EXHIBIT 99.8
EMPLOYEE MATTERS AGREEMENT
EMPLOYEE MATTERS AGREEMENT, dated as of October 28, 2001 (as
the same may be amended from time to time, the "Agreement"), between XXXXXX
ELECTRONICS CORPORATION, a Delaware corporation ("HEC"), and ECHOSTAR
COMMUNICATIONS CORPORATION, a Nevada corporation ("Echostar"), each a "Party,"
and collectively, the "Parties."
WHEREAS, following the separation of HEC from General Motors
Corporation ("General Motors") pursuant to a Separation Agreement (the
"Separation Agreement") entered into by and between HEC and General Motors, HEC
and Echostar desire to combine the business of Echostar with the business of HEC
pursuant to a merger (the "Merger") of Echostar with and into HEC, with HEC as
the surviving corporation ("New HEC"), as contemplated by that certain Agreement
and Plan of Merger (the "Merger Agreement") entered into by and between HEC and
Echostar; and
WHEREAS, the Merger Agreement contemplates the execution and
delivery of this Agreement concurrently with the execution and delivery of the
Merger Agreement; and
WHEREAS, this Agreement shall become effective as of the
Merger Effective Time (as defined in the Merger Agreement).
NOW, THEREFORE, in consideration of the mutual covenants and
provisions hereinafter contained, the Parties hereby agree as follows:
1. DEFINITIONS.
(a) All initially capitalized terms used herein shall have the
meanings ascribed to such terms in the Merger Agreement unless the context
indicates otherwise.
(b) For purposes of this Agreement, each of the following
terms shall have the meaning ascribed to such term below:
"Transaction Documents" shall mean the Merger Agreement,
Implementation Agreement and Separation Agreement.
"Plans" shall mean all employee benefits and compensation
plans, programs, agreements and arrangements (including,
without limitation, all severance, termination, separation,
and retention plans, agreements and arrangements) maintained
or sponsored by HEC or any of its Subsidiaries.
"HEC Employees" shall mean current, former and retired
employees of HEC and its current or former subsidiaries, but
only to the extent HEC has current liabilities or obligations
(contingent or otherwise) to such persons (the
"Subsidiaries").
2. [INTENTIONALLY OMITTED]
3. CONTINUATION OF WAGES AND BENEFITS.
(a) Except as otherwise provided in this Agreement, New HEC
shall continue, as in effect immediately prior to the Merger Effective Time, all
employee benefits and compensation plans set forth on Schedule A to this
Agreement (the "Schedule A Plans"), other than plans, agreements and
arrangements identified thereon as Incentive Compensation Plans (the "HEC
Incentive Plans"), for a period of at least 12 months immediately following the
Merger Effective Time.
(b) For a period of at least 12 months immediately following
the Merger Effective Time, New HEC shall not reduce the salary or hourly wage
rate in effect immediately prior to the Merger Effective Time for any current
HEC Employee as of the Merger Effective Time who is not a member of a collective
bargaining unit or is not covered by a collective bargaining agreement. In
addition, New HEC shall, for at least 12 months immediately following the Merger
Effective Time, provide to each HEC Employee employed by HEC or its Subsidiaries
immediately prior to the Merger Effective Time, opportunities to earn incentive
compensation which is no less favorable in the aggregate than the incentive
compensation opportunities (as defined below) provided to such HEC Employee
immediately prior to the Merger Effective Time. Consistent with this Section
3(b) and Section 5(b), after the Merger Effective Time New HEC may restructure
the mix of the incentive compensation opportunities provided by the various
elements of the HEC Employees' incentive compensation plans and arrangements.
Further, New HEC shall not reduce the amount of such incentive compensation
opportunities which are payable in the form of cash or stock grants (other than
stock options, subject to the second sentence of this Section 3(b)). For
purposes hereof, "incentive compensation opportunities" immediately prior to the
Merger Effective Time shall mean the targeted incentive compensation
opportunities under the HEC Incentive Plans with respect to such HEC Employee as
of the Merger Effective Time (and, with respect to the value of stock option
grants, shall be determined on a Black-Scholes or similar valuation model for
the grants made in the calendar year in which the Merger Effective Time occurs
or the immediately preceding calendar year, whichever produces the highest value
with respect to stock option grants), but does not include the value of any
retention stock option grant or any stock option granted on June 22, 2001, or
amounts payable under the HEC Critical Capabilities Continuation Bonus Plan or
any retention bonus plan.
(c) Nothing in this Agreement or in the Transaction Documents
shall:
(i) confer upon any HEC Employee any right with respect to
continuation of employment with New HEC, nor interfere with the right,
or limit the ability, of New HEC (or the applicable employer) to
terminate the employment of any of the HEC Employees at any time, with
or without cause, nor, subject to Sections 3(a), 3(b), 4.2, 5 and 6
hereof, restrict New HEC in its independent judgment in modifying any
of the terms and conditions of employment of the HEC Employees,
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(ii)) prohibit, restrict, or in any way interfere with New
HEC's rights or abilities to sell, lease or otherwise dispose of all
or any part of the business of New HEC, or
(iii) prohibit, restrict or in any way interfere with New
HEC's right or ability to amend, terminate or suspend any Plan or
other program, policy, agreement or arrangement, to the extent such
action is required to comply with Applicable Law or where applicable,
to maintain qualification under Section 401 of the Code.
4. RETIREMENT PLANS.
(a) Notwithstanding any other provision of this Agreement, New
HEC shall continue coverage under the contributory portion of the HEC
Non-Bargaining Retirement Plan (the "Non-Bargaining Plan"), as in effect
immediately prior to the Merger Effective Time, for all HEC Employees who are
contributory participants in such plan as of the date hereof, or, following the
first anniversary of the Merger Effective Time, provide coverage under a
successor plan having terms and conditions that are no less favorable to any
such participant than the contributory portion of the Non-Bargaining Plan until
the fifth anniversary of the Merger Effective Time, as applicable, except for
amendments to the contributory portion of the Non-Bargaining Plan to the extent
required to comply with Applicable Law or to maintain the qualification of the
plan under Section 401 of the Code.
(b) Effective December 1, 2001, HEC amended the Non-Bargaining
Plan to provide for a cash balance benefit feature pursuant to which
non-contributory participants as of the Merger Effective Time shall be entitled
to an accrued benefit equal to the greater of: (i) the amount calculated under
the cash balance provisions or (ii) the amount calculated under the
non-contributory provisions as in effect immediately prior to the Merger
Effective Time. If, prior to the Merger Effective Time, HEC has not obtained a
favorable determination from the Internal Revenue Service regarding the
qualification of the Non-Bargaining Plan, as amended, New HEC shall use
commercially reasonable efforts to obtain such a determination from the Internal
Revenue Service.
(c) The Non-Bargaining Plan, and the HEC Salaried Excess
Benefit Plan (the "Excess Plan") shall be amended, effective as of the Merger
Effective Time and to the fullest extent permitted by Applicable Law (including
any requirements to maintain the qualification of such plan with Section 401 of
the Code), to provide that each HEC Employee who (i) is a participant in the
contributory portion of the Non-Bargaining Plan as of such date, (ii) is
identified within one year of the Merger Effective Time for layoff which arises
directly from the transactions contemplated by the Transaction Documents
(collectively, the "Transaction"), (iii) is laid off within two years following
the Merger Effective Time, and (iv) is entitled to receive severance benefits
under the Special Severance Appendix to the HEC Employment Transition Assistance
Plan, shall have a right to receive an enhanced lump sum payment equal to the
actuarial present value of the accrued benefit payable under the Non-Bargaining
Plan and the Excess Plan, as applicable, as if such HEC Employee had grown into
his or her earliest unreduced retirement date (e.g., "Magic 75") assuming that
he or she had continued employment with HEC through such date. New HEC shall use
its commercially reasonable efforts to obtain a favorable determination under
Section 401 of the Code with respect to such amendment.
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(d)) New HEC shall timely file for all GUST amendments.
5. INCENTIVE COMPENSATION PLANS.
(a) Neither the performance metric or other performance-based
criteria nor the incentive compensation opportunities provided to the HEC
Employees under the HEC Incentive Plans may be amended or otherwise modified
with respect to any performance period that ends prior to the Merger Effective
Time.
(b) Subject to Section 3(b) of this Agreement, any performance
metric or other performance-based criteria or the incentive compensation
opportunities provided to the HEC Employees under any HEC Incentive Plan may be
amended or otherwise modified with respect to any performance period that
straddles or commences on or after the Merger Effective Time provided that:
(i) With respect to each such HEC Incentive Plan, New HEC
shall, as soon as practicable following the date of the amendment or
modification (the "Modification Date") and in a manner consistent with
past practice and the terms and conditions of such HEC Incentive Plan,
determine the pro rata amount of the award for each HEC Employee under
such HEC Incentive Plan for the period commencing on the first day of
the plan year or performance period(s), as applicable, in which the
Modification Date occurs, and ending on the Modification Date (the
"Pre-Modification Award Period"). As soon as practicable following the
Modification Date, New HEC shall determine the actual aggregate HEC
Incentive Plan performance for the Pre-Modification Award Period by
comparing (x) the actual percentage level of performance achieved
through the Modification Date for each HEC Incentive Plan metric, as
applicable, to (y) the planned performance through the Modification
Date for each HEC Incentive Plan metric, as applicable. New HEC shall
calculate each HEC Employee's award for the Pre-Modification Award
Period under such HEC Incentive Plan by using the actual aggregate HEC
Incentive Plan performance determined in accordance with the preceding
sentence as of the Modification Date. Individual awards so determined
shall be pro rated by a fraction, the numerator of which shall be the
number of whole months completed from the first day of the plan year
or performance period(s), as applicable, up to and including the
Modification Date as a completed month, and the denominator of which
shall be (i) 12 months in the case of the HEC Annual Incentive Plan
and the HEC Employees' Results Sharing Plan, (ii) 36 months in the
case of the HEC Long-Term Achievement Plan, and (iii) the number of
months in the applicable performance period in the case of other HEC
Incentive Plans. The amounts so determined above shall become the
minimum bonus payable under the plan at the end of the plan's
performance period (the "Minimum Bonus Amount");
(ii) The HEC Employees who are affected by the amendment or
modification of the HEC Incentive Plan shall be notified of the
amendment or modification as soon as practicable after the adoption of
the amendment or modification; and
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(iii) As soon as practicable following the last day of the
plan year or performance period(s), as applicable, in a manner
consistent with the terms and conditions of each HEC Incentive Plan,
New HEC shall determine the amount of the award payable to each HEC
Employee under such HEC Incentive Plan for the entire performance
period. New HEC shall pay such awards (subject to such awards not
being less than the Minimum Bonus Amount and to the terms of any
individual written agreements) to participants promptly after the last
day of the plan year or performance period(s), as applicable;
provided, further, that if the employee is terminated in a manner that
would entitle him or her to severance payments under the HEC
Employment Transition Assistance Plan or the PanAmSat Corporation
Severance Pay Plan (including the requirement of signing a consent and
release) and subject to the terms of any individual written agreement,
the employee shall be paid at least the Minimum Bonus Amount under the
plan.
6. RETIREE HEALTH BENEFITS.
(a) Subject to Applicable Law, New HEC shall continue coverage
under the retiree health plan in effect immediately prior to the Merger
Effective Time or, following the first anniversary of the Merger Effective Time,
any successor retiree health plan providing benefits, for all HEC Employees who
are being provided with such coverage as of the Merger Effective Time, for all
HEC Employees who are participants in the contributory portion of the
Non-Bargaining Plan and who are eligible to receive Magic 75 retirement benefits
pursuant to Section 4(c) of this Agreement and for those HEC Employees who have
been given company-paid retiree medical benefits pursuant to the terms of
special contracts ("Special Contract Employees"), including, but not limited to,
former employees of MESC Holdings, Inc., and Honeywell Inc., and their
respective qualified dependents (collectively, such individuals referred to
under this Section 6(a), the "Protected Retiree Benefits Group") for as long as
health insurance coverage is provided to active HEC Employee, but in no event
shall any such retiree health coverage continue beyond the date upon which the
retiree or eligible dependent attains or would have attained age 65. HEC
represents that the number of Special Contract Employees does not exceed 15.
(b) Subject to Applicable Law, for a period of at least 24
months immediately following the Merger Effective Time, New HEC shall provide
retiree health benefits, on the same basis as those provided to retired HEC
Employees who were participants in the contributory portion of the
Non-Bargaining Retirement Plan, to each HEC Employee who (i) is a participant in
the contributory portion of the Non-Bargaining Plan, (ii) is 50 years of age or
older as of the Merger Effective Time, (iii) is identified within one year of
the Merger Effective Time for layoff which arises directly from the Transaction,
(iv) is laid off within two years following the Merger Effective Time , and (v)
is entitled to receive severance benefits under the Special Severance Appendix
to the HEC Employment Transition Assistance Plan, and to such employee's
eligible dependents, commencing at the time the employee attains or would have
attained the age of 55 years and terminating upon the date such retiree or
eligible dependent attains or would have attained age 65. New HEC shall offer
coverage, on a 100% self-pay basis at a group rate under a group medical plan,
for any such employee and his or her eligible dependents until such employee
attains or would have attained age 55.
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7. OTHER BENEFIT PLANS.
7.1 Waiver. New HEC shall, and shall cause the Subsidiaries, to provide
that no pre-existing conditions or exclusions shall apply to HEC Employees under
the New HEC benefit plans except to the extent such condition or exclusion was
applicable to an individual HEC Employee prior to the Merger Effective Time.
With respect to the plan year during which the Merger Effective Time occurs, any
amounts for out of pocket limits and benefit maximums incurred by an HEC
Employee under the Plans during such plan year will be counted toward out of
pocket limits and benefit maximums under the New HEC benefit plans for the same
plan year for such employee.
7.2 Severance Plans. New HEC shall continue the following plans for a
period of at least 24 months after the Merger Effective Time: HEC Employment
Transition Assistance Plan and the Special Severance Appendix thereto, PanAmSat
Corporation Severance Pay Plan, and DIRECTV Latin America Employment Transition
Assistance Plan (including special severance provisions), each as in effect on
the date hereof, including the provisions thereof requiring the signing of a
consent and release.
8. FURTHER AGREEMENTS.
8.1 Past Service Credit. From and after the Merger Effective Time, New
HEC shall, and shall cause the Subsidiaries and successors to, provide credit
(without duplication) to HEC Employees for their service with HEC and its
Subsidiaries for purposes of eligibility, vesting, continuous service,
determination of service awards, vacation and severance entitlements,
eligibility to retire, early retirement subsidies and benefit accrual (provided
that this does not result in any duplication of benefits) under all the New HEC
benefit plans to the same extent and for the same purposes as such service was
credited under the Plans.
8.2 Cooperation. The Parties agree to cooperate and to promptly respond
to reasonable requests for information to implement the terms of this Agreement.
8.3 Administration. This Agreement shall be administered by the
Compensation Committee of the Board of Directors of New HEC (the "Board").
8.4 Successors. New HEC and Echostar shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of New HEC to expressly
assume and agree to perform New HEC's obligations under this Agreement in the
same manner and to the same extent that New HEC would be required to perform
such obligations as if no such succession had taken place and, to the extent
permitted by Applicable Law, New HEC and its affiliates shall thereupon be
relieved of any and all liability in connection therewith.
9. MISCELLANEOUS MATTERS.
9.1 Conduct of Business. Notwithstanding anything contained herein,
nothing in this Agreement shall prohibit, restrict, limit or in any way
interfere with HEC's or any Subsidiary's right or ability to conduct their
business and operations in accordance with Section 5.3(a) of the Merger
Agreement, including, without limitation, HEC's or any HEC Subsidiary's right or
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ability to enter into or modify any employee benefit plan or agreement or
arrangement with, or grant any bonuses, salary increases, severance or
termination pay to, or otherwise increase the compensation or benefits of, any
officer, director, consultant or employee of HEC or its Subsidiaries in the
ordinary course of business consistent with past practice.
9.2 No Third Party Beneficiaries. No provision in this Agreement or in
any Schedule, attached hereto or in the Transaction Documents shall confer upon
any person, other than the signatories hereto, any rights or remedies with
respect to the matters set forth herein.
9.3 Severability. In case any one or more of the provisions contained
in this Agreement or the Schedules hereto shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction or a qualified
arbitrator, the validity, legality and enforceability of the remaining
provisions contained herein and other applications thereof shall not in any way
be diminished.
9.4 Governing Law. To the extent not governed by federal law, this
Agreement shall be governed by and construed in accordance with the laws of the
State of California, regardless of the laws that might otherwise govern under
principles of conflicts of laws applicable thereto.
9.5 Entire Agreement; Amendments. The Transaction Documents and this
Agreement constitute the entire agreement among the Parties and supersede all
other pre-existing agreements, with respect to the matters expressly provided
for in this Agreement and the Schedules hereto. Prior to the Merger Effective
Time, this Agreement may be amended or modified only by mutual agreement in
writing signed by an authorized representative of each Party. Following the
Merger Effective Time, no amendment or modification may be made to this
Agreement.
9.6 Order Of Precedence. This Agreement shall be construed in a manner
consistent with the Transaction Documents and incorporates the provisions
thereof by reference to the extent relevant to this Agreement. The Parties
hereto agree that if any terms of this Agreement conflict with the terms in the
Transaction Documents, the terms of the Transaction Documents shall govern with
respect to the resolution of such conflict.
9.7 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original.
9.8 Notices. All notices or other communications hereunder or under any
Schedule hereto, shall be in writing, signed by the party providing such notice,
and shall be considered properly given or made and shall be deemed to have been
duly given on the date of delivery, when delivered personally or transmitted and
received by telecopier/facsimile transmitter, receipt acknowledged or confirmed
during normal business hours, or in the case of registered or certified mail,
return receipt requested, postage prepaid, on the date shown on such return
receipt.
Any notices to HEC or New HEC shall be sent as follows (or to such other address
as HEC or New HEC may specify in writing to the Echostar):
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Xxxxxx Xxxxxxxx
X.X. Xxx 000
Xxxx. 000
XX-X000
Xx Xxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
With copies to:
Xxxx Xxxxxxx
X.X. Xxx 000
Xxxx. 000
XX-X000
Xx Xxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Any notices to Echostar shall be sent as follows (or to such other address as
Echostar may specify in writing to HEC):
Echostar Communications Corporation
0000 Xxxxx Xxxxx Xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
With copies to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
and Xxxx X. X'Xxxxx
Telecopy: (000) 000-0000
9.10 Descriptive Headings. The section and clause headings of this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date written above.
XXXXXX ELECTRONICS CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Title: Xxxxx X. Xxxxxx
---------------------------------
Date: Vice President
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ECHOSTAR COMMUNICATIONS CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Title: Xxxxx X. Xxxxxxxxx
---------------------------------
Date: Senior V.P., General Counsel and
Secretary
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[Employee Matters Agreement]
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