. The Company shall have the right, subject to the terms of this Agreement, to terminate Executive's employment at any time, with or without “Cause.” The Company shall give Executive written notice of a termination for Cause (the “Cause Notice”) in accordance with Section 7.2 of this Agreement. The Cause Notice shall state the particular action(s) or inaction(s) giving rise to the termination for Cause. No action(s) or inaction(s) will constitute Cause unless:
 
(a)    a resolution finding that Cause exists has been approved by a majority of all of the members of the Board (excluding Executive), at a meeting at which Executive is allowed to appear with his legal counsel; and
 
(b)    where remedial action is feasible, Executive fails to remedy the action(s) or inaction(s) within ten (10) days after receiving the Cause Notice.
 
If Executive effects a cure to the satisfaction of the Board within the 10-day period following his receipt of the Cause Notice, the Cause Notice shall be deemed rescinded and of no force or effect.
 
For purposes of this Agreement, “Cause” shall mean:
 
		
	•    
	participation by Executive in fraudulent conduct against the Company, or a material misrepresentation or omission by Executive that, in the Board's reasonable judgment, has resulted or will likely result in injury to the business, operations or financial condition of the Company;

 
		
	•    
	conviction of or a plea of guilty or nolo contendere with respect to a felony involving theft or moral turpitude;

 
		
	•    
	Executive's violation of any statutory or common law duty of loyalty or good faith to the Company or any of its subsidiaries.

    
		
	•    
	Executive's continued violation of a material policy of the Company for a period of thirty (30) days after Executive's receipt of a written notice specifying the nature of such violation from the Company;

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	•    
	any refusal by Executive to follow the lawful directives of the Board that are consistent with the scope and nature of Executive's duties and responsibilities as set forth in this Agreement;

 
		
	•    
	any misconduct by Executive in connection with performance of his duties hereunder for a period of thirty (30) days after having received a written notice specifying the nature of such misconduct from the Company; or

 
		
	•    
	any breach by Executive of any one or more of the covenants contained in Sections 4 and 5.

 
 3.2    Termination by Executive. Executive shall have the right, subject to the terms of this Agreement, to terminate his employment at any time with or without “Good Reason.”
 
For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following during the Term without Executive's prior written consent:
 
		
	•    
	a material diminution in Executive's authority, duties and/or responsibilities as contemplated by this Agreement;

 
		
	•    
	a material diminution in Executive's Base Salary;

 
		
	•    
	a material diminution in the amount of Executive's annual bonus opportunity, target incentive award and/or benefits, including health, retirement and fringe, unless the diminution is a result of a Company-wide diminution in the annual bonus opportunity, target incentive awards and/or benefits of all similarly situated employees as Executive;

 
		
	•    
	a material failure by the Company to comply with the provisions of Section 2 of this Agreement (provided that an isolated, insubstantial or inadvertent action or omission that is not in bad faith and is remedied by the Company promptly after receipt of notice thereof given by Executive shall not constitute Good Reason);

 
		
	•    
	a change in Executive's principal place of employment, such that the Executive's commuting distance as of the date of this Agreement increases by more than 50 miles each way, as measured from Executive's principal place of employment as of the date of this Agreement;

 
		
	•    
	in the event of the occurrence of a Change in Control (as defined in the CIC Agreement), the failure of a successor to the Company to explicitly assume and agree to be bound by the terms of such agreement, in accordance with the CIC Agreement then in effect; or

 
		
	•    
	a material breach by the Company of any of the terms and conditions of the CIC Agreement.

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Notwithstanding the foregoing, it is specifically agreed that “Good Reason” for termination of employment by Executive shall not exist solely because the Company gives or has given Executive notice of Company's intent not to renew this Agreement after expiration of the initial term hereof, in accordance with Section 1.2 of this Agreement. Executive must give the Company written notice, in accordance with Section 7.2 of this Agreement, of any Good Reason termination of employment. Such notice must be given within 60 days following Executive's knowledge of the first occurrence (as determined without regard to any prior occurrence that was subsequently remedied by the Company) of a Good Reason circumstance and must specify which of the Good Reason circumstances Executive is relying on, the particular action(s) or inaction(s) giving rise to such circumstance, and the date that Executive intends to separate from service, as defined under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), which shall be no earlier than thirty (30) days following the date of the Company's receipt of the notice. Executive's termination shall not be deemed a Good Reason termination of employment if (i) within 30 days of the Company's receipt of such notice, the Company remedies the circumstance(s) giving rise to the notice, or (ii) Executive's termination of his employment does not occur within 60 days after the end of the 30-day period provided to the Company to remedy the circumstances giving rise to the notice. 
 
3.3    Death. If Executive dies during the Term, Executive's employment shall automatically terminate, such termination to be effective on the date of Executive's death.
 
3.4    Disability. If Executive shall suffer a Disability, the Company shall have the right to terminate Executive's employment, such termination to be effective upon the giving of notice to Executive in accordance with Section 7.2 of this Agreement. For purposes of this Agreement, a Disability shall mean any physical or mental incapacity as a result of which Executive is unable to perform substantially all of his essential duties for an aggregate of four (4) months, whether or not consecutive, during any calendar year, and which cannot be reasonably accommodated by the Company without undue hardship. Executive cannot be terminated for Disability unless the Company has delivered a written demand for substantial performance to Executive, specifically identifying the manner in which Executive has not substantially performed his duties, and Executive does not cure such failure within thirty (30) days of such demand. 
 
3.5    Effect of Termination.
 
(a)    In General. Subject to the terms of Section 3.5(c), in the event of the termination of Executive's employment for any reason during the Term or any Renewal Term, the Company shall pay to Executive (or his beneficiary, heirs or estate, in the event of his death), as provided in Section 3.6 of this Agreement: (i) any Base Salary, to the extent not previously paid, to the date of termination; (ii) any reimbursable business expenses that have not yet been reimbursed (collectively, the “Accrued Obligations”); and (iii) any unused vacation time accrued to the date of termination in accordance with the Company's PTO policies then in effect. The Accrued Obligations shall be paid within 30 days after the date of termination.
    
 
(b)    Termination Resulting from Executive's Death or Disability. In the event of termination of Executive's employment as a result of Executive's death or Disability, Executive (or, in the case of death, his beneficiary, heir or estate) shall be entitled to the compensation payable in accordance with Section 3.5(a). In addition, any unvested stock rights, stock options and other unvested incentives or awards previously granted to Executive by the Company shall be subject to the terms of the applicable plan(s) under which such rights, options, incentives or awards were granted pertaining to the consequences of a plan participant's death or disability. 

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(c)    Termination by the Company for Cause and by Executive other than for Good Reason. In the event of termination of Executive's employment by the Company for Cause, or by Executive other than for Good Reason, neither Executive nor any beneficiary, heir or estate of Executive shall be entitled to any compensation other than the payments made or provided in accordance with Section 3.5(a). Executive shall immediately forfeit any right to or incentive compensation not yet paid or payable as of the date of termination, and all unvested stock rights, stock options and other such unvested incentives or awards previously granted to him by the Company, unless otherwise specifically provided in the applicable plan(s) under which such rights, options, incentives or awards were granted. Nothing in this Agreement shall be construed to limit the rights and remedies which may be available to the Company in the event of a termination of Executive's employment by the Company for Cause.
 
(d)    Termination by the Company without Cause or; by Executive for Good Reason In the event of a termination of Executive's employment by the Company without Cause during the Term, or by Executive for Good Reason during the Term, Executive shall receive the payments provided for in Section 3.5(a). In addition:
 
(i)         Executive shall receive a lump-sum payment equal to the amount of Base Salary (at the rate in effect immediately prior to his termination) that would have been payable to him if he had continued in employment through the longer of (A) the balance of the then-current Term of Executive's employment under this Agreement, or (B) the one-year period following the date of termination. Such lump-sum payment shall be made within fifteen (15) business days after Executive's termination date; provided, however, that if at the time of Executive's termination for Good Reason, the Employee is a “specified employee” as defined in Section 409A of the Code, then the Company will defer the payment until the first day of the seventh (7th) month following the date of termination or, if earlier, Executive's death or such earliest other date as is permitted under Section 409A. In the event a lump sum payment would be subject to a delay under Section 409A, Executive may elect to receive payments on the Company's regularly scheduled pay dates, and the Company shall make such payments to the extent permitted by Section 409A and any other applicable law or regulation.
 
(ii)    All rights to exercise any outstanding award of stock options or stock appreciation rights with respect to the Company's common stock, or shares of restricted stock, held by Executive at the date of termination shall be governed by the terms of the applicable plan under which such award was granted.

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(iii)    Executive shall cease to be eligible to participate in the Company's employee benefit programs as of the Executive's date of termination subject to the terms and conditions of each benefit program. At the date of termination, if the Executive participates in the Company's medical and dental insurance plans, Executive will have the opportunity and responsibility to elect COBRA continuation coverage, subject to the terms and availability of such coverage and subject to Executive's election of such coverage. To the extent Executive elects and enrolls in such continuation coverage, the Company will send directly to Executive, on a monthly basis for the one year period following the date of termination, an amount equal to the applicable monthly COBRA payments for the level of coverage in which Executive was enrolled on the date of termination, provided Executive maintains this COBRA coverage and makes the necessary COBRA premium payments to the Company's outsourced COBRA Administrator. It is the Executive's responsibility to pay Executive's COBRA premiums in a timely manner directly to the Company's outsourced COBRA Administrator. The Company COBRA payment to Executive shall be subject to all applicable federal and state withholding, employment taxes and wage garnishments. The Company reserves the right to amend, modify or terminate its benefit coverages at any time at the sole discretion of the Company, provided that any such amendment, modification or termination of such benefit coverages is not made solely to deny Executive coverage thereunder.
 
(iv)    Executive will not be eligible to receive any other compensation from the Company, except as expressly set forth in this Employment Agreement.
 
To the extent the payments under subsection (iii) are not exempt from Section 409A, any payments that cannot be paid during the 6-month period after the date of termination described in Section 7.10(a) will be postponed until the time for payment permitted under Section 7.10.
 
3.6    Conditions of Payment. Any payments or benefits made or provided in connection with the termination of Executive's employment with the Company in accordance with Section 3.5 (other than payments made or provided in accordance with Section 3.5(a) or due to a termination of Executive's employment due to his death) are subject to Executive's:
 
(a)    compliance with the provisions of Sections 3.8, 4 and 5 of this Agreement; and
 
(b)    delivery to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and employee benefit plans prior to the scheduled date for which the applicable payment or benefit is to be made or provided.
and
(c)    returning to the Company any and all documents, keys, records, computer and communications equipment, credit cards, identification cards, and all other tangible things which are the property of the Company to include the Company Car (if any) provided to Executive, within 30 days of the Executive's termination of employment date.
 
Payment of the amounts specified in Sections 3.5(d) (i) and (iii) will be conditioned upon delivery by Executive of an executed, concurrently-effective General Release, substantially in the form attached to this Agreement as Exhibit A, with such changes or additions as needed under then applicable law to give effect to its intent and purpose

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3.7    Mitigation. Executive shall be under no obligation to seek other employment following a termination of his employment with the Company or any subsidiary for any reason. In addition, there shall be no offset against amounts due Executive under this Section 3 or otherwise on account of any compensation attributable to any subsequent employment.
 
3.8    Cooperation; Assistance. Executive agrees to cooperate fully, subject to reimbursement by the Company of reasonable out-of-pocket costs and expenses, with the Company or any subsidiary and its or their counsel with respect to any matter (including any litigation, investigation or governmental proceeding) which relates to matters with which Executive was involved or about which Executive had knowledge during Executive's employment with the Company or any subsidiary. Such cooperation shall include appearing from time to time at the offices of the Company or any subsidiary or its or their counsel for conferences and interviews and, in general, providing the officers of the Company or any subsidiary and its or their counsel with the full benefit of Executive's knowledge with respect to any such matter. Executive further agrees, upon termination of Executive's employment for any reason and if the Board requests, to assist Executive's successor in the transition of Executive's duties and responsibilities to such successor. Executive agrees to render such cooperation in a timely fashion and at such times as may be mutually agreeable to the parties. The Company shall compensate Executive for time spent providing assistance to the Company, based on the number of hours spent by Executive in providing such assistance. The hourly rate of compensation shall be $200.
 
3.9    Effect of the Occurrence of a Change in Control under the CIC Agreement. Upon the occurrence of a Change in Control (as defined in the CIC Agreement), the terms of this Section 3 (other than this Section 3.9) shall cease to have any further force or effect, except under the following circumstances: (i) a Change in Control occurs, (ii) no Triggering Event (as defined in the CIC Agreement) occurs within the 12-month period following the Change in Control (defined in the CIC Agreement as the “Employment Period”), and (iii) subsequent to the end of such Employment Period, either the Company terminates Executive's employment without Cause or Executive terminates Executive's employment for Good Reason. Under such circumstances (and assuming this Agreement is in effect at the time of such termination), Section 3 shall continue to apply to such termination.
 
              
4.    Confidentiality. 
 
4.1    Executive acknowledges and agrees that:
 
(a)    by reason of Executive's employment with the Company and Executive's service as an Officer of the Company, Executive will have knowledge of all aspects of the Company's operations and will be entrusted with and have access to confidential and secret proprietary business information and trade secrets of the Company, including but not limited to:
 
(i)    information regarding the Company's business priorities and strategic plans;

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(ii)    information regarding the Company's personnel;
 
(iii)    financial and marketing information (including but not limited to information about costs, prices, profitability and sales information not available outside the Company);
 
(iv)    secret and confidential plans for and information about new or existing services, and initiatives to address the Company's competition;
 
(v)    information regarding customer relationships; and
 
(vi)    proprietary or confidential information of customers or clients for which the Company may owe an obligation not to disclose such information.
 
(all such information shall be collectively referred to as “confidential information”);
    
(b)     the Company and its subsidiaries, affiliates and divisions will suffer substantial and irreparable damage that will not be compensable through money damages if Executive should divulge or make use of confidential information acquired by Executive in the course of Executive's employment with the Company and service to the Board other than as may be required or appropriate in connection with Executive's work as an employee of the Company; and
 
(c)    the provisions of this Agreement are reasonable and necessary for the protection of confidential information, the business of the Company and its subsidiaries, affiliates and divisions, and the stability of their workforces.
 
4.2    Except as may be required or appropriate in connection with Executive's work as an employee of the Company, Executive shall keep confidential all confidential information Executive learns of during Executive's employment with the Company regarding the Company, its business, operations, systems, employees, customers, clients and prospective clients. In addition, Executive agrees that Executive will not disclose confidential information obtained from the Company or its officers, directors or management during Executive's employment, including, but not limited to, information regarding, or statements by, the Company or its officers, directors or management, to anyone other than as required by law or in response to a lawful court order or subpoena. 
 
4.3    Nothing in this Section 4 shall prohibit Executive from participating as a witness at the request of the Company or a third party in any investigation by the SEC or any other governmental agency charged with the investigation of any matters related to Executive's employment with the Company, nor shall Executive be prohibited from testifying in response to a subpoena, court order or notice of deposition. Executive agrees to notify the Company's General Counsel, in writing, at least ten (10) days prior to the response deadline or appearance date (whichever is earlier) for any such subpoena, court order or notice of deposition issued by a court or investigating agency which seeks disclosure of any confidential information. Executive further agrees to take any actions reasonably requested by the Company to allow the Company to protect the release of information regarding Executive's employment from the Company in such court or agency proceeding.

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4.4    Executive agrees that:
 
(a)    Executive will not, at any time, remove from the Company's premises any notebooks, software, data or other confidential information relating to the Company, except to the extent necessary or appropriate to perform Executive's duties and responsibilities under the terms of this Agreement;
 
(b)    upon the expiration or termination of the Term for any reason whatsoever, Executive shall promptly deliver to the Company any and all notebooks, software, data and documents and material, including all copies thereof, in Executive's possession or under Executive's control relating to any confidential information, or which is otherwise the property of the Company; and
 
(c)    Executive will not use any confidential information for Executive's own benefit or for the benefit of any new employer or any third person.
 
4.5    For purposes of this Section 4, the term “Company” shall mean and include the Company and any and all subsidiaries and affiliated entities of the Company in existence from time to time. 
 
5.    Non-Competition and Non-Solicitation.
 
5.1    Executive acknowledges that the Company is, as of the Effective Date, engaged principally in the business of providing health information risk assessment services to insurance companies and health and wellness providers, performing lab testing services, providing underwriting services in connection with the processing of life insurance applications, and providing health information gathering and assessment services to healthcare and research entities, - throughout the United States. By virtue of Executive's position with the Company, Executive will be exposed to and acquire significant confidential information about the Company and its existing and future plans and strategies. As a result, Executive acknowledges that the Company has a legitimate business interest supporting the restrictive covenants set forth in this Section 5.
 
5.2    During Executive's employment with the Company and until the first anniversary of the date of termination of Executive's employment with the Company, Executive shall not in any manner, directly or indirectly, within the United States (without the prior written consent of a duly authorized officer of the Company):
 
(a)    act as a Competitive Enterprise or accept any engagement in any capacity that involves Executive performing management, consultation, advisory or other services of any kind with a Competitive Enterprise (as defined in Section 5.3 below);

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(b)    Solicit (as defined in Section 5.3 below) any Customer (as defined in Section 5.3 below) to transact business with a Competitive Enterprise or to reduce or refrain from doing any business with the Company or any of its subsidiaries;
 
(c)    transact business with any Customer that would cause Executive to be a Competitive Enterprise;
    
(d)    interfere with or damage any relationship between the Company or any its subsidiaries with a Customer; or
 
(e)    Solicit anyone who is then an employee of the Company or any of its subsidiaries (or who was an employee of the Company or any of its subsidiaries within the prior 12 months) to resign from the Company or any of its subsidiaries or to apply for or accept employment with any other business or enterprise.
 
5.3    For purposes of this Agreement:
 
“Competitive Enterprise” means any business enterprise that either (A) engages in a business that competes anywhere in the United States with any business in which the Company or any of its subsidiaries is then engaged in, or (B) holds a 5% or greater equity, voting or profit participation interest in any enterprise that competes anywhere in the United States with any activity that the Company or any of its subsidiaries is then engaged in; provided, however, that if (i) the Company, including any subsidiary, ceases to do, and exits, a particular type of business activity, then following such exit the Company and its subsidiaries will be deemed not to be “then engaged” in such business; or (ii) the Company, including any of its subsidiaries, was not engaged in a particular type of business activity (and was not contemplating such business activity), while Executive was employed by the Company, then for the purposes of this Agreement, the Company and its subsidiaries will be deemed not to be “then engaged” in such business. 
 
“Customer” means any customer or prospective customer of the Company or any of its subsidiaries whose identity became known to Executive in connection with Executive's relationship with or employment by the Company or any of its subsidiaries.
 
“Solicit” means any direct or indirect communication of any kind, regardless of who initiates it, that in any way invites, advises, encourages or requests any person to take or refrain from taking any action.
 
6.    Injunctive Relief. If Executive commits a breach, or threatens to commit a breach, of any of the provisions of Section 4 or 5 of this Agreement, the Company shall have the right and remedy (which shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity) to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged by Executive that any such breach or threatened breach will or may cause irreparable injury to the Company and that money damages will or may not provide an adequate remedy to the Company. 
  

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7.    Miscellaneous.
 
7.1    Benefit of Agreement, Assignment; Beneficiary. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. This Agreement shall also inure to the benefit of, and be enforceable by, Executive and Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive should die while any amount would still be payable to Executive under this Agreement if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Executive's beneficiary, devisee, legatee or other designee, or if there is no such designee, to Executive's estate.
 
7.2    Notices. Any notice required or permitted under this Agreement shall be in writing and shall be sufficiently given if personally delivered or if sent by certified mail, postage prepaid, with return receipt requested or by reputable overnight courier, addressed: (a) in the case of the Company, to the General Counsel of the Company at the Company's then-current corporate headquarters, and (b) in the case of Executive, to Executive's last known address as reflected in the Company's records, or to such other address as either party shall designate by written notice to the other party. Any notice given hereunder shall be deemed to have been given at the time of receipt thereof by the person to whom such notice is given if personally delivered or at the time of mailing if sent by certified mail or by courier.
 
7.3.    Entire Agreement; Amendment. Except as specifically provided in this Agreement, this Agreement contains the entire agreement of the parties to this Agreement with respect to the terms and conditions of Executive's employment during the Term, and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to compensation due for services rendered under this Agreement. For the avoidance of doubt, in the event of any inconsistency between this Agreement and any plan, program or arrangement of the Company or its affiliates, the terms of this Agreement shall control. This Agreement may not be changed or modified except by an instrument in writing signed by both of the parties.
 
7.4    Waiver. The waiver of either party of a breach of any provision of this Agreement shall not operate or be construed as a continuing waiver or as a consent to or waiver of any subsequent breach.
 
7.5    Headings. The section headings in this Agreement are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or affect any of the provisions of this Agreement.      
 
7.6    Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of New Jersey, without reference to the principles of conflicts of laws.
 
7.7    Survivorship. The respective rights and obligations of the parties under this Agreement shall survive any termination of this Agreement to the extent necessary to effectuate the intended preservation of such rights and obligations, including, without limitation, Section 4 and 5 of this Agreement.

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7.8    Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision or provisions of this Agreement, which shall remain in full force and effect. If any provision of this Agreement is held to be invalid, void or unenforceable, any court so holding shall substitute a valid, enforceable provision that preserves, to the maximum lawful extent, the terms and intent of this Agreement.
 
7.9    Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state or local statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.
 
7.10    Section 409A.
 
(a)    Notwithstanding the due date of any post-employment payments, if at the time of the termination of Executive's employment Executive is a “specified employee” (as defined in Section 409A), Executive will not be entitled to any payments upon termination of employment that are subject to Section 409A until the later of (i) the date that payments are scheduled to be made under this Agreement, or (ii) the earlier of (A) the first day of the seventh month following the date of termination of his employment with the Company for any reason other than death, or (B) the date of Executive's death. The provisions of this paragraph will only apply if and to the extent required to avoid any “additional tax” under Section 409A. The parties to this Agreement intend that the determination of Executive's termination of employment shall be made in accordance with Treasury Reg. Section 1.409A-1(h).
 
(b)    The parties to this Agreement intend that this Agreement and Company's and Executive's exercise of authority or discretion hereunder shall comply with the provisions of Section 409A and the Treasury regulations relating thereto so as not to subject Executive to the payment of interest and tax penalty which may be imposed under Section 409A. In furtherance of this objective, to the extent that any regulations or other guidance issued under Section 409A would result in Executive being subject to payment of “additional tax” under Section 409A, the parties agree to use their best efforts to amend this Agreement in order to avoid the imposition of any such “additional tax” under Section 409A, which such amendment shall be designed to minimize the adverse economic effect on Executive without increasing the cost to the Company (other than transactions costs), all as reasonably determined in good faith by the Company and Executive to maintain to the maximum extent practicable the original intent of the applicable provisions. This Section 7.10 does not guarantee that payments under this Agreement will not be subject to “additional tax” under Section 409A.
 

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7.11    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which will constitute one and the same instrument.
 
 
IN WITNESS WHEREOF, each of the parties has duly executed this Agreement on the date indicated below. The Company represents that its execution of this Agreement has been authorized by the Compensation Committee of the Company's Board of Directors.
 
                        
Hooper Holmes, Inc.
 
Date:    _December 9, 2010_________    By:    _/s/ Mark C. Rosenblum____________
Name:    Mark C. Rosenblum
Title:    SVP, General Counsel
                            
 
                        
Date:    _December 9, 2010_________    _/s/ Ransom J. Parker____________________
Ransom J. Parker
 

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