Document:

EX-10(GG) Service Agreement with JC Plant

Exhibit 10(gg)

DATED   17 April 1997

Lucas Limited

and

LucasVarity plc

and

JOHN CHARLES PLANT

SERVICE

AGREEMENT

 

CONTENTS

	 	 	 	 	 	 	 
	CLAUSE			
			PAGE
	 
	1.			Interpretation			1
	
	
	
	

	2.			
Appointment
			2
	
	
	
	

	3.			
Duties of Executive
			2
	
	
	
	

	4.			
Remuneration
			3
	
	
	
	

	5.			
Expenses
			3
	
	
	
	

	6.			
Pensions
			3
	
	
	
	

	7.			
Medical and Sickness
			3
	
	
	
	

	8.			
Holidays
			4
	
	
	
	

	9.			
Confidential Information
			4
	
	
	
	

	10.			
Intellectual Property
			4
	
	
	
	

	11.			
Gratuities and Codes of
Conduct
			5
	
	
	
	

	12.			
Termination of
Appointment
			5
	
	
	
	

	13.			
Protective Covenants
			7
	
	
	
	

	14.			
Compensation
			7
	
	
	
	

	15.			
General
			9
	
	
	
	

	16.			Notices
			10
	 
	First Schedule
			11
	 
	
Second Schedule – Protective
Covenants
			12
	 
	
Appendix to Second
Schedule
			15
	 
	
Third Schedule – Senior
Executive Share Ownership
Policy
			16

THIS AGREEMENT is executed as a deed on the 17th day of April, 1997

BETWEEN:

	(1)	 	Lucas Limited (registered number 872948) whose registered office is at
Stratford Road, Solihull, B90 4LA (the “Company”);
	 
	(2)	 	LucasVarity plc (registered number 3207774) whose registered office is
at 46 Park Street, London W1Y 4DJ (the “Parent”); and
	 
	(3)	 	JOHN CHARLES PLANT of “The Homestead” Peachfield Road, Malvern,
Worcestershire WR14 3LE (the “Executive”)

IT IS AGREED as follows:

	1.	 	INTERPRETATION
	 
	(1)	 	In this agreement:
	 
		 	“Associated Company” means:

	 	 	 
	(a)		
a company which is not a Subsidiary of the Parent but whose issued equity share capital
(as defined in section 744 of the Companies Act 1985) is owned as to at least 20 per cent by
the Parent or one of its Subsidiaries; and
	 
	(b)		
a Subsidiary of a company within (a) above;

	 

	 	 	“Board” means the board of directors of the Parent or the Company including any committee of
the board;
	 
	 	 	“Group” means the Parent and
its Subsidiaries and Associated Companies for the time being and
“Group Company” means any one of them;
	 
	 	 	“Recognised Investment Exchange” has the same meaning as in section 207 of the Financial
Services Act 1986;
	 
	 	 	“Subsidiary” means a subsidiary within the meaning of section 736 of the Companies Act 1985; and
	 
	 	 	“Working Day” means a day other than a Saturday, Sunday or bank or other public holiday in
England.
	 
	(2)	 	References in this agreement to a person include a body corporate and an unincorporated
association of persons and references to a company include any body corporate.
	 
	(3)	 	Any reference in this agreement to a statutory provision includes any statutory modification or
re-enactment of it for the time being in force.
	 
	(4)	 	Subclauses (1) to (3) above apply unless the contrary intention appears.

2

	(5)	 	The headings in this agreement do not affect its interpretation.
	 
	(6)	 	Where appropriate, references to the Executive include his personal representatives.
	 
	(7)	 	The terms set out in the First Schedule in accordance with the requirements of the Employment
Rights Act 1996 and in the Second Schedule in relation to confidentiality and other protective
covenants form part of this agreement.
	 
	2.	 	APPOINTMENT
	 
	 	 	The Company shall employ the Executive as Divisional Managing Director, Electrical & Electronic
Systems and the Executive shall serve the Company and the Group on the terms set out in this
agreement (the “Appointment"). The Appointment shall take effect from 6 September 1996.
	 
	3.	 	DUTIES OF EXECUTIVE
	 
	(1)	 	The Executive shall use his best endeavours to promote and protect the interests of the Group
and shall not do anything which is harmful to those interests.
	 
	(2)	 	The Executive shall diligently and faithfully perform such duties and exercise such powers as
may from time to time be assigned to or vested in him in relation to the conduct and management
of the affairs of the Group by the Board, provided that no such assignment or vesting of duties
or powers by the Board shall be valid or effective unless:

	 	 	 
	(a)		
the powers or duties in question are compatible with the Executive’s status; and
	 
	(b)		
the Executive shall be provided with as much work as is necessary to keep him as fully
occupied and engaged in the business and affairs of the Group as he is at the date of this
agreement.

	 	 	 
	(3)		
The Executive shall give to the Board such information regarding the affairs of the Group as it
shall require and shall comply with all proper instructions of the Board.
	 
	(4)		
The Executive shall (unless prevented by ill-health or accident or otherwise directed by the
Board) devote the whole of his time during normal business hours to the duties of the
Appointment and such additional time as is necessary for the proper fulfilment of those duties.

	 
	
(5)		
The Executive shall not accept any appointment to any office in relation to any body, whether
corporate or not, (other than a Group Company) or directly or indirectly be interested in any
manner in any other business except:

	 	 	 
	(a)		
as holder or beneficial owner (for investment purposes only) of any class of securities in
a company if those securities are listed or dealt in on a Recognised Investment Exchange and if
the Executive (together with his spouse, children, parents and parents’ issue) neither holds
nor is beneficially interested in more than five per cent of the securities of that class; or
	 
	(b)		
with the consent in writing of the Company which may be given subject to any terms or
conditions which the Company requires.

3

	(6)	 	The duties of the Appointment shall relate primarily to the United Kingdom at such places as
the Company may from time to time require but shall extend to occasional travel abroad when
required by the Company. The Executive shall not otherwise be required to work outside the
United Kingdom unless he agrees to do so. If the Executive’s principal place of work changes
and it is necessary for the Executive to relocate, the Company will pay the Executive’s
reasonable expenses in connection with the relocation.
	 
	4.	 	REMUNERATION
	 
	(1)	 	The Company shall pay to the Executive a salary at the rate per annum decided by the Board
or such higher salary as may from time to time be approved by the Board. The Company shall not
reduce the Executive’s salary without his prior written consent.
	 
	(2)	 	The Executive’s salary shall accrue from day to day and be payable by equal instalments in
arrears on the last day of every month and shall be inclusive of any fees receivable by the
Executive as a director of any Group Company.
	 
	(3)	 	The Company may also pay to the Executive such bonus (if any) as may be approved at the
absolute discretion of the Board for any financial year of the Company during the whole of
which the Executive has been employed by the Company. A pro-rated payment may, at the absolute
discretion of the Board, be made in respect of any financial year during which the Appointment
commences or is terminated.
	 
	(4)	 	In addition to the salary and any bonus payable under this clause, the Company and the
Executive may agree that the Executive will be entitled to additional benefits such as the
provision of a company car and/or the provision of medical expenses or other insurances.
	 
	5.	 	EXPENSES
	 
	 	 	The Company shall reimburse the Executive (on production of such evidence as it may reasonably
require) the amount of all travelling and other expenses properly and reasonably incurred by him
in the discharge of his duties.
	 
	6.	 	PENSIONS
	 
	 	 	The Company will make all payments necessary to enable the Executive and/or his dependant(s) to
receive in full all of the pension and other benefits payable under the pension arrangements
agreed between the Company and the Executive.
	 
	7.	 	MEDICAL AND SICKNESS
	 
	 	 	The Executive shall be paid in full during any period of absence from work due to sickness or
injury not exceeding 240 Working Days in any period of two years subject to the provisions of
clause 12 and to the production of satisfactory evidence from a registered medical practitioner
in respect of any period of absence in excess of 20 Working Days. The Executive’s salary
during any period of absence due to sickness or injury shall be inclusive of any statutory sick
pay to which he is entitled and the Company may deduct from his salary the amount of any social
security benefits he may be entitled to receive.

4

	8.	 	HOLIDAYS
	 
	(1)	 	In addition to any entitlement due under the rules of the Company applying to Long Service
Leave, the Executive shall be entitled to 26 Working Days’ holiday with pay in every calendar
year at times convenient to the Company.
	 
	(2)	 	Any entitlement to holiday remaining at the end of any calendar year shall lapse. The
entitlement to holiday accrues pro rata throughout each calendar year (disregarding fractions
of days).
	 
	9.	 	CONFIDENTIAL INFORMATION
	 
	 	 	The terms of the Second Schedule hereto shall apply to the Executive.
	 
	10.	 	INTELLECTUAL PROPERTY
	 
	(1)	 	In this clause “Intellectual Property Right” means a formula, process, invention, improvement,
utility model, trade mark, service mark, business name, copyright, design right, patent,
know-how, trade secret and any other intellectual property right of any nature whatsoever
throughout the world (whether registered or unregistered and including all applications and
rights to apply for the same) which:

	 	 	 
	(a)		
relates to or is useful in connection with the business or any product or service of a
Group Company; and
	 
	(b)		
is invented, developed, created or acquired by the Executive (whether alone or jointly with
any other person) during the period of the Apppointment.

	(2)	 	Subject to the provisions of the Patents Act 1977, the entire interest of the Executive in any
Intellectual Property Right shall, as between the Executive and the Company, become the
property of the Company as absolute owner without any payment to the Executive for it.
	 
	(3)	 	The Executive shall promptly communicate in confidence to the Company full particulars of any
Intellectual Property Right (whether or not it is vested in the Company pursuant to subclause
(2) above or otherwise) and the Executive shall not use, disclose to any person or exploit any
Intellectual Property Right belonging to the Company without the prior written consent of the
Company.
	 
	(4)	 	With respect to any Intellectual Property Right which is not vested in the Company pursuant to
subclause (2) above or otherwise, the Executive shall negotiate in good faith with the Company
with a view to the Company acquiring all the Executive’s right, title and interest in that
Intellectual Property Right and, unless the Company has declined in writing to negotiate or
acquire such Intellectual Property Right, the Executive shall not jeopardise the grant of any
registration in respect of that Intellectual Property Right by any public or non-confidential
disclosure for a period of three months from the date on which full particulars of it are
communicated to the Company.

5

	(5)	 	The Executive shall, at the request and expense of the Company, prepare and execute such
instruments and do such other acts and things as may be necessary or desirable to enable the
Company or its nominee to obtain protection of any Intellectual Property Right vested in the
Company in such parts of the world as may be specified by the Company or its nominee and to
enable the Company to exploit any Intellectual Property Right vested in the Company to best
advantage.
	 
	(6)	 	The Executive hereby irrevocably appoints the Company to be his attorney in his name and on his
behalf to sign, execute or do any instrument or thing and generally to use his name for the
purpose of giving to the Company or its nominee the full benefit of the provisions of this
clause and in favour of any third party a certificate in writing signed by any director or the
secretary
of the Company that any instrument or act falls within the authority conferred by this clause
shall be conclusive evidence that such is the case.
	 
	(7)	 	The Executive hereby waives all of his moral rights (as defined in the Copyright Designs and
Patents Act 1988) in respect of any act of the Company and any act of a third party done with
the Company’s authority in relation to any Intellectual Property Right which is or becomes the
property of the Company.
	 
	(8)	 	The obligations of the Executive under subclauses (2) to (6) above shall continue to apply
after the termination of the Appointment (whether terminated lawfully or not). Each of those
obligations is enforceable independently of each of the others and its validity shall not be
affected if any of the others is unenforceable to any extent.
	 
	11.	 	GRATUITIES AND CODES OF CONDUCT
	 
	(1)	 	The Executive shall not directly or indirectly accept any commission, rebate, discount or
gratuity, in cash or in kind, from any person who has or is likely to have a business
relationship with any Group Company.
	 
	(2)	 	The Executive shall comply with all codes of conduct from time to time adopted by the Board and
with all applicable rules and regulations of the London Stock Exchange and any other relevant
regulatory authority including (without limitation) the model code on directors’ dealings in
securities.
	 
	(3)	 	The Executive shall comply with the terms of the Parent’s Executive Share Ownership Policy as
amended from time to time. A copy of the Policy, current at the date of this agreement, is
attached as the Third Schedule hereto.
	 
	12.	 	TERMINATION OF APPOINTMENT
	 
	(1)	 	The Company may terminate the Appointment by giving to the other party at least two years’
notice in writing expiring at any time and the Executive may terminate the Appointment by
giving to the other party at least six months’ notice in writing expiring at any time.
	 
	(2)	 	If the Executive:

	 	 	 
	(a)		
becomes of unsound mind or is, or may be, suffering from mental disorder and either:

6

	 	 	 
	(i)		
he is admitted to hospital for treatment
under the Mental Health Act 1983; or
	 
	(ii)		
an order is made by any competent court for
his detention or for the appointment of a
receiver, curator bonis or other person to
exercise powers with respect to his property
or affairs; or

	 	 	 
	(b)		
is unable properly to perform his duties by reason of ill-health, accident or otherwise for
a consecutive period of 240 Working Days; or
	 
	(c)		
is guilty of any serious or repeated breach of his obligations under this agreement; or
	 
	(d)		
is guilty of serious midconduct which may reasonably and objectively be considered to be
prejudicial to the interests of the Company or the Group; or
	 
	(e)		
is convicted of a criminal offence as a result of which he is sentenced to a term of
imprisonment; or
	 
	(f)		
becomes bankrupt or makes any arrangement or composition with his creditors; or
	 
	(g)		
is disqualified from being a director of any company by reason of an order made by any
competent court; or
	 
	(h)		
resigns his directorship or fails or ceases to hold any requisite share qualification,

	 
	
the Company may (whether or not any notice of termination has been given under subclause (1)
above) by written notice to the Executive terminate the Appointment with immediate effect.

	(3)	 	During any period of notice of termination of the Appointment (whether or not such notice has
been given by the Company or the Executive) the Company may require the Executive to take any
holiday to which the Executive is entitled under clause 8 at such time or times as the Company
may decide.
	 
	(4)	 	On the termination of the Appointment in any way (whether lawfully or otherwise) the Executive
shall immediately:

	 	 	 
	(a)		
resign all offices held by him in any Group Company (without prejudice to the rights of any
party arising out of this agreement or the termination of the Appointment);
	 
	(b)		
return any company car and its keys to the Company at such place as it shall nominate for
the purpose; and
	 
	(c)		
deliver to the Company Secretary all property in his possession, custody or under his
control belonging to any Group Company including (but not limited to) business cards, credit
and charge cards, security and computer passes, original and copy documents or other media on
which information is held in his possession relating to the business or affairs of any Group
Company.

7

	(5)	 	If the Executive does not resign any office held by him in any Group Company when required to
do so under this agreement the Company is irrevocably authorised to appoint some person in his
name and on his behalf to do all such things and execute all such documents as may be necessary
for or incidental to giving effect to his resignation of that office.
	 
	(6)	 	With effect from the date of termination of the Appointment, all the rights and obligations of
the parties under this agreement shall cease except for those which are expressed to continue
after that date and except in relation to any breach of any provision of this agreement before
that date. Termination of the Appointment shall not prejudice any other rights of the
Company.
	 
	13.	 	PROTECTIVE COVENANTS
	 
	 	 	The terms of the Second Schedule hereto shall apply to the Executive.
	 
	14.	 	COMPENSATION
	 
	(1)	 	Without prejudice to any of the other provisions of this agreement the Company may at any time
without notice or with less notice than the notice that is required to terminate the
Appointment and if the Company does so:

	 	 	 
	(a)		
the Executive shall not for the purpose of mitigating his loss be required (and it is
hereby expressly declared and agreed that it would be unreasonable for the purpose)
to undertake any office, employment or occupation under which his status would be significantly
lower than that at the time of the termination of the Appointment; and
	 
	(b)		
in calculating the amount of damages to which the Executive shall be entitled in respect of
the termination of the Appointment, any amount paid or payable to the Executive under clause
4(3) in relation to the financial year immediately preceding that in which the Appointment
terminates shall be deemed to be included in the total amount of the Executive’s remuneration
at the date on which the Appointment terminates.

	(2)	 	If the Company terminates the Appointment (other than in accordance with clause 12) the Company
will pay to the Executive within five working days of the Appointment terminating a payment in
lieu of notice of a sum equivalent to two times where no notice is given by the Company or such
lower multiplier as is appropriate to take into account the unexpired period
of notice where notice has been given by either party under clause 12(1) above:

	 	 	 
	(a)		
the Executive’s gross basic annual salary; and
	 
	(b)		
a sum representing the gross annual value of all other remuneration or benefits the
Executive is entitled to receive from the Company other than bonuses payable under clause 4(3)
of this agreement and pension benefits (which are dealt with below) and the Company and the
Executive have agreed that the value of those benefits shall for the purpose of this clause be
15 per cent of the Executive’s basic salary on the date on which the Appointment terminates;

8

	 	 	 
	 
	(c)		
the gross amount as was paid or is payable to the Executive pursuant to clause 4(3) in
respect of the Company’s last financial year as compensation for the loss of bonuses and;
	 
	(d)		
a sum in respect of pension entitlement calculated in accordance with subclause (3) below.

	(3)	 	The sum payable under subclause (2) in respect of the Executive’s membership of a relevant
pension scheme is calculated as follows:

	 	 	 
	(a)		
In the case of each relevant pension scheme which is not a money purchase scheme, it is the
value of the amount by which the notional pension exceeds the actual pension. For this
purpose, the “actual pension” is the amount of the deferred pension from normal pension age
under the relevant pension scheme to which the Executive would be entitled at the termination
date. The “notional pension” is the amount of the deferred pension from the normal pension age
under the relevant pension scheme to which the Executive would be entitled if the Company had
terminated this agreement two years after the termination date or at the end of any unexpired
period of notice where notice has been given by either party under clause 12(1) above, but
calculating the deferred pension on the basis of the Executive’s final pensionable earnings at
the termination date. In each case, it is assumed that the Company complies with its
obligations under subclause (4) below and that (notwithstanding subclause (4)(a)) the Executive
has no entitlement to a pension before normal pension age. The value of the excess is
calculated by applying to the amount of the excess the factors used at the termination date by
the trustees or managers of the relevant pension scheme for the purpose of calculating the
capital value of a deferred pension for a member of the Executive’s gender and the Executive’s
age at the termination date. The “termination date” is the effective date of the termination
by the Company of this agreement.
	 
	(b)		
In the case of a relevant pension scheme which is a money purchase scheme, it is the total
of the contributions which the Company would have been obliged to make to the scheme in the two
years after the termination date or until the end of any unexpired period of notice where
notice has been given by either party under clause 12(1) above and the payments which the
Company would have been obliged to make in that period to the Executive to compensate him for
any additional tax or national insurance contributions payable by him as a result of the
contributions of the Company being chargeable to income tax as income of the Executive. For
this purpose, it is assumed that the Executive’s earnings do not increase after the termination
date.

	(4)	 	In addition to the payments under subclauses (2) and (3) above, if the Appointment is
terminated by the Company (other than in accordance with clause 12 above):

	 	 	 
	(a)		
The Company will give any necessary consent and use its best endeavours to procure that the
trustees or managers of any relevant pension scheme give their consent to:

	 	 	 
	(i)		
the payment of the pension due to the
Executive under the provisions of the scheme
(on the basis that those consents are
given), commencing at a date not earlier
than the Executive’s fiftieth birthday,
which is selected by the Executive; and

9

	 	 	 
	(ii)		
the exercise by the Executive of any option
available under the provisions of the scheme
in relation to that pension.

	 	 	 
	(b)		
In addition to any promised increase in the Executive’s pension, both in payment and, if
applicable, in deferment, under the provisions of a relevant pension scheme, the Company will
use its best endeavours to procure that from time to time the Executive’s pension is increased
at the same time and by not less than the same rate, and by reference to the same constituent
parts, as the other pensions in payment or deferred pensions, as the case may be, under the
scheme.
	 
	(c)		
The Company will pay any contribution which may be required by the trustees or managers of
the relevant pension scheme for the above purposes.

	(5)	 	In subclauses (3) and (4) above:

	 	 	 
	(a)		
“relevant pension scheme” means any pension scheme (whether approved or unapproved) to
which the Company is party under which the Executive has, or, on the assumption that the terms
of this agreement are performed by the Company, would have, an actual or prospective
entitlement to benefit at the date of the termination of the agreement;
	 
	(b)		
a relevant pension scheme is a money purchase scheme if the obligation of the Company to
contribute to it is solely to contribute a fixed amount or a fixed percentage of the
Executive’s salary (or some other definition of his earnings);
	 
	(c)		
references to the Executive’s pension, options and benefits include the pension, options
and benefits to which the Executive’s spouse and dependants are contingently entitled under the
relevant pension scheme and accordingly references to the Executive include them.

	(6)	 	The payments under this clause shall be subject to tax and the Company shall deduct tax from
the amounts to be paid to the Executive under subclauses 14(2)(a) to (c) above at the
Executive’s marginal rate of tax at the date the Appointment terminates.
	 
	(7)	 	Termination of the Appointment by the Company with the payments required under subclauses (2)
and (3) above and the consents under subclause (4) shall not be a termination in breach of this
agreement and the Company and the Executive agree that any payment made under this clause will
be in full and final settlement of all claims the Executive has against the Company and the
Group arising out of or in connection with the termination of the Appointment whether arising
under this agreement, any other agreement or contractual arrangement between the Executive and
the Company or any other Group Company or any statutory provision and the Executive shall have
no other claim against the Company or the Group.
	 
	15.	 	GENERAL
	 
	(1)	 	As from the effective date of the Appointment all other agreements or arrangements between the
Executive and any Group Company relating to the employment of the Executive shall cease to have
effect.
	 
	(2)	 	This agreement shall be governed by and construed in accordance with English law.

10

	16.	 	NOTICES
	 
	(1)	 	Any notice or other document to be served under this agreement may, in the case of the Company,
be delivered or sent by first class post or telex or facsimile process to the Company
at its registered office for the time being and, in the case of the Executive, may be delivered
to him or sent by first class post to his usual or last known place of residence.
	 
	(2)	 	Any such notice or other document shall be deemed to have been served:

	 	 	 
	(a)		
if delivered, at the time of delivery;
	 
	(b)		
if posted, at 10:00 a.m. on the second Working Day after it was put into the post; or
	 
	(c)		
if sent by telex or facsimile process, at the expiration of two hours after the time of
despatch, if despatched before 3:00 p.m. on any Working Day, and in any other case at 10:00
a.m. on the Working Day following the date of despatch.

	(3)	 	In proving such service it shall be sufficient to prove that delivery was made or that the
envelope containing such notice or other document was properly addressed and posted as a
pre-paid first class letter or that the telex or facsimile message was properly addressed and
despatched as the case may be. All references to time are references to UK time.

AS WITNESS this agreement is executed as a Deed by the Executive and duly
authorised representatives of the Company and the Parent on the date which
appears first on page 1.

	 	 	 	 	 	 	 
	THE COMMON SEAL			)
	of Lucas Limited was hereunto			)
	affixed in the presence of:			)
	 
	/s/ T. V. Voak
	

	Director
							[SEAL]
	/s/ A. J. Willis
	

	Secretary
	 
	THE COMMON SEAL			)
	of LucasVarity plc was			)
	hereunto affixed in the presence of:			)
	 
	/s/ Victor A. Rice
	

	Director
				
			[SEAL]
	/s/ A. J. Willis
	

	Secretary
	 
	SIGNED AND DELIVERED AS A			)
	DEED by			)
				
	 
							/s/ John C. PlantEX-10(HH) Agrmt Between LucasVarity & JC Plant

Exhibit 10(hh)

13 May 1998

Mr J C Plant

“The Homestead”

Peachfield Road

Malvern

Worcestershire

WR14 3LE

Dear John

I have pleasure in confirming the terms and conditions of your expatriate
assignment to the US effective 1 July 1998 as President, LucasVarity
Automotive. You will be based in Livonia and will report to me.

Many of the conditions contained in this letter are designed to assist you in
establishing yourself in the US and take account of cost factors involved in
transfer and resettlement.

	1.	 	Expatriate Assignment
	 
	 	 	Subject to satisfactory performance, it is the Company’s intention that your
expatriate assignment in the US shall be for a period of up to three years.
	 
	 	 	During your expatriate assignment you will remain an employee of the UK and
will enjoy the same terms and conditions of employment as though you were in
the UK except so far as these are modified by the assignment contract. The
period in the US will be treated as a period of continuous employment with
LucasVarity plc and Lucas Limited for both statutory and contractual
purposes and will count towards any service related entitlements, including
pension.
	 
	 	 	This expatriate assignment letter will be governed by (and construed in
accordance with) the laws of the UK and the Company and employee agree to
the exclusive jurisdiction of the UK courts.
	 
	 	 	During the expatriate assignment you will be under the day to day control of
Varity Automotive, Inc. and subject to their rules and regulations.
Additionally, you must abide by all the laws in the US.

 

	2.	 	Salary
	 
	 	 	Effective from the date of appointment your total assignment salary will be
$521,552 per annum, made up of a host country spendable portion of $375,824
and a home country portion of £89,404. A copy of the assignment build-up
calculation is attached.
	 
	 	 	The total assignment salary may be paid direct to you in the US or,
alternatively, you may choose to have a portion paid in the UK. From your
assignment salary you are expected personally to meet all your US income tax
liabilities, including those which arise from the payment of allowances and
any benefits in kind.
	 
	 	 	Your home base salary is $425,000 per year. This salary will be used as the
basis for calculation of EVA bonus, executive stock option grants, and UK
Pension Scheme entitlement.
	 
	 	 	Both salaries will be subject to review in February 1999 and thereafter in
line with Company policy.
	 
	3.	 	Incentive Bonus
	 
	 	 	Your EVA normative incentive bonus (ie assuming achievement of 100% of your
EVA target) will be 60% of your home base salary. Your EVA bonus
opportunity will be based 70% on LucasVarity Automotive performance and 30%
on Group performance. As you know, the bonus programme has no upside limit
in the event that you exceed your assigned EVA target.
	 
	4.	 	Foreign Service Incentive
	 
	 	 	In recognition of your undertaking this foreign service assignment you will
receive an incentive payment of 10% of home base salary. This amount has
been included in your assignment salary and will be paid as part of your
monthly salary.
	 
	5.	 	Goods and Services Differential
	 
	 	 	A goods and services differential will be paid to compensate you for the
higher cost of goods and services in Michigan compared to the UK. The
differential is calculated by multiplying a goods and services (or cost of
living) index by the amount that someone at your income level and family
size would spend on goods and services in the UK. An index less than 100
indicates that goods and services in this location are less expensive than
in the UK. An index higher than 100 indicates that costs are higher. At
present the goods and services index for a UK national assigned to Michigan
is 109.2 and this differential has been reflected in your assignment salary
and will be paid as part of your monthly salary.

 

	6.	 	Company Pension
	 
	 	 	For the period of your expatriate assignment to the US, you will continue as
a member of the Lucas Pension Scheme for such time as the UK tax authorities
will allow (currently this is at least 10
years).
	 
	7.	 	Social Security
	 
	 	 	Application will be made for you to remain in the UK Social Security Scheme
under the terms of the Social Security agreement between the UK and the US.
The specific terms of the agreement will be explained to you. Once agreed
by the UK Social Security authorities, a certificate of continuing liability
to the UK scheme will be issued, which will maintain your benefit
entitlements on return. Your assignment salary has been calculated to cover
the cost of UK Social Security contributions.
	 
	8.	 	Personal Accident Insurance
	 
	 	 	During your expatriate assignment you will be covered under your home
country scheme in accordance with the rules.
	 
	9.	 	Executive Share Option Scheme
	 
	 	 	You will continue to be eligible for participation in the LucasVarity
Executive Share Option Scheme.
	 
	10.	 	Payroll Arrangements
	 
	 	 	While in the US your payroll manager will be Ann Marie Odrobina, Manager,
Payroll and Benefits, Buffalo, New York. The Company will make arrangements
to make deductions to meet your UK commitment regarding pension, social
security, etc. Ann Marie’s contact numbers are 716 888 8011 (telephone) and
716 888 8090 (fax).
	 
	 	 	Your UK payroll manager will be Cindy Taylor, Corporate Payroll, Birmingham
Business Park. Cindy’s contact numbers are 0121 627 1322 (telephone) and
0121 627 1350 (fax).
	 
	11.	 	Medical Examination
	 
	 	 	Before taking up your expatriate assignment, you are required to undergo a
medical examination. In addition, please ensure that you have had recent
dental and vision check ups as appropriate and, wherever possible,
undertaken any treatment prior to departure.

 

	12.	 	Health Expenses
	 
	 	 	You will become a member of the Company’s US medical insurance scheme. Full
details will be provided by David Birtwistle. Your assignment salary is
intended to cover the cost of non-prescribed items, minor treatment and
routine medical expenses.
	 
	13.	 	Disturbance Allowance
	 
	 	 	A one-off allowance of 1/12th of your home base salary will be given to
assist with disturbance costs and resettlement expenses. LucasVarity will
assume any tax liability arising from this payment.
	 
	14.	 	Electrical Allowance
	 
	 	 	A one-off allowance of $2,150 will be given to assist you with the purchase
of electrical appliances that operate on US electricity supply. LucasVarity
will assume any tax liability arising from this payment.
	 
	15.	 	Temporary Accommodation
	 
	 	 	Hotel and reasonable out of pocket expenses in the US will be paid by the
Company for a period not exceeding thirteen weeks while permanent
accommodation is being secured. Any extension to this period will be at my
discretion. LucasVarity will assume any tax liability arising from these
payments.
	 
	16.	 	UK Permanent Residence
	 
	 	 	Due to the fluctuation in housing prices, the uncertainty of mortgage
interest rates and the
non-liquid nature of real estate, LucasVarity encourages you to maintain
your current permanent UK residence. The Company will provide assistance
with your assignment location housing costs.
All costs associated with your current permanent residence will remain your
responsibility.
	 
	 	 	If you choose to sell your residence, expenses associated with the sale,
excluding improvements or required maintenance, are reimbursable by the
Company. Since we expect assignees to continue contributing to their
housing expense, if you sell your home the Company paid housing allowance at
your assignment location will be reduced by your current monthly housing
costs, which include mortgage principal and interest, taxes and insurance.

 

	17.	 	US Accommodation
	 
	 	 	For the duration of your assignment, LucasVarity will provide you with
assistance in obtaining housing in or near Livonia. For house hunting
purposes in the Livonia area, the maximum Company paid allowance, including
utilities, will be US$6,000 per month. As noted previously, if you choose
to sell your UK permanent residence, this US$6,000 per month allowance will
be reduced. LucasVarity will assume any tax liability arising from this
allowance.
	 
	18.	 	Removal Expenses
	 
	 	 	The Company will pay the expenses involved, including insurance, in
transporting by sea freight an approved consignment of up to 260 cubic feet
(for furnished accommodation) or 1000 cubic feet (for unfurnished
accommodation) of personal property which you may wish to take with you.
	 
	 	 	You are expected to comply with the laws and customs regulations of the US.
The selected removal company will provide information on this.
	 
	 	 	Schedules of effects for transfer abroad, listing each item and its value,
should be submitted to
Alyson Fell, Compensation & Benefits Analyst, Birmingham Business Park, to
obtain the necessary transit insurance. Alyson’s contact numbers are 0121
627 1331 (telephone) and 0121 627 1350
(fax).
	 
	19.	 	Education Assistance
	 
	 	 	The Company will pay the excess costs necessary to obtain suitable education
for your children in the US, over and above the cost of equivalent UK
education, subject to a maximum level of assistance of 50% of the US costs.
LucasVarity will assume any tax liability arising from these payments.
	 
	20.	 	Car
	 
	 	 	LucasVarity will provide you with a monthly car allowance of $850 per month
during your assignment. The monthly car allowance is considered ordinary
income for tax purposes and is not subject to tax equalisation. Taxes which
become due on these payments will be your responsibility.
	 
	21.	 	Hours of Work
	 
	 	 	Your hours of work will be in line with local
practice.

	22.	 	Leave
	 
	 	 	Your annual leave entitlement will remain 25 days. You will also be
entitled to customary public holidays.
	 
	23.	 	Travel
	 
	 	 	The Company will pay the air fares and approved travelling expenses for you
and your family for the journey to the US. You will be entitled to travel
in accordance with the Group Travel Policy.
	 
	 	 	For each year of expatriate assignment, you will be allowed one return trip
to the UK for you and your family at business class. Alternatively, you may
choose to have two return trips at economy class.
	 
	 	 	LucasVarity will assume any tax liability arising from these payments.
	 
	24.	 	Taxation Counselling
	 
	 	 	The Company will pay for taxation counselling from Arthur Andersen and Co. as
detailed below. This service is in respect of income arising as a direct
result of your LucasVarity employment and will not cover other sources of
income you may have. It will cover:

	 	 	 
	–		
a review of information on your personal tax position in
the UK, and in the US, at the start of the period of assignment
	 
	–		
the completion of tax returns required in the US
	 
	–		
a review of the position at the end of the period in the US, and on arrival in the UK

	 	 	Andrew Hodges at Arthur Andersen, Birmingham, UK will be your contact.
	 
	25.	 	Financial Counselling
	 
	 	 	You will be provided with an annual allowance of $5,000 in respect of
financial counselling. This will enable you, if you wish, to utilise the
services of a professional adviser in respect of your personal finances.
This allowance will be paid monthly.

 

	26.	 	Visa
	 
	 	 	This appointment is subject to obtaining the appropriate visa/work permit in
line with US Immigration law. Supporting documentation and advice will be
provided by Ruth McManus, Manager, Management Resourcing, Buffalo, New York.
Ruth’s contact numbers are 716 888 8008 (telephone) and 716 888 8066 (fax).
	 
	27.	 	Change of Circumstances
	 
	 	 	Your expatriate contract will be reviewed during your initial expatriate
assignment, at which time your personal circumstances and Company
requirements will be considered to determine your future employment
situation.
	 
	 	 	Should it be mutually agreed that your assignment will extend beyond three
years, it may be necessary to revise certain of these conditions to reflect
any changes in applicable legislation and Company policy provisions.
	 
	 	 	If it is mutually agreed that you will continue as an employee in the US for
an indeterminate period, these assignment conditions may cease to apply and
you may transfer to appropriate local conditions of employment. This will
mean that you will be treated under local terms and conditions regarding
salary, pension, social security and any other benefits.
	 
	 	 	Should it be necessary to terminate your expatriate assignment for business
reasons, as opposed to individual performance issues, the repatriation
policy will apply.
	 
	28.	 	Repatriation
	 
	 	 	Upon expiry of your expatriate assignment, the Company will repatriate you
to the UK.
	 
	 	 	You will be granted casual leave as necessary for travel to, and
resettlement in, the UK. The Company will pay the cost of transporting an
approved consignment of personal property back to the UK. Your payroll
transfer date will be determined by your agreed departure date from the US.

Please confirm your acceptance of the above by signing and returning one copy
of this letter to me.

Yours sincerely,

/s/ J. A. Gilroy

J A Gilroy

Chief Operating Officer

cc: J.H. Chandler

 

I confirm my acceptance of the above expatriate terms and conditions.

	 	 	 	 	 	 
	Signed		/s/ J. C. Plant
			
	

J C Plant

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