CHANGE IN CONTROL AGREEMENT
Exhibit 10.48
THIS AGREEMENT,
dated ,
2008, is made by and between Delphi Corporation, a Delaware
corporation (the “Company”), and Xxxxxx X’Xxxx
(the “Executive”).
WHEREAS, the Company considers it to be in the best interests of
its stockholders to continue the employment of the
Executive; and
WHEREAS, the Board recognizes that the possibility of a Change
in Control exists and that such possibility, and the uncertainty
and questions which it may raise among the Company’s senior
executives, may result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce and encourage the continued attention and
dedication of the Company’s senior executives, including
the Executive, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from
the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby
agree as follows:
1. Defined Terms. The definitions of
capitalized terms used in this Agreement are provided in the
last Section hereof to the extent not otherwise defined herein.
2. Term of Agreement. The Term of this
Agreement shall commence on the consummation of the
Company’s Plan of Reorganization under Chapter 11 of
the United States Bankruptcy Code and shall continue in effect
through December 31, 2009; provided, however, that
commencing on January 1, 2009 and each January 1
thereafter, the Term shall automatically be extended for one
additional year unless, not later than September 30 of the
preceding year, the Company or the Executive shall have given
notice not to extend the Term; and further provided, however,
that if a Change in Control shall have occurred during the Term,
the Term shall expire no earlier than twenty-four
(24) months beyond the month in which such Change in
Control occurred.
3. Compensation Other Than Severance Payments
3.1 Following a Change in Control and during the Term,
during any period that the Executive fails to perform the
Executive’s full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company
shall pay the Executive’s full salary to the Executive at
the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such
period (other than any disability plan), until the
Executive’s employment is terminated by the Company for
Disability.
3.2 If the Executive’s employment shall be terminated
for any reason following a Change in Control and during the
Term, the Company shall pay the Executive’s full salary to
the Executive through the Date of Termination at the rate in
effect immediately prior to the Date of Termination or, if
higher, the rate in effect immediately prior to the first
occurrence of an event or circumstance constituting Good Reason,
together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of the
Company’s compensation and benefit plans, programs or
arrangements as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.
3.3 If the Executive’s employment shall be terminated
for any reason following a Change in Control and during the
Term, the Company shall pay to the Executive the
Executive’s normal post-termination compensation and
benefits as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in
accordance with, the Company’s retirement, insurance and
other compensation or benefit plans, programs and arrangements
as in effect immediately prior to the Date of Termination or, if
more favorable to the Executive, as in effect immediately prior
to the occurrence of the first event or circumstance
constituting Good
Reason. Without limiting the generality of the foregoing and
notwithstanding anything in Section 4, below, to the
contrary, during the Term and upon the Executive’s
termination of employment for any reason following a Change in
Control and during the Term, the Executive shall be entitled to
participate in the DB SERP in accordance with its terms as
in effect on the date hereof, without regard to any amendment or
termination of the DB SERP after the date hereof.
4. Severance Payments Upon Termination of Employment
Following a Change in Control.
4.1 Subject to Section 4.2 hereof, if the
Executive’s employment is terminated during the Term
following a Change in Control, other than (a) by the
Company for Cause, (b) by reason of death or Disability, or
(c) by the Executive without Good Reason, then, the Company
shall pay the Executive the amounts, and provide the Executive
the benefits, described in this Section 4.1
(“Severance Payments”) and Section 4.2, in
addition to any payments and benefits to which the Executive is
entitled under Section 3 hereof. For all purposes of this
Agreement, the Executive’s employment shall be deemed to
have been terminated following a Change in Control by the
Company without Cause or by the Executive with Good Reason, if
(i) the Executive’s employment is terminated by the
Company without Cause prior to a Change in Control and such
termination was at the request or direction of a Person who has
entered into an agreement with the Company the consummation of
which would constitute a Change in Control, (ii) the
Executive terminates his employment for Good Reason prior to a
Change in Control and the circumstance or event which
constitutes Good Reason occurs at the request or direction of
such Person, or (iii) the Executive’s employment is
terminated by the Company without Cause or by the Executive for
Good Reason and such termination or the circumstance or event
which constitutes Good Reason is otherwise in connection with or
in anticipation of a Change in Control (provided, however, that
such Change in Control referred to in clause (i),
(ii) or (iii), as applicable, actually occurs).
Notwithstanding the foregoing, payment of all amounts payable
under this Section 4.1 shall be delayed, if necessary,
until the Executive has incurred a separation from service under
Code Section 409A.
(A) In lieu of any further salary payments to the Executive
for periods subsequent to the Date of Termination and in lieu of
any severance benefit otherwise payable to the Executive, the
Company shall pay to the Executive a lump sum severance payment,
in cash, equal to three (3) times the sum of (i) the
Executive’s base salary as in effect immediately prior to
the Date of Termination or, if higher, in effect immediately
prior to the first occurrence of an event or circumstance
constituting Good Reason or at any time during the one
(1) year period ending as of the Date of Termination, and
(ii) the Executive’s target annual incentive
compensation under any incentive plan maintained by the Company
in respect of the fiscal year in which occurs the Date of
Termination or, if higher, the fiscal year in which occurs the
first event or circumstance constituting Good Reason (in each
case determined without regard to any reduction in base salary
which occurred during the one (1) year period ending as of
the Date of Termination). Notwithstanding anything to the
contrary, if the Change in Control event does not constitute a
change in ownership or effective control of the Company or a
change in ownership of a substantial portion of the assets of
the Company under Code Section 409A, then an amount equal
to the amount that would have been paid under the
Executive’s Employment Agreement upon a termination other
than for cause (as defined in the Employment Agreement) or by
the Executive for good reason (as defined in the Employment
Agreement) had a Change in Control not occurred, shall be paid
in installments for an eighteen (18) month period
commencing on the first day of the month next following the Date
of Termination and the remaining amounts payable under this
clause (A) shall be paid in lump sum.
(B) For the thirty-six (36) month period immediately
following the Date of Termination, the Company shall arrange to
provide the Executive and his dependents life, accident and
health insurance benefits substantially similar to those
provided to the Executive and his dependents immediately prior
to the Date of Termination or, if more favorable to the
Executive, those provided to the Executive and his dependents
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, at no greater after-tax
cost to the Executive than the after-tax cost to the Executive
immediately prior to such date or occurrence. Benefits otherwise
receivable by the Executive pursuant to this Section 4.1(B)
shall be reduced to the extent benefits of the same type are
received by or made available to the Executive during the
thirty-six (36) month period following the Executive’s
termination of employment (and any such benefits received by or
made available to the Executive shall be reported to the Company
by the Executive); provided, however, that the Company
shall reimburse the Executive for the excess, if any, of the
after-tax cost of such benefits to the Executive over such cost
immediately prior to the Date of
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Termination or, if more favorable to the Executive, the first
occurrence of an event or circumstance constituting Good Reason.
If the Severance Payments shall be decreased pursuant to
Section 4.2 hereof, and the Section 4.1(B) benefits
which remain payable after the application of Section 4.2
hereof are thereafter reduced pursuant to the immediately
preceding sentence, the Company shall, no later than five
(5) business days following such reduction, pay to the
Executive the least of (i) the amount of the decrease made
in the Severance Payments pursuant to Section 4.2 hereof,
(ii) the amount of the subsequent reduction in these
Section 4.1(B) benefits, or (iii) the maximum amount
which can be paid to the Executive without being, or causing any
other payment to be, nondeductible by reason of
section 280G of the Code.
(C) Notwithstanding any provision of any annual or long
term cash incentive plan to the contrary, the Company shall pay
to the Executive a lump sum amount, in cash, equal to the sum of
(i) any unpaid incentive compensation which has been
allocated or awarded to the Executive for a completed fiscal
year or other measuring period preceding the Date of Termination
under any such plan and which, as of the Date of Termination, is
contingent only upon the continued employment of the Executive
to a subsequent date and (ii) a pro rata portion to the
Date of Termination of the aggregate value of all contingent,
cash incentive compensation awards to the Executive for all then
uncompleted periods under any such plan, calculated as to each
such award by multiplying the award that the Executive would
have earned on the last day of the performance award period,
assuming the achievement, at the target level, of the individual
and corporate performance goals established with respect to such
award, by the fraction obtained by dividing the number of full
months and any fractional portion of a month during such
performance award period through the Date of Termination by the
total number of months contained in such performance award
period.
(D) In addition to the benefits to which the Executive is
entitled under each DC Pension Plan, the Company shall pay the
Executive a lump sum amount, in cash, equal to the amount that
would have been contributed thereto or allocated thereunder by
the Company on the Executive’s behalf in respect of the
three (3) years immediately following the Date of
Termination, determined (i) as if the Executive made the
maximum permissible contributions thereto during such period,
(ii) as if the Executive earned compensation during such
period at a rate equal to the Executive’s compensation (as
defined in the DC Pension Plan) during the twelve
(12) months immediately preceding the Date of Termination
or, if higher, during the twelve (12) months immediately
prior to the first occurrence of an event or circumstance
constituting Good Reason determined, in each case, without
regard to any reduction in base salary during such twelve
(12) month period, and (iii) without regard to any
amendment to the DC Pension Plan made subsequent to a Change in
Control, which amendment adversely affects in any manner the
computation of benefits thereunder.
(E) The Company shall provide the Executive with reasonable
outplacement services suitable to the Executive’s position
for a period of one year or, if earlier, until the first
acceptance by the Executive of an offer of employment.
4.2 (A) Whether or not the Executive becomes entitled
to the Severance Payments, if any payment or benefit received or
to be received by the Executive (including any payment or
benefit received or to be received in connection with a Change
in Control or the termination of the Executive’s
employment, whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement) (all such payments and
benefits, excluding the
Gross-Up
Payment, being hereinafter referred to as the “Total
Payments”) will be subject (in whole or part) to the Excise
Tax, then, subject to the provisions of subsection (B) of
this Section 4.2, the Company shall pay to the Executive an
additional amount (the
“Gross-Up
Payment”) such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income and employment
taxes and Excise Tax upon the
Gross-Up
Payment, and after taking into account the phase out of itemized
deductions and personal exemptions attributable to the
Gross-Up
Payment, shall be equal to the Total Payments. For purposes of
determining the amount of the
Gross-Up
Payment, the Executive shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in
the calendar year in which the
Gross-Up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of
the Executive’s residence on the Date of Termination (or if
there is no Date of Termination, then the date on which the
Gross-up
Payment is calculated for purposes of this Section 4.2),
net of the maximum reduction in federal income tax which could
be obtained from deduction of such state and local taxes.
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(B) In the event that, after giving effect to any
redeterminations described in subsection (D) of this
Section 4.2, the aggregate Total Payments do not equal or
exceed 110% of the Safe Harbor Amount (as defined below), then
subsection (A) of this Section 4.2 shall not apply and
the cash Severance Payments shall first be reduced (if
necessary, to zero), and the noncash Severance Benefits shall
thereafter be reduced (if necessary, to zero) to the extent
necessary so that no portion of the Total Payments is subject to
the Excise Tax; provided, however, that the Executive may
elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance
Payments. “Safe Harbor Amount” means the greatest
pre-tax amount of Total Payments that could be paid to the
Executive without causing the Executive to become liable for any
Excise Tax in connection therewith.
(C) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (i) all of the Total Payments shall be
treated as “parachute payments” within the meaning of
section 280G(b)(2) of the Code, unless in the opinion of
tax counsel (“Tax Counsel”) reasonably acceptable to
the Executive and selected by the accounting firm which was,
immediately prior to the Change in Control, the Company’s
independent auditor (the “Auditor”), such other
payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of
section 280G(b)(4)(A) of the Code, (ii) all
“excess parachute payments” within the meaning of
section 280G(b)(l) of the Code shall be treated as subject
to the Excise Tax unless, in the opinion of Tax Counsel, such
excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered, within
the meaning of section 280G(b)(4)(B) of the Code, in excess
of the Base Amount allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax, and (iii) the
value of any noncash benefits or any deferred payment or benefit
shall be determined by the Auditor in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.
Prior to the payment date set forth in Section 4.3 hereof,
the Company shall provide the Executive with its calculation of
the amounts referred to in this Section 4.2(C) and such
supporting materials as are reasonably necessary for the
Executive to evaluate the Company’s calculations. If the
Executive disputes the Company’s calculations (in whole or
in part), the reasonable opinion of Tax Counsel with respect to
the matter in dispute shall prevail.
(D) In the event that (i) amounts are paid to the
Executive pursuant to subsection (A) of this
Section 4.2, (ii) the Excise Tax is finally determined
to be less than the amount taken into account hereunder in
calculating the
Gross-Up
Payment, and (iii) after giving effect to such
redetermination, the Severance Payments are to be reduced
pursuant to subsection (B) of this Section 4.2, the
Executive shall repay to the Company, within five
(5) business days following the time that the amount of
such reduction in Excise Tax is finally determined, the portion
of the
Gross-Up
Payment attributable to such reduction (plus that portion of the
Gross-Up
Payment attributable to the Excise Tax and federal, state and
local income and employment taxes imposed on the
Gross-Up
Payment being repaid by the Executive), to the extent that such
repayment results in (i) no portion of the Total Payments
being subject to the Excise Tax and (ii) a
dollar-for-dollar reduction in the Executive’s taxable
income and wages for purposes of federal, state and local income
and employment taxes) plus interest on the amount of such
repayment at 120% of the rate provided in
section 1274(b)(2)(B) of the Code. In the event that
(x) the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of the
Executive’s employment (including by reason of any payment
the existence or amount of which cannot be determined at the
time of the
Gross-Up
Payment) and (y) after giving effect to such
redetermination, the Severance Payments should not have been
reduced pursuant to subsection (B) of this
Section 4.2, the Company shall make an additional
Gross-Up
Payment in respect of such excess and in respect of any portion
of the Excise Tax with respect to which the Company had not
previously made a
Gross-Up
Payment (plus any interest, penalties or additions payable by
the Executive with respect to such excess and such portion)
within five (5) business days following the time that the
amount of such excess is finally determined.
4.3 The payments provided in subsections (A), (C) and
(D) of Section 4.1 hereof and in Section 4.2
hereof shall be made not later than the fifth business day
following the Date of Termination (or if there is no Date of
Termination, then the date on which the
Gross-Up
Payment is calculated for purposes of Section 4.2 hereof);
provided, however, that in no event shall payments be
made later than the end of the Executive’s taxable year
following the taxable year in which the Executive remits the
related Excise Tax; provided, further, that if the
amounts of such payments, and the limitation on such payments
set forth in Section 4.2 hereof, cannot be finally
determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in
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good faith by the Executive (or, in the case of payments under
Section 4.2 hereof, in accordance with Section 4.2
hereof, of the minimum amount of such payments to which the
Executive is clearly entitled and shall pay the remainder of
such payments (together with interest on the unpaid remainder
(or on all such payments to the extent the Company fails to make
such payments when due) at 120% of the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. At the time
that payments are made under this Agreement, the Company shall
provide the Executive with a written statement setting forth the
manner in which such payments were calculated and the basis for
such calculations including, without limitation, any opinions or
other advice the Company has received from Tax Counsel, the
Auditor or other advisors or consultants (and any such opinions
or advice which are in writing shall be attached to the
statement).
4.4 The Company also shall pay to the Executive all legal
fees and expenses incurred by the Executive in disputing in good
faith any issue hereunder relating to the termination of the
Executive’s employment, in seeking in good faith to obtain
or enforce any benefit or right provided by this Agreement, or
in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code
to any payment or benefit provided hereunder. Such payments
shall be made within five (5) business days after delivery
of the Executive’s written requests for payment accompanied
with such evidence of fees and expenses incurred as the Company
reasonably may require; provided, however, that in no
event shall payments be made later than the last day of the
Executive’s taxable year following the taxable year in
which the fee or expense was incurred. Notwithstanding the
foregoing, in the event that the Executive does not prevail on
at least one material issue in the relevant dispute or other
proceeding, the Executive shall repay any amount previously paid
by the Company pursuant to this Section 4.4 in respect of
such dispute or other proceeding within ten (10) days of
the final resolution thereof.
4.5 Notwithstanding anything in this Agreement to the
contrary, to the extent required by Section 409A, payment of the
amounts payable under this Agreement shall commence no earlier
than the earlier of (i) the first day of the first month
commencing at least six (6) months following the
Executive’s separation from service with the Company
(within the meaning of Code Section 409A) or (ii) the
Executive’s date of death. During the six month waiting
period, such amounts payable will accumulate with interest (at
120% of the rate provided in Code Section 1274(b)(2)(B)) and be
paid as soon as possible.
4.6 Notwithstanding the foregoing, the Company’s
obligations to pay or provide any benefits, other than as
required by Section 3.2 and Section 3.3, shall
(1) cease as of the date the Executive breaches any of the
provisions of Section 5 and (2) be conditioned on the
Executive signing a general release of claims in favor of the
Company and its affiliates, which is satisfactory to the
Company, and the expiration of any revocation period provided
for in such release. In addition, in the event the Executive
breaches any of the provisions of Section 5 herein,
Executive shall repay the Company an amount equal to the
payments made under Section 4.1(A) herein (reduced by an
amount equal to the total such payments divided by thirty-six
(36), which the Executive acknowledges is adequate consideration
for the general release provided pursuant to clause (2) of
the immediately preceding sentence) multiplied by a fraction,
the numerator being the number of days remaining in the
Restriction Period from the date of breach and the denominator
being the number of days in the Restriction Period. Such
repayment shall be made within ten (10) days of notice from
the Company.
4A. Vesting of Equity and Equity-Based
Awards. If the Executive is employed by the
Company through the date of a Change in Control:
(A) The Company shall accelerate the vesting and cause the
restrictions to lapse on all unvested or restricted time-vested
equity or equity-based awards held by the Executive as of such
Change in Control and permit each time-vested stock option to
acquire common stock of the Company and each time-vested stock
appreciation right held by the Executive as of such Change in
Control to remain exercisable for a period of one (1) year
following such Change in Control (but in no event beyond the
remainder of its term).
(B) If such Change in Control constitutes a Sale of the
Company in which the Company’s investors as of the
Effective Date realize a net internal rate of return
(“IRR”) on their equity investment in the Company
(using a cost basis equal to Plan Equity Value per share (as
defined in the Company’s Plan of Reorganization under
Chapter 11 of the United States Bankruptcy Code)) of at
least 10%, assuming full vesting of all outstanding Company
stock and stock options, the Company shall accelerate the
vesting and cause the restrictions to lapse on all
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then-outstanding unvested or restricted performance-vested
equity or equity-based awards held by the Executive as of such
Sale of the Company and permit each performance-vested stock
option to acquire common stock of the Company and each
performance-vested stock appreciation right held by the
Executive as of such Sale of the Company to remain exercisable
for a period of one (1) year following such Sale of the
Company (but in no event beyond the remainder of its term). The
Board or its compensation committee shall, in its discretion,
adjust such IRR threshold at least every three years following
the Effective Date, (i) with respect to awards granted
after the date of such adjustment, or (ii) to appropriately
reflect the effects of any mergers, acquisitions,
recapitalizations or other corporate transactions involving the
Company.
5. Restrictive Covenants. In recognition
of the compensation to be paid to the Executive pursuant to
Sections 3, 4 and 4A of this Agreement, and Section 5
of the Employment Agreement, the Executive agrees to be bound by
the provisions of this Section 5 (the “Restrictive
Covenants”). The Restrictive Covenants will apply without
regard to whether any termination or cessation of the
Executive’s employment is initiated by the Company or the
Executive, and without regard to the reason for that termination
or cessation.
5.1 Return of Company Property. The
Executive agrees that following the termination of the
Executive’s employment for any reason, or at any time prior
to the Executive’s termination upon the request of the
Company, he or she shall return all property of the Company, its
parent, subsidiaries, affiliates and any divisions thereof,
which is then in or thereafter comes into his or her possession,
including, but not limited to, any Confidential Information (as
defined below) or Intellectual Property (as defined below), or
any other documents, contracts, agreements, plans, photographs,
projections, books, notes, records, electronically stored data
and all copies, excerpts or summaries of the foregoing, as well
as any automobile or other materials or equipment supplied by
the Company, its parent, subsidiaries, affiliates and any
divisions thereof to the Executive, if any.
5.2 Confidentiality.
(A) The Executive acknowledges and agrees that:
(A) the Executive holds a position of trust and confidence
with the Company and that his or her employment by the Company
will require that the Executive have access to and knowledge of
valuable and sensitive information, material, and devices
relating to the Company
and/or its
business, activities, products, services, customers and vendors,
including, but not limited to, the following, regardless of the
form in which the same is accessed, maintained or stored: the
identity of the Company’s actual and prospective customers
and their representatives; prior, current or future research or
development activities of the Company
and/or its
customers; the products and services provided or offered by the
Company to customers or potential customers and the manner in
which such services are performed or to be performed; the
product
and/or
service needs of actual or prospective customers; pricing and
cost information; information concerning the development,
engineering, design, specifications, acquisition or disposition
of products
and/or
services of the Company; unique
and/or
proprietary computer equipment, programs, software and source
codes, licensing information, personnel information, vendor
information, marketing plans and techniques, forecasts, and
other trade secrets (“Confidential Information”);
(B) the direct and indirect disclosure of any such
Confidential Information would place the Company at a
competitive disadvantage and would do damage, monetary or
otherwise, to the Company’s business; and (C) the
engaging by the Executive in any of the activities prohibited by
this Section 5.2(A) may constitute misappropriation
and/or
improper use of trade secrets in violation of the Michigan
Uniform Trade Secrets Act, as well as a violation of this
Agreement.
(B) During the Term and at all times thereafter, the
Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, partner,
employee, consultant, principal or agent of any business, or in
any other capacity, publish or make known, disclose, furnish,
reproduce, make available, or utilize any of the Confidential
Information without the prior express written approval of an
officer of the Company, other than in the proper performance of
the duties contemplated herein, unless and until such
Confidential Information is or shall become general public
knowledge through no fault of the Executive.
(C) In the event that the Executive is required by law to
disclose any Confidential Information, the Executive agrees to
give the Company prompt advance written notice thereof and to
provide the Company with reasonable assistance in obtaining an
order to protect the Confidential Information from public
disclosure.
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(D) The failure to xxxx any Confidential Information as
confidential shall not affect its status as Confidential
Information under this Agreement.
5.3 Intellectual Property.
(A) The Executive hereby assigns to the Company or its
designees, without further consideration and free and clear of
any lien or encumbrance, the Executive’s entire right,
title and interest (within the United States and all foreign
jurisdictions), to any and all inventions, discoveries,
improvements, developments, works of authorship, concepts,
ideas, plans, specifications, software, formulas, databases,
designees, processes and contributions to Confidential
Information created, conceived, developed or reduced to practice
by the Executive (alone or with others) during the Term which
(A) are related to the Company’s current or
anticipated business, activities, products, or services,
(B) result from any work performed by Executive for the
Company, or (iii) are created, conceived, developed or
reduced to practice with the use of Company property, including
any and all Intellectual Property Rights (as defined below)
therein (“Work Product”). Any Work Product which falls
within the definition of “work made for hire”, as such
term is defined in the Copyright Act (17 U.S.C.
Section 101), shall be considered a “work made for
hire”, the copyright in which vests initially and
exclusively in the Company. The Executive waives any rights to
be attributed as the author of any Work Product and any
“droit morale” (moral rights) in Work Product. The
Executive agrees to immediately disclose to the Company all Work
Product. For purposes of this Agreement, “Intellectual
Property” shall mean any patent, copyright, trademark or
service xxxx, trade secret, or any other proprietary rights
protection legally available.
(B) The Executive agrees to execute and deliver any
instruments or documents, and to do all other things reasonably
requested by the Company in order to more fully vest the Company
with all ownership rights in the Work Product. If any Work
Product is deemed by the Company to be patentable or otherwise
registrable, the Executive shall assist the Company (at the
Company’s expense) in obtaining letters of patent or other
applicable registration therein and shall execute all documents
and do all things, including testifying (at the Company’s
expense) necessary or appropriate to apply for, prosecute,
obtain, or enforce any Intellectual Property Right relating to
any Work Product. Should the Company be unable to secure the
Executive’s signature on any document deemed necessary to
accomplish the foregoing, whether due to the Executive’s
disability or other reason, the Executive hereby irrevocably
designates and appoints the Company and each of its duly
authorized officers and agents as the Executive’s agent and
attorney-in-fact to act for and on the Executive’s behalf
and stead to take any of the actions required of Executive under
the previous sentence, with the same effect as if executed and
delivered by the Executive, such appointment being coupled with
an interest.
5.4 Non-Competition.
(A) The Executive acknowledges and agrees that:
(1) the Business (as defined below) is intensely
competitive and conducted by the Company throughout the world;
and (2) reasonable limits on the Executive’s ability
to engage in activities which are competitive with the Company
are warranted in order to, among other things, reasonably
protect trade secrets and proprietary information of the Company
and to maintain and develop the Company’s reputation,
customer relationships, goodwill and overall status in the
marketplace.
(B) During the period of the Executive’s employment
with the Company and for a period of eighteen (18) months
(the “Restriction Period”) following the termination
of the Executive’s employment for any reason, and provided
that the Company is making the payments, if any, required under
Section 4.1(A), subject to Section 4.6, the Executive
shall not engage in Competition (as defined below) with the
Company.
(C) For purposes of this Agreement, “Competition”
by the Executive shall mean the Executive’s engaging in, or
otherwise directly or indirectly being employed by or acting as
a consultant or lender to, or being a director, officer,
employee, principal, agent, stockholder, member, owner or
partner of, or permitting the Executive’s name to be used
in connection with the activities of any other business or
organization anywhere in the world which competes, directly or
indirectly, with the Company in the Business; provided,
however, it shall not be a violation of this
Section 5.4(C) for the Executive to become the registered
or beneficial owner of up to three percent (3%) of any class of
the capital stock of a corporation in Competition with the
Company that is registered under the Securities Exchange Act of
1934, as amended, provided that the Executive does not otherwise
participate in the business of such corporation.
7
For purposes of this Agreement, “Business” means the
creation, development, manufacture, sale, promotion and
distribution of vehicle electronics, transportation components,
integrated systems and modules and other electronic technology
and any other material business which the Company engages in, or
has taken steps (as evidenced by the amounts expended or
investment by the Company or actions by the Board of Directors)
to become engaged in, at the time of the Executive’s
termination.
5.5 Non-Solicitation;
Non-Interference. During the period of the
Executive’s employment with the Company and for a period of
eighteen (18) months following the termination of the
Executive’s employment for any reason the Executive agrees
that he will not, directly or indirectly, for the
Executive’s benefit or for the benefit of any other person,
firm or entity, do any of the following:
(A) solicit from any customer doing business with the
Company as of the Executive’s termination or within six
(6) months prior to the Date of Termination, business of
the same or of a similar nature to the Business;
(B) solicit from any known potential customer of the
Company business of the same or of a similar nature to that
which has been the subject of a known written or oral bid, offer
or proposal by the Company, or of substantial preparation with a
view to making such a bid, proposal or offer, within six
(6) months prior to the Date of Termination;
(C) solicit the employment or services of, or hire or
engage, any person who was known by Executive to be employed or
engaged by the Company as of the Date of Termination, or within
6 months thereof; or
(D) otherwise interfere with the business or accounts of
the Company, including, but not limited to, with respect to any
relationship or agreement between the Company and any vendor or
supplier.
5.6 Injunctive Relief; Indemnity of
Company. The Executive agrees that any breach or
threatened breach of Sections 5.2, 5.3, 5.4 or 5.5 would
result in irreparable injury and damage to the Company for which
an award of money to the Company would not be an adequate
remedy. The Executive therefore also agrees that in the event of
said breach or any reasonable threat of breach, the Company
shall be entitled to seek an immediate injunction and
restraining order to prevent such breach
and/or
threatened breach
and/or
continued breach by the Executive
and/or any
and all persons
and/or
entities acting for
and/or with
the Executive. The terms of this paragraph shall not prevent the
Company from pursuing any other available remedies for any
breach or threatened breach hereof, including, but not limited
to, remedies available under this Agreement and the recovery of
damages. The Executive and the Company further agree that the
provisions of this Section 5 are reasonable. The Executive
agrees to indemnity and hold harmless the Company from and
against all reasonable expenses (including reasonable fees and
disbursements of counsel) which may be incurred by the Company
in connection with, or arising out of, any violation of this
Agreement by the Executive.
5.7 Definition of Company: For purposes
of this Section 5, the “Company,” as used above,
shall be construed to include the Company and its parent,
subsidiaries and affiliates, including, without limitation, any
divisions managed or supervised by the Executive.
5.8 Survival: The provisions of this
Section 5 survive the termination of Executive’s
employment with the Company, regardless of the reason for such
termination, for the duration expressly stated in any such
provision or, if no duration is stated, then indefinitely.
6. Termination Procedures and Compensation During
Dispute.
6.1 Notice of Termination. After a Change
in Control and during the Term, any purported termination of the
Executive’s employment (other than by reason of death)
shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with
Section 9 hereof. For purposes of this Agreement, a
“Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the
provision so indicated. A purported termination of the
Executive’s employment by the Company for Cause shall not
be treated as a termination for Cause hereunder unless, within
thirty (30) days following the Company’s delivery of a
Notice of Termination for Cause, the Company provides the
Executive with a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire
membership of the Board at a meeting of the Board which was
called and held for the purpose
8
of considering such termination (after reasonable notice to the
Executive and a reasonable opportunity for the Executive,
together with the Executive’s counsel, to be heard before
the Board) finding that, in the opinion of the Board, the
Executive was guilty of conduct constituting Cause and
specifying the particulars thereof in detail.
6.2 Date of Termination. “Date of
Termination,” with respect to any purported termination of
the Executive’s employment after a Change in Control and
during the Term, shall mean (i) if the Executive’s
employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance
of the Executive’s duties during such thirty (30) day
period), and (ii) if the Executive’s employment is
terminated for any other reason, the date specified in the
Notice of Termination (which shall not be less than thirty
(30) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
6.3 Compensation During Dispute. With
respect to any termination of the Executive’s employment
during the Term and following a Change in Control, if within
fifteen (15) days after any Notice of Termination is given,
or, if later, prior to the Date of Termination, the party
receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Company
shall continue to pay the Executive the full compensation in
effect when the notice giving rise to the dispute was given
(including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when
the notice giving rise to the dispute was given, until the
earlier of (i) the date on which the Term ends or
(ii) the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or by a final
judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal
has been perfected); provided, however, that this
Section 6.3 shall be applicable in the event of a notice of
dispute given by the Executive only if such notice is given in
good faith and the Executive pursues the resolution of such
dispute with reasonable diligence. Amounts paid under this
Section 6.3 are not in addition to other amounts due under
this Agreement and shall be offset against and reduce any
amounts otherwise due under Section 4.1 hereof.
7. No Mitigation. The Company agrees
that, if the Executive’s employment with the Company
terminates during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to
Section 3 or 4 hereof. Further, except as specifically
provided in Section 4.1(B) hereof, no payment or benefit
provided for in this Agreement shall be reduced by any
compensation earned by the Executive as the result of employment
by another employer, by retirement benefits, by offset against
any amount claimed to be owed by the Executive to the Company or
otherwise, except for amounts actually owed by the Executive to
the Company as of the Date of Termination.
8. Successors; Binding Agreement.
8.1 In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business
and/or
assets of 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 it if no such
succession had taken place.
8.2 This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die
while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued
to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the
Executive’s estate.
9. Notices. For the purpose of this
Agreement, notices and all other communications provided for in
the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid,
addressed, if to the Executive, to the address inserted below
the Executive’s signature on the final page hereof and, if
to the Company, to the address set forth
9
below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Delphi Corporation
0000 Xxxxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: General Counsel
10. Miscellaneous. No provision of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and
signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or of any lack
of compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. This Agreement supersedes any
other agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof which have
been made by either party including but not limited to the
Change in Control Agreement entered into between the Company and
the Executive dated as of February [ ], 2000;
provided, however, that this Agreement shall supersede
any agreement setting forth the terms and conditions of the
Executive’s employment with the Company only in the event
that the Executive’s employment with the Company is
terminated on or following a Change in Control, by the Company
other than for Cause or by the Executive for Good Reason; and
provided, further, that prior to a Change in Control,
this Agreement shall not affect or supersede any agreement
setting forth the terms and conditions of the Executive’s
employment with the Company or the termination thereof prior to
a Change in Control. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under
federal, state or local law and any additional withholding to
which the Executive has agreed. The obligations of the Company
and the Executive under this Agreement which by their nature may
require either partial or total performance after the expiration
of the Term (including, without limitation, those under
Sections 4, 5 and 6 hereof) shall survive such expiration.
11. Validity. The invalidity or
unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and effect.
12. Counterparts. This Agreement may be
executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one
and the same instrument.
13. Settlement of Disputes; Claims.
13.1 All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and
shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement
relied upon. The Board shall afford a reasonable opportunity to
the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a
decision of the Board within sixty (60) days after
notification by the Board that the Executive’s claim has
been denied.
13.2 The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Michigan, without regard to its conflicts of law
principles. The parties hereby irrevocably consent and submit to
the jurisdiction of the federal and state courts located within
the state of Michigan in any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out
of or in connection with, this Agreement.
14. Definitions. For purposes of this
Agreement, the following terms shall have the meanings indicated
below:
(A) “Affiliate” shall have the meaning set forth
in
Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(B) “Auditor” shall have the meaning set forth in
Section 4.2 hereof.
10
(C) “Base Amount” shall have the meaning set
forth in section 280G(b)(3) of the Code.
(D) “Beneficial Owner” shall have the meaning set
forth in
Rule 13d-3
under the Exchange Act.
(E) “Board” shall mean the Board of Directors of
the Company.
(F) “Cause” for termination by the Company of the
Executive’s employment shall mean (I) willful
misconduct or gross negligence by the Executive in the
performance of his duties hereunder, including insubordination;
(II) the Executive’s commission of any felony or the
Executive’s commission of any misdemeanor involving moral
turpitude (including entry of a guilty or nolo contendere
plea); (III) the Executive’s commission of any act
involving dishonesty that results in financial, reputational or
other harm, monetary or otherwise, to the Company or its
affiliates and subsidiaries, including but not limited to an act
constituting misappropriation or embezzlement of the property of
the Company or its parent, affiliates or subsidiaries, as
determined in good faith by the Board; or (IV) any material
breach by the Executive of this Agreement. The occurrence of any
of the foregoing shall be a reason for Cause, provided that, if
the Company determines that the circumstances constituting Cause
are curable, then such circumstances shall not constitute Cause
unless and until the Executive has been informed by the Company
of the existence of Cause and given an opportunity of ten
business days to cure, and such Cause remains uncured at the end
of such
ten-day
period.
(G) A “Change in Control” shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates)
representing more than 50% of the combined voting power of the
Company’s then outstanding securities, excluding any Person
who becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph
(III) below;
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and
any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election
by the Company’s stockholders was approved or recommended
by a vote of at least two-thirds
(2/3)
of the directors then still in office who either were directors
on the date hereof or whose appointment, election or nomination
for election was previously so approved or recommended;
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with
any other corporation or other entity, other than (i) a
merger or consolidation which results in the voting securities
of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) more than 50% of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately
after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 25% or
more of the combined voting power of the Company’s then
outstanding securities; or
(IV) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s
assets, other than a sale or disposition by the Company of all
or substantially all of the Company’s assets to an entity,
more than 50% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
11
Notwithstanding the foregoing, a “Change in Control”
shall not be deemed to have occurred by virtue of (i) the
consummation of the Company’s Plan of Reorganization under
Chapter 11 of the United States Bankruptcy Code, including,
but not limited to, the issuance of the Company’s
Series A-1
Preferred Stock,
Series A-2
Preferred Stock, and Series B Preferred Stock (the
“Preferred Stock”), (ii) the consummation of any
of the transactions contemplated by [insert appropriate
reference to the purchase agreement, Company charter or other
documentation setting forth the terms of the preferred stock and
other corporate governance provisions] including, but not
limited to, the conversion of the Preferred Stock into common
stock of the Company and the conversion of Series B
Preferred Stock into
Series A-1
Preferred Stock or
Series A-2
Preferred Stock, or (iii) the consummation of any
transaction or series of integrated transactions immediately
following which the record holders of the common stock of the
Company immediately prior to such transaction or series of
transactions continue to have substantially the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions.
(H) “Code” shall mean the Internal Revenue Code
of 1986, as amended from time to time.
(I) “Company” shall mean Delphi Corporation and,
except in determining under Section 14(G) hereof whether or
not any Change in Control of the Company has occurred, shall
include any successor to its business
and/or
assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(J) “DB SERP” shall mean the Company’s
frozen defined benefit Supplemental Executive Retirement Program.
(K) “DC Pension Plan” shall mean any
tax-qualified, supplemental or excess defined contribution plan
maintained by the Company and any other defined contribution
plan or agreement entered into between the Executive and the
Company which is designed to provide the Executive with
supplemental retirement benefits.
(L) “Date of Termination” shall have the meaning
set forth in Section 6.2 hereof.
(M) “Disability” shall be deemed the reason for
the termination by the Company of the Executive’s
employment, if, as a result of the Executive’s incapacity
due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive’s
duties with the Company for a period of six (6) consecutive
months, the Company shall have given the Executive a Notice of
Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall
not have returned to the full-time performance of the
Executive’s duties.
(N) “Employment Agreement” shall mean the
employment agreement entered into by and between the Company and
the Executive.
(O) “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(P) “Excise Tax” shall mean any excise tax
imposed under section 4999 of the Code.
(Q) “Executive” shall mean the individual named
in the first paragraph of this Agreement.
(R) “Good Reason” for termination by the
Executive of the Executive’s employment shall mean the
occurrence after any Change in Control, or prior to a Change in
Control under the circumstances described in clauses (ii)
and (iii) of the second sentence of Section 4.1 hereof
(provided, however, that a Change in Control actually
occurs), without the written consent of the Executive, of any of
the following events that has not been fully cured within ten
(10) business days after written notice thereof has been
given by the Executive to the Company setting forth in
sufficient detail the conduct or activities the Executive
believes constitute grounds for Good Reason:
(I) a material demotion or diminution in the
Executive’s title, responsibility or authority, or the
assignment to the Executive of any duties materially
inconsistent with the Executive’s position (including
titles and relationships), authority, duties or
responsibilities, in each case as contemplated by Section 3
of the Employment Agreement, or any other action by the Company
which results in substantial adverse alteration in such
position, authority, duties, or responsibilities, or the failure
to elect or to re-elect the Executive to the Board, or the
removal of the Executive from the Board; provided,
however, that the Company’s ceasing to be a
publicly-held corporation shall not constitute Good Reason
within the meaning of this Section 14(R)(I);
12
(II) a reduction by the Company in the Executive’s
base salary as in effect on the date hereof or as the same may
be increased from time to time except for across-the-board
salary reductions similarly affecting all executives of the
Company described in the Employment Agreement;
(III) a material reduction in the Executive’s
incentive compensation opportunity or benefits, except for, in
each case, across-the-board reductions similarly affecting all
executives of the Company described in Section 7(c)(3) of
the Employment Agreement;
(IV) the relocation of the Executive’s principal place
of employment to a location more than 25 miles from the
Executive’s principal place of employment as of immediately
prior to such relocation or the Company’s requiring the
Executive to be based anywhere other than such principal place
of employment (or permitted relocation thereof) except for
(i) required travel on the Company’s business to an
extent substantially consistent with the Executive’s
present business travel obligations, (ii) the relocation of
the Company’s World Headquarters as described in
Section 4 of the Employment Agreement;
(V) the failure by the Company to pay to the Executive any
portion of the Executive’s current compensation or to pay
to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the
Company, within seven (7) days of the date such
compensation is due; or
(VI) a failure of a successor to assume this Agreement in
accordance with Section 8.1 of this Agreement.
Any termination by the Executive of his employment during the
30-day
period commencing on the first anniversary of the occurrence of
a Change in Control shall be deemed to be for Good Reason for
all purposes of this Agreement.
(S) “Gross-Up
Payment” shall have the meaning set forth in
Section 4.2 hereof.
(T) “Notice of Termination” shall have the
meaning set forth in Section 6.1 hereof.
(U) “Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(V) “Sale of the Company” shall mean any
transaction or series of transactions (whether structured as a
stock sale, merger, consolidation, reorganization, asset sale or
otherwise), which results in the sale or transfer of
(i) beneficial ownership of more than 50% of the
Company’s then-outstanding shares of capital stock
(determined based on fair market value), or (ii) all or
substantially all of the assets of the Company and its
subsidiaries taken as a whole (determined based on fair market
value), in each case, other than to a Person, more than 50% of
the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior
to such sale or transfer.
(W) “Severance Payments” shall have the meaning
set forth in Section 4.1 hereof.
(X) “Term” shall mean the period of time
described in Section 2 hereof (including any extension,
continuation or termination described therein).
(Y) “Total Payments” shall mean those payments so
described in Section 4.2 hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
DELPHI CORPORATION
| By: |
|
Name:
Title:
XXXXXX X’XXXX
Address:
(Please print carefully)
14
