EXHIBIT 10.4
EXECUTION COPY
EMPLOYMENT
AGREEMENT (“Agreement”) dated as of November 30,
2006 by and between GMAC LLC (the “Company”) and Sanjiv
Khattri (the “Executive”) (each a “Party”
and together, the “Parties”).
WHEREAS,
the Executive has been employed by General Motors Acceptance
Corporation (“GMAC”) as its Executive Vice President
& Chief Financial Officer;
WHEREAS,
a Purchase and Sale Agreement, dated as of April 2, 2006, was
entered into between FIM Holdings LLC (“Holdings”),
GMAC, General Motors Corporation, and the other parties thereto
(the “Purchase Agreement”);
WHEREAS,
prior to the Closing Date (as defined in the Purchase Agreement),
GMAC shall be converted into the Company;
WHEREAS,
the Parties desire the Executive to continue employment with the
Company upon the terms set forth herein.
Accordingly,
the Parties agree as follows:
1.
Employment and Acceptance . The Company shall employ the
Executive, and the Executive shall accept employment, subject to
the terms of this Agreement, on the Closing Date (the
“Effective Date”).
2.
Term . Subject to earlier termination pursuant to
Section 5 of this Agreement, this Agreement and the employment
relationship hereunder shall continue from the Effective Date until
December 31, 2011. As used in this Agreement, the
“Term” shall refer to the period beginning on the
Effective Date and ending on the earlier of
(i) December 31, 2011 or (ii) the date the
Executive’s employment terminates in accordance with
Section 5 below. In the event that the Executive’s
employment with the Company terminates, the Company’s
obligation to continue to pay, after the date of termination, Base
Salary (as defined below), Bonus (as defined below) and other
unaccrued benefits shall terminate except as may be provided for in
Section 5 below.
3.1
Title . The Company shall employ the Executive to render
exclusive and full-time services to the Company and its
subsidiaries. The Executive shall serve in the capacity of
Executive Vice President & Chief Financial Officer, and shall
report directly to the Board of Directors of the Company (the
“Board”) and the Chief Executive Officer of the
Company.
3.2
Duties . The Executive will have such authority and
responsibilities and will perform such executive duties customarily
performed by an Executive Vice President & Chief Financial
Officer, of a company in similar lines of business as the Company
and its subsidiaries or as may be reasonably assigned to the
Executive by the Board.
The Executive
will devote substantially all of his full working-time and
attention (other than due to physical or mental incapacity) to the
performance of such duties and to the promotion of the business and
interests of the Company and its subsidiaries. Provided that the
following activities do not materially interfere with the
Executive’s duties and responsibilities as Executive Vice
President & Chief Financial Officer (as determined by the
Company), the Executive may (i) with the prior written consent
of the Board (which shall not be unreasonably withheld), serve on
boards, committees and commissions of charitable organizations,
(ii) manage his personal investments, and (iii) with the
prior written consent of the Board (which shall not be unreasonably
withheld), serve on the boards of directors of other
companies.
4.
Compensation and Benefits by the Company . As compensation
for all services rendered pursuant to this Agreement, the Company
shall provide the Executive the following during the
Term:
4.1
Base Salary . The Company will pay to the Executive an
annualized base salary of not less than $700,000, payable in
accordance with the customary payroll practices of the Company
(“Base Salary”). The Base Salary shall be reviewed no
less frequently than annually for purposes of increase, such
increase, if any, to be determined in the sole discretion of the
Board or the compensation committee of the Board (the
“Compensation Committee”).
4.2
Retention Bonus . The Company will pay to the Executive a
retention bonus of $500,000 (the “Retention Bonus”),
payable in four (4) equal quarterly installments, the first of
which to occur three (3) months following the Effective Date,
subject to the Executive’s continued employment with the
Company on the date of each installment, except as set forth in
Section 5.2.
4.3
Bonuses . The Executive shall be eligible to receive an
annual bonus (“Bonus”) under a plan established by the
Company based upon achievement of performance targets and key
measures determined by the Board or the Compensation Committee. The
Executive’s target bonus shall be $900,000 (the “Target
Bonus”), with the actual amount of each Bonus being
determined by the Board or the Compensation Committee in accordance
with the applicable plan and formula.
4.4
Long-Term Incentive Compensation .
(a) Subject
to the terms of the Company’s Long-Term Phantom Interest Plan
(the “Phantom Interest Plan”) and an award agreement,
the Executive shall be granted on, or as soon as practicable
following, the Effective Date an award with an Award Percentage (as
defined in the Phantom Interest Plan) equal to 0.05% payable,
subject to the Executive’s continued employment with the
Company (except as set forth in Section 5.2 hereof), as soon
as practicable following the third anniversary of the date of grant
(the “Payment Date”). In addition, subject to his
continued employment with the Company (except as set forth in
Section 5.2 hereof), on the third anniversary of the date of
grant, or as soon as practicable thereafter, the Executive shall be
granted an additional award with an Award Percentage equal to 0.05%
payable, subject to the Executive’s continued employment with
the Company, as soon as practicable following the third anniversary
of the date of the grant of such award.
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(b) Subject
to the terms and conditions set forth on Exhibit A
attached hereto, the Amended and Restated Limited Liability Company
Operating Agreement of the Company, and the GMAC Management LLC
Class C Membership Interest Plan and award agreement, the
Executive shall be granted on, or as soon as practicable following,
the Effective Date, directly or indirectly, 0.20% of the
Class C Membership Interests of the Company.
4.5
Participation in Employee Benefit Plans . The Executive
shall be entitled, if and to the extent eligible, to participate in
all of the applicable benefit plans and perquisite programs of the
Company, which may be available to other senior executives of the
Company, on the same terms as such other executives. The Executive
shall be entitled to the same perquisites the Executive was
entitled to receive immediately prior to the Effective Date;
provided that such perquisites may be modified or
terminated to the same extent modified or terminated for other
senior executives of the Company. The Company may at any time or
from time to time amend, modify, suspend or terminate any employee
benefit plan, program or arrangement for any reason without the
Executive’s consent if such amendment, modification,
suspension or termination is consistent with the amendment,
modification, suspension or termination for other executives of the
Company.
4.6
Vacation . The Executive shall be entitled to four
(4) weeks of paid vacation. The Executive shall not be
entitled to payment for unused vacation days upon the termination
of his employment except as set forth in Section 5 below. The
carry-over and accrual of vacation days shall be in accordance with
Company policy.
4.7
Expense Reimbursement . The Executive shall be entitled to
receive reimbursement for all appropriate business expenses
incurred by him in connection with his duties under this Agreement
in accordance with the policies of the Company as in effect from
time to time.
5.
Termination of Employment .
5.1
By the Company for Cause or by the Executive Without Good Reason
or Due to Death or Disability . If: (i) the
Executive’s employment terminates due to his death;
(ii) the Company terminates the Executive’s employment
with the Company for Cause (as defined below); (iii) the
Company terminates the Executive’s employment with the
Company due to the Executive’s Disability (as defined below);
or (iv) the Executive terminates his employment without Good
Reason (as defined below) the Executive or the Executive’s
legal representatives (as appropriate), shall be entitled to
receive the following:
(a) the
Executive’s accrued but unpaid Base Salary to the date of
termination and any employee benefits that the Executive is
entitled to receive pursuant to the employee benefit plans of the
Company and its subsidiaries (other than any severance plans) in
accordance with the terms of such employee benefit
plans;
(b) the
unpaid portion of the Bonus, if any, relating to any calendar year
prior to the calendar year of the Executive’s death,
termination due to Disability, termination by the Company for Cause
or by the Executive without Good Reason, payable in accordance with
Section 4.3 above;
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(c) payment
for accrued unused vacation days, payable in accordance with
Company policy; and
(d) expenses
reimbursable under Section 4.6 above incurred but not yet
reimbursed to the Executive to the date of termination.
For
the purposes of this Agreement, “Disability” means a
determination by a licensed physician in accordance with applicable
law that as a result of a physical or mental injury or illness, the
Executive is unable to perform the essential functions of his job
with or without reasonable accommodation for a period of
(i) one hundred twenty (120) consecutive days or
(ii) one hundred eighty (180) days in any one
(1) year period (the “Disability Date”). Either
the Executive or the Company may request that a licensed physician
be selected. The licensed physician shall be mutually and
reasonably selected by the Company and the Executive (or his legal
representative); provided, that if a licensed physician is not
mutually selected within ten (10) business days following a
request for a licensed physician, the Company shall select a
licensed physician in good faith.
For
the purposes of this Agreement, “Cause” means, as
determined by the Board, (i) indictment of the Executive for a
felony; (ii) conduct by the Executive in connection with his
employment duties or responsibilities that is fraudulent or grossly
negligent, (iii) willful misconduct on an ongoing basis after
written notice from the Company or any of its subsidiaries to the
Executive, (iv) the Executive’s contravention of
specific written lawful directions related to a material duty or
responsibility which is directed to be undertaken from the Board or
the person to whom the Executive reports which is not cured within
20 days of the Executive’s receipt of written notice of
such contravention; (v) breach of the Executive’s
covenants set forth in Section 6 below; (vi) any acts of
dishonesty by the Executive resulting or intending to result in
personal gain or enrichment at the expense of the Company, its
subsidiaries or affiliates; or (vii) the Executive’s
continued failure to comply with a material policy of the Company,
its subsidiaries or affiliates after receiving notice from the
Board or the Chief Executive Officer of the Company of such failure
to comply. An act or failure to act shall not be
“willful” if the Executive reasonably believed that
such action or inaction was in the best interests of the Company. A
termination for “Cause” shall be effective immediately
(or on such other date set forth by the Board).
For
the purposes of this Agreement, “Good Reason” means,
without the Executive’s consent, (i) a reduction in Base
Salary or bonus; provided that , the Company may at
any time or from time to time amend, modify, suspend or terminate
any bonus, incentive compensation or other benefit plan or program
provided to the Executive for any reason and without the
Executive’s consent if such modification, suspension or
termination (x) is a result of the underperformance of the
Company under its business plan, (y) is consistent with an
“across the board” reduction for all senior executives
of the Company, and (z) is undertaken in the Board’s
reasonable business judgment acting in good faith and engaging in
fair dealing with the Executive, or (ii) a material diminution
in the Executive’s title, duties or responsibilities below a
level consistent with Executive’s performance and skill
level, as determined in good faith by the Board; provided
that , a suspension of the Executive and the requirement
that the Executive not report to work shall not constitute Good
Reason if the Executive continues to receive his compensation and
benefits. The Company shall have thirty (30) days after
receipt of notice from the Executive in writing specifying the
deficiency to cure the deficiency that would result in Good
Reason.
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5.2
By the Company Without Cause or by the Executive for Good
Reason . If during the Term, the Executive terminates his
employment for Good Reason, upon at least thirty (30) days
prior written notice to the Company, or the Company terminates the
Executive’s employment without Cause, and upon execution
without revocation of a valid release agreement substantially in
the form attached hereto as Exhibit B (except that the
Company shall, in its sole discretion, have the right to amend the
release agreement to take into account changes in law effective
subsequent to the Effective Date), the Executive shall receive the
following incremental severance payments set forth in this
Section 5.2 (in addition to the payments upon termination
specified in Section 5.1):
(a) continued
payment of any unpaid installments of the Retention Bonus, if any
(the sum of the unpaid installments, the “Unpaid Retention
Bonus”);
(b) an
amount equal to the excess of (x) the product of (1) the
Severance Multiplier (as defined below) multiplied by (2) the
Executive’s Base Salary over (y) the Unpaid Retention
Bonus, such amount payable in equal monthly installments on the
last business day of each month over a number of months following
such termination of employment equal to the Severance
Multiplier;
(c) (x) if
such termination occurs on or prior to June 30th, an amount
equal to the product of (1) the Severance Multiplier
multiplied by (2) the Severance Bonus Amount (as defined
below), payable in equal monthly installments on the last business
day of each month over a number of months following such
termination of employment equal to the Severance Multiplier or
(y) if such termination occurs following June 30th, an
amount equal to (1) the Severance Multiplier multiplied by
(2) the Severance Bonus Amount, payable as follows, (A) a
lump sum equal to such amount multiplied by a fraction, the
numerator of which is the number of full months following such
termination through the date such amounts are paid to similarly
situated employees (the “Lapsed Months”) and the
denominator of which is equal to the Severance Multiplier (such
fraction not to exceed one (1)) and (B) the remaining amount,
if any, payable in equal monthly installments for a number of
months equal to the Severance Multiplier minus the number of Lapsed
Months;
(d) a
pro rata bonus for the year of termination, calculated as the
product of (x) “Severance Bonus Amount” and (y) a
fraction, the numerator of which is the number of days in the
current calendar year through the date of termination and the
denominator of which is 365, payable in the calendar year following
the date of termination when bonuses are paid to similarly situated
employees;
(e) a
pro rata payment with respect to any award outstanding under the
Phantom Interest Plan equal to the amount that would have been
payable to the Executive for the performance period applicable to
such award (determined as of the end of such performance period)
multiplied by a fraction, the numerator of which is the number of
full months in the performance period that have lapsed prior to
such termination and the denominator of which is the number of
months in the performance period, payable at the end of such
performance period; and
(f) reimbursement
of the employer portion of the cost (consistent with the
Company’s policy for active employees) of continuation
coverage of group health coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985, as
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amended (“COBRA”) for a number of months
equal to the lesser of (x) the Severance Multiple and
(y) eighteen (18), to the extent the Executive elects such
continuation coverage and is eligible for such coverage and subject
to the terms of the plan and the law. Notwithstanding the
foregoing, the benefits provided under this Section 5.2(f)
shall cease when the Executive is covered under another group
health plan.
For
purposes of this Agreement, (x) the “Severance
Multiplier” shall equal the lesser of (A) two (2) and
(B) the quotient of (1) the number of full months
remaining in the Term divided by (2) twelve (12); provided
that in no event shall the Severance Multiplier be less than
.5 and (y) the “Severance Bonus Amount” shall
mean, in the event of a termination (i) on or prior to
June 30th of any calendar year, the Bonus paid to the
Executive for the calendar year prior to the termination or
(ii) after June 30th of any calendar year, the Bonus that
would have been payable to the Executive for the calendar year of
the termination (determined as of the end of such calendar year).
Notwithstanding the foregoing, the amount payable pursuant to the
sum of (b) and (c) above shall not be less than the
excess of (x) the product of the Severance Multiplier
multiplied by $800,000 over (y) the Unpaid Retention
Bonus.
The
Company shall have no obligation to provide the benefits set forth
above in the event that the Executive materially breaches the
provisions of Section 6.
5.3
Continued Employment Beyond the Expiration of the Term .
Unless the Parties otherwise agree in writing, continuation of the
Executive’s employment with the Company beyond the expiration
of the Term shall be deemed an employment at-will and shall not be
deemed to extend any of the provisions of this Agreement and the
Executive’s employment may thereafter be terminated at will
by either the Executive or the Company; provided that
the provisions of Sections 5.6, 6, 7, 8, 9.6, 9.11 and 9.12 of
this Agreement shall survive any termination of this Agreement or
the termination of the Executive’s employment
hereunder.
5.4
No Mitigation; No Offset . The Executive shall be under no
obligation to seek other employment after his termination of
employment with the Company and the obligations of the Company to
the Executive which arise upon the termination of his employment
pursuant to this Section 5 shall not be subject to mitigation
or offset.
5.5
Removal from any Boards and Position . If the
Executive’s employment is terminated for any reason under
this Agreement, he shall be deemed to resign (i) if a member,
from the Board or board of directors of any subsidiary of the
Company or any other board to which he has been appointed or
nominated by or on behalf of the Company and (ii) from any
position with the Company or any subsidiary of the Company,
including, but not limited to, as an officer of the Company and any
of its subsidiaries.
5.6
Nondisparagement . The Executive agrees that he will not at
any time (whether during or after the Term) publish or communicate
to any person or entity any Disparaging (as defined below) remarks,
comments or statements concerning the Company, its parent,
subsidiaries and affiliates, and their respective present and
former members, partners, directors, officers, shareholders,
employees, agents, attorneys, successors and assigns. The Company
agrees to instruct its executive officers and directors to refrain
from publishing or communicating to any person or entity any
Disparaging remarks, comments or statements concerning the
Executive at any time (whether during or after the Term),
provided that , nothing
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in this
Section 5.6 shall prevent the Company from (a) responding
in a truthful manner to inquiries regarding Executive’s
employment or the termination thereof, from investors, regulators,
the Company’s auditors or insurers, or as otherwise may be
required by applicable law, rules or regulations, or
(b) disclosing information concerning the Executive or the
termination of Executive’s employment to officers of the
Company or its affiliates who, at the discretion of the Company,
should know such information. “Disparaging” remarks,
comments or statements are those that impugn the character,
honesty, integrity or morality or business acumen or abilities in
connection with any aspect of the operation of business of the
individual or entity being disparaged.
6.
Restrictions and Obligations of the Executive .
6.1
Confidentiality . (a) During the course of the
Executive’s employment by the Company (prior to and during
the Term), the Executive has had and will have access to certain
trade secrets and confidential information relating to the Company
and its subsidiaries (the “Protected Parties”) which is
not readily available from sources outside the Company. The
confidential and proprietary information and, in any material
respect, trade secrets of the Protected Parties are among their
most valuable assets, including but not limited to, their customer,
supplier and vendor lists, databases, competitive strategies,
computer programs, frameworks, or models, their marketing programs,
their sales, financial, marketing, training and technical
information, their product development (and proprietary product
data) and any other information, whether communicated orally,
electronically, in writing or in other tangible forms concerning
how the Protected Parties create, develop, acquire or maintain
their products and marketing plans, target their potential
customers and operate their retail and other businesses. The
Protected Parties invested, and continue to invest, considerable
amounts of time and money in their process, technology, know-how,
obtaining and developing the goodwill of their customers, their
other external relationships, their data systems and data bases,
and all the information described above (hereinafter collectively
referred to as “Confidential Information”), and any
misappropriation or unauthorized disclosure of Confidential
Information in any form would irreparably harm the Protected
Parties. The Executive acknowledges that such Confidential
Information constitutes valuable, highly confidential, special and
unique property of the Protected Parties. The Executive shall hold
in a fiduciary capacity for the benefit of the Protected Parties
all Confidential Information relating to the Protected Parties and
their businesses, which shall have been obtained by the Executive
during the Executive’s employment by the Company or its
subsidiaries and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). The Executive shall not,
during the period the Executive is employed by the Company or its
subsidiaries or at any time thereafter, disclose any
Conf
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