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EXHIBIT 10.3
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement")
dated as of November 30, 2006 by and between GMAC LLC (the
"Company") and William Muir (the "Executive") (each a "Party" and
together, the "Parties").
WHEREAS, the Executive has been
employed by General Motors Acceptance Corporation ("GMAC") as
President, GMAC and Chairman, GMAC Insurance Group;
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. Duties and Title
.
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
President, 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 a President 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 President (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 $850,000, 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 $700,000 (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 $1,150,000 (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 0.075% 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 0.075% 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.
(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
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agreement, the Executive shall be granted on, or as soon as
practicable following, the Effective Date, directly or indirectly,
0.30% 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 five
(5) 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;
(c) payment
for accrued unused vacation days, payable in accordance with
Company policy; and
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(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.
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
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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 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
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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 $1 million 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 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,
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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 Confidential Information, directly or
indirectly, to any person or entity for any reason or purpose
whatsoever, no
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