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EXHIBIT (10)(q)
AGREEMENT
This AGREEMENT (the "Agreement") is made and entered into on
and as of December 22, 1999, by and between Delphi Automotive Systems
Corporation, a Delaware corporation ("Delphi"), and General Motors Corporation,
a Delaware corporation ("GM").
RECITALS
WHEREAS, on September 16, 1998, Delphi was incorporated as a
wholly-owned subsidiary of GM; and
WHEREAS, effective as of January 1, 1999, GM contributed to
Delphi the assets, and Delphi assumed the liabilities, comprising the business
of the Delphi Automotive Systems business sector of GM; and
WHEREAS, the foregoing liabilities assumed by Delphi included
certain obligations arising under contracts with the International Union, United
Automotive, Aerospace and Agricultural Implement Workers of America (the "UAW")
to provide benefits and coverages to hourly workers; and
WHEREAS, in connection with the foregoing, GM and Delphi
entered into various agreements that set forth certain covenants of Delphi as to
continuity of business, limitations on the incurrence of indebtedness and other
matters; and
WHEREAS, on February 10, 1999, Delphi consummated an initial
public offering of 100,000,000 shares of its common stock; and
WHEREAS, on May 28, 1999, GM distributed 452,565,000 shares of
Delphi common stock as a dividend to holders of GM $1-2/3 par value common stock
and contributed 12,435,000 shares of Delphi common stock to a trust for the
benefit of GM employees, with the effect that GM divested its entire equity
interest in Delphi on that date; and
WHEREAS, in connection with the collective bargaining between
and among GM, Delphi and the UAW relating to, among other things, the effects of
the separation of GM and Delphi on the collective bargaining agreements in
existence at the time of the separation, the UAW has required that GM enter into
an agreement (the "Benefit Guarantee") to the effect that in the event that
Delphi or its successor company(ies) ceases doing business or becomes subject to
Financial Distress (as defined in the Benefit Guarantee) that affects the
benefits provided to certain UAW members, GM would guarantee the provision of
certain benefits for such members; and
WHEREAS, GM has entered into the Benefit Guarantee in the form
annexed hereto as Exhibit A.
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NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, and intending to be legally bound hereby, the parties hereby
covenant and agree as follows:
(A) The parties acknowledge that the Benefit Guarantee has been
included in the 1999-2003 GM-UAW National Agreement, in the
form set forth on Exhibit A.
(B) Until the expiration or termination of the Benefit Guarantee:
Delphi shall not, without consulting with GM at least five
days in advance (or if such notice is not reasonably possible,
such lesser amount of time as is reasonably possible, but in
any event not less than 24 hours), take or permit any of its
subsidiaries (or other affiliates controlled by it) to take
any of the following actions:
1. Other than for fair value, the sale, transfer or
other disposition of assets in any single transaction
or series of related transactions, including shares
of capital stock of any of its subsidiaries, that in
the aggregate constitute more than 60% of the
consolidated gross assets of Delphi and its direct
and indirect subsidiaries; or
2. The entering into of any single transaction or series
of related transactions which, if consummated, would
cause Delphi's "Consolidated Leverage Ratio" to
exceed 3.25:1.00 (as defined and measured in the
Delphi Competitive Advance and Revolving Credit
Facility with Chase Manhattan Bank as agent, dated as
of January 4, 1999 as in effect on the date hereof).
(C) Until the expiration or termination of the Benefit Guarantee:
1. Delphi shall not, without GM's prior written consent
(which shall not be unreasonably delayed or withheld)
voluntarily liquidate or dissolve Delphi, Delco
Electronics Corporation, Delphi Automotive Systems
LLC or Delphi Automotive Systems (Holding), Inc. or
any of their "significant subsidiaries" (as defined
in Regulation S-X (17 CFR 210) or their respective
successor entities or cause or permit any of such
entities voluntarily to enter into any proceeding
relating to its bankruptcy or insolvency (or similar
reorganization under statutes for the protection of
creditors), in each case only to the extent permitted
by law, and subject to the fiduciary obligations of
Delphi's board of directors;
2. Delphi shall not, without GM's prior written consent
(which shall not be unreasonably delayed or withheld)
merge, consolidate or consummate a similar business
combination involving Delphi unless (A) Delphi is the
surviving entity and the ultimate controlling parent
entity of its affiliated group of companies (a
"UCPE") or (B) if as a result of such transaction
Delphi is not the surviving entity or Delphi (or its
successor) is controlled
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by another UCPE, then, in either case, under this
Section C(2)(B): (i) such UCPE (if any) and the
successor entity (if other than Delphi) shall
expressly assume Delphi's obligations hereunder by an
agreement substantially in the form of Exhibit B
hereto or otherwise in form reasonably satisfactory
to GM, and (ii) immediately after giving effect to
such merger, consolidation or other similar business
combination, Delphi or the successor entity (if other
than Delphi) and the UCPE (if any) shall not be in
violation of its obligations under this Agreement;
3. Delphi shall not, without GM's prior written consent
(which shall not be unreasonably delayed or withheld)
enter into any single transaction or series of
related transactions which, if consummated, would
cause Delphi's credit rating to be downgraded below
B1 from Xxxxx'x or B+ from Standard & Poor's (whether
or not such a downgrade might constitute Financial
Distress under the Benefit Guarantee);
4. Delphi shall not, without GM's prior written consent
(which shall not be unreasonably delayed or withheld)
enter into any single transaction or series of
related transactions which, if consummated, would
cause the independent auditors of Delphi to qualify
their opinion regarding Delphi's financial statements
as they relate to Delphi's ability to continue to
operate as a going concern; and
5. Delphi shall not, without GM's prior written consent
(which shall not be unreasonably delayed or
withheld), permit any of its subsidiaries (or other
affiliates controlled by it) to take any actions
which would cause Delphi to violate paragraphs (2),
(3) or (4) of this Section C.
(D) If the Chief Financial Officer of Delphi shall at any time
believe that it is more likely than not that GM would become
obligated to provide any benefits pursuant to the Benefit
Guarantee, then Delphi shall immediately notify the Chief
Financial Officer of GM in writing of such event (the
"Notice"). The Notice shall state with particularity the facts
and circumstances giving rise to such event, and, to the
extent practicable, the estimated timing and scope of any
benefits that GM might be required to provide pursuant to the
Benefit Guarantee.
(E) Promptly after the delivery of the Notice to GM and with a
view towards promoting the best interests of both companies,
Delphi and GM shall cooperate with each other in all
reasonable respects and work together in good faith to
consider reasonable alternatives, identify appropriate actions
and enter into reasonable arrangements which would enable
Delphi to continue to satisfy its benefit obligations to its
employees such that GM would not become obligated to provide
any benefits pursuant to the Benefit Guarantee.
(F) 1. In the event that Delphi either fails or refuses to
provide or reduces the level of the benefits it
provides to its employees such that, after 60 days,
the continuation of such failure, refusal or
reduction would cause GM to become
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obligated to provide any benefits pursuant to the
Benefit Guarantee, then Delphi shall promptly grant
to GM and GM's outside advisors reasonable access to
the relevant financial and other information relating
to Delphi's financial condition and to the benefits
provided to UAW employees which Delphi can produce
without an unreasonable burden and which GM
reasonably requires to enable GM (i) to assess
Delphi's financial condition, including, but not
limited to, the nature of its Financial Distress, and
(ii) to verify the timing and scope of any benefits
that GM might be required to provide pursuant to the
Benefit Guarantee. Notwithstanding the foregoing,
Delphi shall not be required to provide access to any
information regarding pricing or profitability with
any customer or supplier, information which Delphi
determines is competitively sensitive or the
disclosure of which to GM would violate any
confidentiality agreement of Delphi or violate any
requirement of law.
2. Except as may be required by law, regulatory
authority or legal process, GM shall not disclose or
use any of the information furnished or to be
furnished by Delphi or its representatives to GM in
connection with this Agreement at any time or in any
manner other than as expressly contemplated by this
Agreement. GM may disclose such information to such
of its directors, employees and advisors as it
determines have a need to know and who agree to be
bound by these confidentiality provisions, but in no
event shall it disclose such information to its
purchasing employees. GM shall be responsible for any
breach of this Section F(2) by any such persons.
(G) If GM shall at any time become obligated to provide any
benefits pursuant to the Benefit Guarantee, Delphi shall use
all reasonable commercial efforts to, as soon as practicable
thereafter, re-assume all obligations for the provision of
such benefits to its employees such that GM is relieved of its
obligations under the Benefit Guarantee.
(H) Delphi shall indemnify and hold harmless GM and its affiliates
from and against any and all losses and liabilities, if any,
relating to (i) all benefits provided by GM pursuant to the
Benefit Guarantee, (ii) all third party claims or settlements
relating to any benefits provided by GM pursuant to the
Benefit Guarantee, (iii) all collection efforts by or on
behalf of GM relating to the losses and liabilities described
in clauses (i) and (ii) hereof and (iv) any breach by Delphi
of any of the provisions of this Agreement. If GM incurs such
losses or liabilities, Delphi and GM shall immediately enter
into an indebtedness agreement evidencing and providing
security for Delphi's indemnification obligations hereunder.
Such agreement shall specify that all amounts for which Delphi
is, at such time and thereafter, required to indemnify GM
hereunder shall be deemed to be principal thereunder and shall
accrue interest at a market rate of interest commensurate with
Delphi's long-term credit rating at the time such agreement is
executed.
(I) This Agreement shall be governed by the internal laws (and not
the law of conflicts) of the State of Delaware. Any action to
enforce or interpret any
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provision of this Agreement shall be brought exclusively in
the state or federal courts of the State of Delaware.
(J) Delphi and GM each acknowledge and agree that the breach by it
of any term or provision of this Agreement, or the breach by
it or any of its subsidiaries, affiliates or the persons
mentioned in paragraph F(2) of their respective obligations
hereunder, will materially and irreparably harm the other
party, that monetary damages will not provide an adequate
remedy for such breach and that such other party, in its sole
discretion and in addition to its rights under this Agreement
and any other remedies it may have in law or at equity, may,
after five days (or such shorter time as such other party
reasonably determines is required to avoid irreparable harm to
it, but in all cases not less than 24 hours) prior written
notice to the breaching party, apply to any court of law or
equity of competent jurisdiction (without posting of any bond
or deposit) for specific performance, injunctive relief or
other equitable remedies in order to enforce this Agreement or
prevent any breach of the terms hereof.
(K) Delphi agrees that the foregoing is in addition and not in
lieu of the covenants previously provided to GM in connection
with the separation of Delphi from GM.
(L) This Agreement, and Delphi's obligations hereunder (other than
any indemnification obligations under paragraph H), shall
terminate at midnight on the later of (i) the eighth
anniversary of the Effective Date of the 1999-2003 GM-UAW
National Agreement or (ii) if and to the extent appropriate,
the expiration of any obligations of GM to provide benefits
pursuant to the Benefit Guarantee, provided however, that
Delphi's obligations shall not be extended by reason of any
extension of the term of GM's obligations to the UAW under the
Benefit Guarantee as in effect as of the date hereof, unless
Delphi shall have consented in writing to any such extension.
(M) GM intends to request a supplemental ruling from the IRS
concerning, among other things, whether and to what extent, if
at all, the private letter ruling received by GM from the IRS
dated January 12, 1999 concerning the tax-free nature of the
spin-off of Delphi from GM is affected by this Agreement and
the agreements, including the Benefit Guarantee, entered into
between GM and the UAW in connection with their 1999
bargaining for a new labor contract. Although GM does not
expect the IRS to modify the validity of the favorable letter
ruling, it may, after assessing the IRS review of the
agreements, engage in further review of those agreements with
the UAW in order to seek modifications thereto which preserve
the effectiveness of the tax-free ruling from the IRS as well
as the protections sought by the UAW for its members in those
agreements. If and to the extent any modifications to those
agreements are agreed to between GM and the UAW which limit or
otherwise modify the duration or scope of the obligations of
GM under the Benefit Guarantee, GM and Delphi shall promptly
negotiate in good faith and modify the provisions of this
Agreement for the purpose of causing Delphi to provide to GM
benefits and rights, consistent with those contained herein,
which in
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substantially the same manner as is accomplished in this
Agreement, correspond to and functionally support the
obligations of GM under the Benefit Guarantee as it may be
modified.
(N) If any provision of this Agreement is held to be invalid or
unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (i) the other provisions of this Agreement
shall remain in full force and effect in such jurisdiction and
shall be construed to carry out the intentions of the parties
hereto as nearly as may be possible, and (ii) the invalidity
or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction.
(O) Except as expressly provided herein, neither party may assign
any of its rights hereunder without the prior written consent
of the other party hereto. This Agreement shall not be
construed as giving any person, other than the parties hereto
and their permitted successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this
Agreement or any of the provisions herein contained, this
Agreement and all provisions and conditions hereof being
intended to be, and being, for the sole and exclusive benefit
of such parties, and permitted successors and assigns and for
the benefit of no other person or entity, provided, however,
that the promissory note issued by Delphi to GM, pursuant to
the Supplement to U.S. Employee Matters Agreement, is subject
to acceleration upon violation by Delphi of its obligations
hereunder (whether such note is held by GM or a permitted
transferee of GM).
(P) This Agreement constitutes the entire agreement between the
parties hereto with respect to its subject matter and
supersedes all prior oral or written agreements,
understandings and representations to the extent that they
relate in any way to the subject matter of this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement on and as of the date first above written.
GENERAL MOTORS CORPORATION
By: /s/ Xxxx Xxxxxxxxx
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Title: Treasurer
DELPHI AUTOMOTIVE SYSTEMS CORPORATION
By: /s/ X.X. Xxxxxxxxxx III
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Title:Chief Executive Officer and President
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