1
EXHIBIT 10.9
DELPHI AUTOMOTIVE SYSTEMS CORP.
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT, dated as of _______ __, 199_, is
entered into between Delphi Automotive Systems Corp., a Delaware corporation
(the "Company"), and [__________] (the "Executive").
The Company and the Executive, intending to be legally bound hereby,
agree that upon a Change in Control and upon a subsequent termination of
employment, the Company shall take the actions described in Sections 4 and 5
below:
SECTION 1. CHANGE IN CONTROL. As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if, during the three-year period
following the date on which General Motors Corporation distributes to its
shareholders all shares of the Company's common stock then held by it (the
"Distribution"):
(a) any person or group of persons (within the meaning of Section
13(d) of the Securities Exchange Act of 1934 as amended (the "Act")),
other than the Company or a subsidiary of the Company or an employee
benefit plan sponsored by the Company or a subsidiary of the Company,
acquires beneficial ownership (as defined in Section 13(d) (directly
or indirectly) of (i) 50 percent or more of the outstanding securities
of the Company entitled to vote in the elections of directors (or
securities or rights convertible into or exchangeable for such
securities) ("Stock") of the Company, or (ii) of Stock having a total
number of votes that may be cast and elect a majority of the directors
of the Company;
(b) members of the "Incumbent Board" (as defined below) cease for
any reason to constitute a majority of the Board of Directors of the
Company; for this purpose, the "Incumbent Board" shall consist of the
individuals who, as of the date of the Distribution, constitute the
entire Board of Directors of the Company and any new director whose
election by the Board or nomination for election by the shareholders
of the Company was approved by a vote of at least 2/3rds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, but excluding for all purposes any
director (i) designated or nominated by, or affiliated with, a person
who has entered into an agreement with the Company to effect a
transaction described in subsection (a) above, or (ii) who initially
assumed office as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 under the Act) or other actual
or threatened solicitation of proxies or contests by or on behalf of a
person other than the Board (a "Proxy Contest"), including by reason
of any agreement intended to avoid or settle any Election Contest or
Proxy Context or (iii) who was designated or renominated by any such
person (or by any person designated or renominated by any such
person);
2
(c) the stockholders of the Company shall approve (i) any
consolidation, merger, or other reorganization of the Company in which
the Company is not the continuing or surviving corporation or pursuant
to which shares of Stock would be converted into cash, securities, or
other property, other than a merger of the Company in which holders of
Stock immediately prior to the merger have either the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger as immediately before or have more than
50 percent of the ownership of voting common stock of the surviving
corporation immediately after the merger, or (ii) any sale, lease,
exchange, or other transfer in one transaction or a series of related
transactions of 50 percent or more of the assets of the Company; or
(d) there shall occur a liquidation or dissolution of the
Company.
SECTION 2. TERM OF AGREEMENT. This Agreement shall commence on the
date first set forth above and shall remain in effect until the third
anniversary of a Change in Control.
SECTION 3. TERMINATION OF EMPLOYMENT
(a) Entitlement. The Executive shall be entitled to the payments and
benefits provided under Section 5 below if, during the three-year period
following a Change in Control, the Executive ceases to be employed by the
Company or its successor for either of the following reasons:
(1) Except as provided in subsection (b) below, the Company
terminates the Executive's employment; or
(2) The Executive terminates his or her employment after one or
more of the following events occurs without the Executive's express
written consent.
(A) Executive's annual base salary and/or annual bonus is reduced
or any other material compensation or benefits arrangement for
the Executive is reduced (and such reduction is unrelated to
Company or individual performance); or
(B) the Executive's duties or responsibilities are negatively,
and materially changed in a manner inconsistent with the
Executive's position (including status, offices, titles, and
reporting requirements) or authority;
(C) the Company requires the Executive's work location or
residence to be relocated more than 25 miles from its location as
of the Change in Control;
(D) the Company or its successor fails to offer the Executive a
comparable position after the Change in Control.
-2-
3
(b) Termination for Cause. Notwithstanding subsection (a) above, the
Executive shall not be entitled to the payments and benefits provided under
Section 5 below if the Executive's employment with the Company is terminated for
one or more of the following reasons: (i) the willful and continued failure of
the Executive to perform substantially the Executive's duties owed to the
Company or its affiliates after a written demand for substantial performance is
delivered to the Executive specifically identifying the nature of such
unacceptable performance, or (ii) the conviction of the Executive for a felony.
(c) Termination Due to Death or Incapacity. If the Executive's
employment is terminated by reason of the Executive's death or incapacity during
the term, this Agreement shall terminate automatically on the date of death or
the date of determination by the Board that the incapacity of the Executive has
occurred, as the case may be. "Incapacity" means any physical or mental illness
or disability of the Executive which continues for a period of six consecutive
months or more and which at any time after such six-month period the Board shall
reasonably determine renders the Executive incapable of performing his or her
duties during the remainder of the term.
(d) Notice of Termination. Any termination by the Company for cause or
incapacity, or by the Executive for a reason described in Section 3(b) above,
shall be communicated by a notice to the other party given in accordance with
Section 9 below. The notice shall be in writing and shall (i) state the
specific termination provision in the Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination under such provision, and (iii) specify the
termination date (not more than 30 days after the giving of the notice).
SECTION 4. OBLIGATIONS OF THE COMPANY UPON A CHANGE IN CONTROL. As of
a Change in Control, the Executive shall be entitled to receive the following
payments and benefits from the Company:
(a) all outstanding uninvested stock options held by the Executive
shall fully vest as of the Change in Control and become immediately exercisable
in accordance with their terms;
(b) all long-term incentive awards earned by the Executive as of the
Change in Control under the Delphi Automotive Systems Performance Achievement
Plan, calculated at current forecasted payouts, shall be fully "funded" by the
Company by contribution of an amount equal to such awards to a "rabbi trust" no
later than the Change in Control.
(c) all compensation previously deferred at the election of the
Executive, together with accrued interest or earnings, shall be fully "funded"
by the Company by contribution of an amount equal to such deferrals and accrued
interest or earnings to a "rabbi trust" no later than the Change in Control; and
-3-
4
(d) all benefits accrued by the Executive under the terms of the
Supplemental Executive Retirement Program and the Benefit Equalization Plan -
Retirement maintained by the Company, or any successor plans shall be fully
"funded" by the Company by contribution of an amount equal to the then total
present value of such benefits to a "rabbi trust" no later than the Change in
Control; such amount to be calculated using a discount rate equal to the annual
rate of interest on 30-year Treasury securities for the month before the month
in which occurs the Change in Control.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION OF EMPLOYMENT
FOLLOWING A CHANGE IN CONTROL. Upon termination of the Executive subsequent to a
Change in Control, the Executive shall be entitled to receive, in addition to
the payments and benefits provided in Section 4 above, payments and benefits
from the Company as follows:
(a) Termination Due to a Qualifying Event. If the Executive's
employment with the Company is terminated as the result of an event described in
Section 3(a) above, the Executive shall be entitled to receive the following
payments and benefits from the Company:
(1) the Company shall pay the Executive in a single sum in cash,
within five business days after his or her termination date, the
aggregate of the following amounts:
(A) the sum of the Executive's currently effective annual base
salary through the termination date and any accrued vacation pay;
(B) an amount equal to three times the sum of the Executive's
annual base salary plus his or her target bonus;
(2) the Company shall continue, for a period of 36 months from
the termination date, health insurance coverage for the Executive and
the Executive's eligible family members and life insurance coverage
for the Executive, in both cases at least equal to the coverage that
would have been provided to such person(s) under the Company's health
and life insurance plans if the Executive's employment had not been
terminated;
(3) the Company shall, at its sole expense as incurred, reimburse
the Executive up to $50,000 for expenses and costs related to
outplacement services, the provider of which shall be selected by the
Executive in his or her sole discretion;
(4) the Company shall continue to provide the Executive with use
of the Executive's company car (if any) for one year following the
termination date; and
-4-
5
(5) the Company shall pay or reimburse the Executive for legal
fees and expenses incurred as a result of any dispute resolution
process entered into by the Executive to enforce this Agreement.
(b) Termination Due to Death or Incapacity. If the Executive's
employment is terminated by reason of the Executive's death or incapacity during
the term, this Agreement shall terminate without further obligations to the
Executive or to the Executive's legal representatives under this Agreement other
than for the timely payment of the Executive's currently effective annual base
salary through the termination date, any accrued vacation pay, and any
compensation that the Executive previously elected to defer.
(c) Termination For Cause or Without Good Reason. If the Executive's
employment is terminated for a reason described in Section 3(b) above during the
term or if the Executive voluntarily terminates employment during the term
(other than for a reason described in Section 3(a)(2) above), this Agreement
shall terminate without further obligations to the Executive under this
Agreement other than for the timely payment to the Executive of his or her
currently effective annual base salary through the termination date and of any
compensation that the Executive previously elected to defer.
(d) Possible Reduction in Payments and Benefits. Following any Change
in Control, to the extent that any amount of pay or benefits provided under to
the Executive under this Agreement would cause the Executive to be subject to
excise tax under sections 280G and 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), and after taking into consideration all other amounts
payable to the Executive under other Company plans, programs, policies, and
arrangements, then the amount of pay and benefits provided under this Agreement
shall be reduced (first by any pay, and then, to the extent necessary, by any
benefits), to the extent necessary to avoid imposition of any such excise taxes.
However, if it shall be determined that the Executive would not receive a net
after-tax benefit (taking into account income, employment, and any excise taxes)
resulting from application of the reduction, then no reduction shall be made
with respect to pay or benefits due the Executive. All determinations of the
amount of the reduction shall be made by tax counsel selected by the Company's
independent auditors, and the cost of making such determination shall be borne
entirely by the Company.
SECTION 6. TERMINATION OF NONCOMPETITION RESTRICTIONS; NONDISCLOSURE
(a) Termination of Noncompetition Restrictions. If the Executive
terminates his or her employment with the Company for a reason described in
Section 3(a)(2) above during the first year following the Change in Control, or
if the Company terminates the Executive's employment other than for a reason
described in Section 3(b) above during the first year, then, effective as of the
termination date, the Executive shall cease to be subject to the terms of any
noncompetition agreement with the Company previously entered into. If the event
described above occurs during the second year following the Change in Control,
then, effective as of the termination date, the Executive shall be subject to
the terms of any noncompetition agreement
-5-
6
with the Company previously entered into for one year thereafter. If the event
described above occurs during the third year following the Change in Control,
then, effective as of the termination date, the Executive shall be subject to
the terms of any noncompetition agreement with the Company previously entered
into for two years thereafter.
(b) Nondisclosure. The Executive shall not (other than in the good
faith performance of his or her services to the Company before termination of
employment) disclose or make known to anyone other than employees of the
Company, or use for the benefit of himself or herself or any other person, firm,
operation, or entity unrelated to the Company, any knowledge, information, or
materials, whether tangible or intangible, belonging to the Company, about the
products, services, know-how, customers, business plans, or financial,
marketing, pricing, compensation, and other proprietary matter relating to the
Company. On or before the Executive's termination of employment with the
Company, the Executive shall deliver to the Company any and all confidential
information in his or her possession.
SECTION 7. SUCCESSORS. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business or assets of the Company, by
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession will be a breach of this
Agreement and entitle the Executive to compensation from the Company in the same
amount and on the same terms as the Executive would be entitled to had the
Company terminated the Executive for any reason other than cause or incapacity
on the succession date (and assuming a Change in Control had occurred prior to
such succession date).
SECTION 8. NON-ASSIGNABILITY. This Agreement is personal in nature and
neither of the parties shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations under it, except as
provided in Section 7. Without limiting the foregoing, the Executive's right to
receive payments under this Agreement shall not be assignable or transferable,
whether by pledge, creation of a security interest, or otherwise, other than a
transfer by his or her will or by the laws of descent or distribution, and, in
the event of any attempted assignment or transfer by the Executive contrary to
this Section, the Company shall have no liability to pay any amount so attempted
to be assigned or transferred.
SECTION 9. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for shall be in writing and shall be deemed to
have been given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
-6-
7
If to the Executive: [name]
[address]
If to the Company: Delphi Automotive Systems Corp.
0000 Xxxxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing. Notices of change of address shall be effective only upon receipt.
SECTION 10. GOVERNING LAW. The validity, interpretation, construction,
and performance of this Agreement shall be governed by the laws of the State of
Michigan without reference to principles of conflict of laws.
SECTION 11. SETTLEMENT OF DISPUTES; ARBITRATION. If there has been a
Change in Control and any dispute arises between the Executive and the Company
as to the validity, enforceability, and/or interpretation of any right or
benefit afforded by this Agreement, at the Executive's option, such dispute
shall be resolved by binding arbitration proceedings in accordance with the
rules of the American Arbitration Association. The arbitrators shall presume
that the rights and/or benefits afforded by this Agreement that are in dispute
are valid and enforceable and that the Executive is entitled to such rights
and/or benefits. The Company shall be precluded from asserting that such rights
and/or benefits are not valid, binding, and enforceable and shall stipulate
before such arbitrators that the Company is bound by all the provisions of this
Agreement. The burden of overcoming by clear and convincing evidence the
presumption that the Executive is entitled to such rights and/or benefits shall
be on the Company. The arbitrators shall have discretion to award punitive
damages to the Executive if it is found that the Company's actions or failures
to act which led to the Executive's submitting a dispute to arbitration and/or
the Company's actions or failures to act during the pendency of the arbitration
proceeding make such an award appropriate in the circumstances. The results of
any arbitration shall be conclusive on both parties and shall not be subject to
judicial interference or review on any ground whatsoever, including without
limitation any claim that the Company was wrongfully induced to enter into this
Agreement to arbitrate such a dispute.
SECTION 12. MISCELLANEOUS
(a) This Agreement contains the entire understanding with the
Executive with respect to its subject manner and supersedes any and all prior
agreements or understandings, written or oral, relating to the subject matter.
No provisions of this Agreement may be amended unless such amendment is agreed
to in writing signed by the Executive and the Company.
-7-
8
(b) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same Agreement.
(d) The Company may withhold from any benefits payable under this
Agreement all Federal, state, local, or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.
(e) The captions of this Agreement are not part of its provisions and
shall have no force or effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
DELPHI AUTOMOTIVE SYSTEMS CORP.
By
---------------------------------
Name:
------------------------------
Title:
-----------------------------
------------------------------------
[Signature of Executive]
-8-
