Exhibit 10(f)
HE Holdings, Inc.
Executive Change in Control Severance Agreement
Agreement entered into this 9th day of January 1997 by and between HE Holdings,
Inc., a Delaware corporation (the "Company") and _______________ (the
"Executive").
The Board of Directors of General Motors Corporation is negotiating a change in
control of the ownership of the Company and desires to assure continuity of
management and the continued attention of the Executive to his duties without
any distraction arising out of the circumstances surrounding the change in
ownership.
WHEREAS, the Company and the Executive desire to enter into this Agreement on
the terms and conditions set forth below. For good and valuable consideration
and the mutual covenants set forth herein the parties hereto agree as follows:
1. Definitions. The following terms shall have the meaning set forth below
for purposes of this Agreement.
a. "Base Compensation" means (i) the annual rate of base salary of the
Executive as of the date of a Change in Control, plus the actual Annual
Incentive Plan bonus paid for performance in the calendar year
immediately preceding the date of a Change in Control.
b. "Cause" means the Executive's (i) conviction of, or plea of nolo
contendere to, a felony; (ii) use of illegal drugs; or (iii) willful
and intentional misconduct, willful neglect or gross negligence, in the
performance of the Executive's duties, which the Company reasonably
believes has caused a demonstrable and serious injury to the Company,
monetary or otherwise; provided, however, that such acts or events
shall constitute Cause only if the Executive is given written notice
that the Company intends to terminate his employment for Cause, which
notice shall specify the particular acts or failures to act on the
basis of which the decision to so terminate employment was made. In
the case of a termination for Cause as described in clause (iii) above,
the Executive shall be given the opportunity within 30 days of the
receipt of such notice to meet with the Company to defend such acts or
failures to act, prior to termination. The Company may suspend the
Executive's title and authority pending such meeting, and such
suspension shall not constitute "Good Reason", as otherwise defined in
this plan.
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c. "Change in Control" means during the Term the effective date of (a) a
change in ownership of the common stock of the Company, whether by
sale, merger, consolidation or reorganization pursuant to which General
Motors Corporation does not directly or indirectly own more than 50% of
the outstanding common stock, in value, of the Company or any successor
surviving entity, or (b) the sale or distribution of all or
substantially all of the assets of the Company to an unrelated entity
or entities or to an entity in which General Motors Corporation does
not directly or indirectly own more than 50% in value of the equity of
such entity.
d. "Code" means the Internal Revenue Code of 1986, as amended.
e. "Company" means HE Holdings, Inc. and its successors and assigns.
f. "Comparable Position" means a position of relatively equal or greater
scope of responsibility and authority, equal or greater base
compensation, equal or greater aggregate incentive compensation payout
targets, and equal or greater aggregate benefits and perquisites, as
constituted immediately prior to the Change in Control.
g. "Good Reason" means any of the following events occurring within three
(3) years following a Change in Control:
(i) without the Executive's written consent, (A) any reduction in the
amount of the Executive's annual salary, (B) any significant
reduction in the Executive's aggregate incentive compensation
opportunities, (C) any significant reduction in the aggregate
value of the Executive's benefits as in effect from time to time
(unless such reduction is pursuant to a general change in benefits
applicable to all similarly situated employees of the Company and
its affiliates), or (D) any material and willful breach by the
Company of a written employment agreement with the Executive;
(ii) a significant reduction, without the Executive's written consent,
in the Executive's duties or responsibilities, including, for
example, a significant diminution of the Executive's authority,
responsibility and reporting requirements from that immediately
prior to a Change in Control; or
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(iii) without the Executive's written consent, a transfer of the
Executive's principal place of employment to a location more than
50 miles from the Executive's place of employment immediately
prior to the Change in Control, provided that the distance
between the new principal place of employment and the Executive's
primary residence is greater than 10 miles from the distance
between the principal place of employment prior to such transfer
and the Executive's primary residence immediately prior to the
Change in Control.
Notwithstanding the above, the occurrence of any of the events
described in (i), (ii) or (iii) above will not constitute Good
Reason unless the Executive gives the Company written notice,
within 30 calendar days after the Executive knew or should have
known of the occurrence of any of the events described in (i),
(ii) or (iii) above, that such event constitutes Good Reason, and
the Company thereafter fails to cure the event within thirty (30)
days after receipt of such notice.
h. "Term" means the period commencing on the date of this Agreement and
continuing for three years.
i. "Severance Compensation" means [two] [three] times Base Compensation.
2. Accrued Compensation and Severance Benefits.
2.1 Involuntary Termination. In the event within three (3) years following a
Change in Control (i) the Executive's employment is terminated by the
Company without Cause or (ii) the Executive terminates his or her own
employment with the Company for Good Reason, and in each case the Executive
does not receive an offer of employment for a Comparable Position with
General Motors Corporation or its affiliates, the Executive shall be
entitled to severance compensation and other benefits as set forth in
Sections 2.2, 2.3 and 2.4 below.
2.2 Accrued Compensation. The accrued compensation to which the Executive is
entitled pursuant to Section 2.1 shall be as follows:
a. an amount equal to the Executive's unpaid annual base salary earned as
of the date of termination;
b. an amount equal to the Executive's unpaid targeted annual bonus
established for the fiscal period in which the Change in Control
occurs, multiplied by a fraction, the numerator of which is the number
of days elapsed in the current fiscal period to the date of
termination, and the denominator of which is 365; and
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c. an amount equal to the Executive's unpaid targeted long term incentive
plan payments under plans established up to and including the fiscal
period in which the Change in Control occurs, multiplied by a fraction
the numerator of which is the number of days elapsed from the beginning
of the plan period to the date of termination, and the denominator of
which is 1,095.
2.3 Amount of Severance Pay.
a. The amount of severance pay to which the Executive is entitled pursuant
to Section 2.1 shall be equal to the Severance Compensation less any
amounts paid or payable to the Executive under the Executive Retention
Agreement, if any, between the Company and Executive. Payment shall
be conditioned upon receipt of a written release by the Executive of
any claims against the Company or its subsidiaries, except those
arising under this Agreement or any other written plan or agreement,
which shall be specifically noted in such release. Payment shall be
made within ten (10) days following receipt of an effective written
release of any such claims. Such Severance Compensation shall be in
lieu of any other payments or benefits in the nature of severance pay
or benefits to which the Executive has received or will receive from
the Company or any of its affiliates (including without limitation,
payments under the Xxxxxx Electronics Employee Transition Plan or other
severance pay plan, or any severance agreements between the Company and
the Executive). Any other arrangement providing severance benefits
shall be deemed to be amended to eliminate any obligation for benefits
to be provided thereunder. If the Executive is entitled to any notice
or payment in lieu of any notice of termination of employment required
by Federal, state or local law, including but not limited to the Worker
Adjustment and Retraining Notification Act, the Severance Compensation
to which the Executive would otherwise be entitled under this Agreement
shall be reduced by the amount of any such payment, in lieu of notice.
b. There shall be no duplication of severance benefits in any manner. In
this regard, the Executive shall not be entitled to Severance
Compensation hereunder for more than one position with the Company and
its affiliates.
c. The Executive's Severance Compensation under this Agreement shall not
be reduced by the amount of any regular salary paid or payable by any
employer of the Executive. The Executive shall not be obligated to
secure new employment (except to the extent that a Comparable Position
is offered by General Motors Corporation or its affiliates), but shall
be obligated to report promptly to the Company any actual employment
obtained during the period for which employee benefits continue
pursuant to Section 2.4.
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2.4 Other Benefits.
a. The Executive shall be entitled to participate on the same basis as
active employees in the Company's group health, dental and life
insurance plans, or the Company shall make available comparable
benefits, (but not any other welfare benefit plans or any retirement
plans, except as described below) for a period of [two] [three] years
following a termination of employment described in Section 2.1, and
provided that the coverage provided under this Agreement is subject to
any limitations under the terms of any applicable contract with an
insurance carrier or third party administrator, except such coverage
shall expire if the Executive becomes eligible for coverage under a
plan of another employer. Nothing herein shall be deemed to restrict
the right of the Company from amending or terminating any such plan in
a manner generally applicable to similarly situated active employees of
the Company and its affiliates, in which event the Executive shall be
entitled to participate on the same basis (including payment of
applicable contributions) as similarly situated active executives of
the Company and its affiliates.
b. In determining the Executive's pension benefit under a Supplemental
Executive Retirement Plan (the "SERP"), the Executive shall be deemed
to have satisfied the age and service requirements for the "rule of 75"
early retirement benefit, such that when the executive would have
satisfied the "rule of 75" if he continued with the Company, he shall
be entitled to receive, between the Company qualified retirement plan
and the SERP, his full accrued benefit under each such plan as of the
date of his actual termination of employment, (the "Aggregate Accrued
Benefit"), without any actuarial reduction for early payment. In
addition, he shall be deemed eligible under the SERP for "COLA"
benefits with respect to his Aggregate Accrued Benefit, to be payable
from the SERP.
c. The Executive shall be entitled to reimbursement for actual payments
made for professional outplacement services, not to exceed $25,000.
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3. Excise Taxes.
a. Anything in this Agreement to the contrary notwithstanding and except
as set forth below, if it is determined that any payment or
distribution by the Company to or for the benefit of Executive (whether
paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 3) (a "Payment") would
be subject to the excise tax imposed by Section 4999 of the Code, or
any interest or penalties are incurred by Executive with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this paragraph
"a", if it is determined that Executive is entitled to a Gross-Up
Payment, but that Executive, after taking into account the Payments and
the Gross-Up Payment, would not receive a net after-tax benefit of at
least $50,000 (taking into account both income taxes and any Excise
Tax) as compared to the net after-tax proceeds to Executive resulting
from an elimination of the Gross-Up Payment and a reduction of the
payments, in the aggregate, to an amount (the "Reduced Amount") such
that the receipt of Payments would not give rise to any Excise Tax then
no Gross-Up Payment shall be made to Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.
b. Subject to the provisions of paragraph "a", all determinations required
to be made under this Section 3, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting firm
selected by the Company (the "Accounting Firm") which shall be retained
to provide detailed supporting calculations both to the Company and
Executive within 15 business days of the receipt of notice from
Executive that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 3, shall be paid by the Company to
Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at
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the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. If the
Company exhausts its remedies pursuant to paragraph "c" below and
Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive.
c. Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after
Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid or appealed. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on
which it gives such notice to the company (or such shorter period
ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim,
Executive shall:
(a) give the Company any information reasonably requested by the
Company relating to such claim
(b) take such action in connection with contesting such claims as the
Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(c) cooperate with the Company in good faith in order to effective
contest such claim, and
(d) permit the Company to participate in any proceedings relating to
such claim;
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provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties with respect thereto) imposed as
a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this paragraph "c",
the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and xxx for a refund or
to contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment to
Executive, on an interest-free basis, and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes
for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable
hereunder, and Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
d. If, after the receipt by Executive of an amount advanced by the Company
pursuant to paragraph "c" above, Executive becomes entitled to receive
any refund with respect to such claim, Executive shall (subject to the
Company's complying with the requirements of paragraph "c" above)
promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto).
If after the receipt by Executive of an amount advanced by the Company
pursuant to paragraph "c" above, a determination is made that Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
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4. Claims & Arbitration.
4.1 Arbitration of Claims. After exhausting administrative remedies provided
in applicable plans, if any, Executive shall settle by arbitration any
dispute or controversy arising in connection with this Agreement, whether
or not such dispute involves a plan subject to the Employee Retirement
Income Security of 1974, as amended ("ERAS"). Such arbitration shall be
conducted in accordance with the employment rules of the American
Arbitration Association before a panel of three arbitrators sitting in Los
Angeles, California. The award of the arbitrators shall be final and non-
applicable, and judgment may be entered on the award of the arbitrators in
any court having proper jurisdiction. All expenses of such arbitration
shall be borne by the Company in accordance with Section 4.2 hereof.4.2
Payment of Legal Fees and Costs. The Company agrees to pay as incurred, to
the full extent permitted by law, all legal fees and expenses which
Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company, Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement of
any guarantee of performance thereof (including as a result of any contest
by Executive about the amount of payment pursuant to this Agreement), plus
in each case interest on any delayed payment at the applicable federal rate
provided for in Section 7872 (f) (2) (A) of the Code.
4.3 Agent for Service of Legal Process. Service of legal process with respect
to a claim under this Agreement shall be made upon the General Counsel of
the Company.
5. Tax Withholding. All payments to the Executive under this Agreement will
be subject to the withholding of all applicable employment and income
taxes.
6. Employment Rights. This Agreement shall not confer upon the Executive any
right to the continuation of employment with the Company.
7. Severability. In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
8. Successors. This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of the Company. The Company will require
any successor to all or substantially all of the business and/or assets of
the Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform if no succession had taken place.
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9. Notices. Any notice required under this Agreement shall be in writing and
shall be delivered by certified mail return receipt requested to each of
the parties as follows:
To the Executive: ________________________
________________________
________________________
To the Company: HE Holdings, Inc.
Corporate Secretary
0000 Xxxxxx Xxxxxxx
Xxx Xxxxxxx, XX 00000
or to such other address as either party shall have furnished to the other
in writing in accordance herewith.
10. Governing Law. The provisions of this Agreement shall be construed in
accordance of the laws of the state of California, to the extent not
preempted by ERISA.
IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement
as of the date and year first above written.
________________________
Executive
HE Holdings, Inc.
________________________
By:
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