UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): September 13, 2018

 

 

ADIENT PLC

(Exact name of registrant as specified in its charter)

 

 

 

Ireland   001-37757   98-1328821

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

25-28 North Wall Quay, IFSC

Dublin 1, Ireland

(Address of principal executive offices)

Registrant’s telephone number, including area code: 414-220-8900

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions ( see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On September 13, 2018, Adient plc (“ Adient ”) announced that Douglas G. DelGrosso will become the new President and Chief Executive Officer of Adient, with such appointment to be effective October 1, 2018 (the “ Effective Date ”). Mr. DelGrosso will also become a member of the Board of Directors of Adient (the “ Board ”). Mr. DelGrosso joins Adient from Chassix, Inc., a global, vertically integrated manufacturer of aluminum and iron cast and machined chassis sub-frame automotive components, where he has served as Chief Executive Officer since January 2016.

In connection with Mr. DelGrosso’s appointment, Frederick A. (Fritz) Henderson will no longer serve as interim Chief Executive Officer of Adient, with his last day in such role being September 30, 2018. Mr. Henderson was appointed by the Board as interim Chief Executive Officer in June 2018. John M. Barth will cease serving as the interim Chairman of the Board on September 30, 2018, although Mr. Barth will remain a director. On the Effective Date, Mr. Henderson will become non-executive Chairman of the Board. The size of the Board will be increased from seven to eight directors on the Effective Date.

Mr. DelGrosso, age 56, brings to the President and Chief Executive Officer role substantial automotive industry leadership and operational expertise, including through his role at Chassix and his experience serving as president and chief executive officer of Henniges Automotive, Inc., a privately-held global automotive sealing and anti-vibration company, from August 2012 to December 2015. Mr. DelGrosso also spent five years at TRW Automotive, where he last served as vice president and general manager for the company’s global braking and suspension operations, and twenty years at Lear Corporation, where he last served as president and chief operating officer. Mr. DelGrosso served on the Board of Directors of Lincoln Educational Services Corporation (Nasdaq:LINC) from 2014 to 2015. Mr. DelGrosso earned a bachelor’s degree in mechanical engineering from Lawrence Technological University and a master’s degree in business administration from Michigan State University.

In connection with his appointment, Adient provided to Mr. DelGrosso a written offer letter (the “ Offer Letter ”), which was accepted by Mr. DelGrosso, and which provides for the following compensation terms for Mr. DelGrosso. Mr. DelGrosso will receive an initial base salary of $1,150,000 per year, and is eligible to participate in Adient’s performance-based cash incentive bonus program, with a target annual bonus equal to 150% of his base salary and an opportunity to earn up to 200% of base salary for performance above target, subject to the performance metrics determined annually by the Compensation Committee of the Board. Mr. DelGrosso will be eligible to receive annual long-term equity incentive awards, in the form and with applicable performance goals to be determined by the Compensation Committee of the Board and as granted in accordance with Adient’s normal equity grant practices, with a target grant date value of $7,300,000. He will also be eligible for Adient’s standard employee benefits as in effect from time to time on the same basis as generally made available to other senior management of Adient.

In addition, to compensate Mr. DelGrosso for equity awards and other dividend compensation that he had the opportunity to earn at his previous employer but that were forfeited in connection with his change in employment, Adient will grant to Mr. DelGrosso a one-time equity award in the form of performance share units (“ PSUs ”) issued under Adient’s 2016 Omnibus Plan with a grant date target value of $7,000,000. The PSUs will be earned and become vested based on the difference in (i) the average closing price of Adient ordinary shares over the ten trading

 

2


days before and ten trading days after Mr. DelGrosso’s start date with Adient (the “ Starting Price ”) and (i) the average closing price of Adient ordinary shares over the 10 trading days before and 10 trading days after the third anniversary of the grant date as follows:

 

   

Ending Price as a Percent of Starting Price

 

  

Multiplier Against Granted PSUs

 

Less than Starting Price    75%
Equal to Starting Price    90%
Over 100% up to 150%    100%
Over 150% up to 200%    135%
Over 200% up to 250%    175%
Over 250%    250%

For Mr. DelGrosso to earn the full target value of the PSUs, the average closing price of an Adient ordinary share must be greater (as calculated by the formula discussed above) at the time of the third anniversary of the grant date than it was at the grant date. In addition, the PSUs will be forfeited by Mr. DelGrosso if he separates from service with Adient prior to the third anniversary of his start date unless due to death or disability.

Mr. DelGrosso will also receive a one-time cash bonus of $1,300,000 to compensate him for a forfeited 2018 bonus and forfeited dividends from his previous employer. This cash bonus is subject to repayment to Adient in full if Mr. DelGrosso’s employment ends for any reason other than termination by Adient without cause or due to death or disability prior to the second anniversary of his start date.

Additionally, Mr. DelGrosso will enter into a Key Executive Severance and Change of Control Agreement (the “ Agreement ”) with Adient, which is expected to be effective on the Effective Date or shortly thereafter, in generally the same form as the similar agreements between other senior executives and Adient. Under the Agreement, Mr. DelGrosso may be entitled to receive severance benefits upon a qualifying termination of employment. The Agreement also contains restrictive covenants. The benefits provided by the Agreement vary depending on whether a qualifying termination of employment is in connection with a change of control (as defined in the Agreements), as follows:

 

     
     

Change of Control Termination

 

  

Non-Change of Control Termination

 

Qualifying Termination   

During the two years after a change of control:

 

•  An involuntary termination other than for cause, disability or death

 

•  Resignation for good reason

  

•  Involuntary termination other than for cause, disability or death

 

•  Resignation for good reason

Cash Severance    Three times the sum of base salary and average annual bonus    One and one-half times base salary
Bonus    Full current year annual bonus based on actual performance    Pro rata current year annual bonus based on actual performance
Benefits Replacement    Cash payment equal to monthly employer contributions for welfare benefits, retirement plans and car lease multiplied by 36    Cash payment equal to monthly employer contributions for welfare benefits, retirement plans and car lease multiplied by 18

 

3


     
     

Change of Control Termination

 

  

Non-Change of Control Termination

 

Equity Awards   

•  Vesting of awards accelerates on a change of control only if they are (1) not assumed or replaced or (2) terminated

 

•  Upon subsequent termination of employment, awards vest on a pro rata basis (subject to achievement of any applicable performance goals)

   Awards vest on a pro rata basis (subject to achievement of any applicable performance goals)
Employee Obligations   

•  Perpetual confidentiality covenant, trade secrets protection, non-disparagement, non-competition and non-solicitation for 12-18 months

 

•  Severance benefits are contingent on the Executive providing a release of claims to Adient

    
Excise Tax Gross-Up Payments    None     

There are no family relationships between Mr. DelGrosso and any director or executive officer of Adient, and there are no relationships or related transactions between Mr. DelGrosso and Adient that would be required to be reported under Item 404 of Regulation S-K.

Additionally, Adient and Mr. DelGrosso will enter into indemnification agreements in substantially the same form that Adient has entered into with each of Adient’s other officers. The forms of such indemnification agreements were filed as Exhibits 10.5 and 10.6 to Amendment No. 1 to Adient’s Annual Report on Form 10-K/A for the fiscal year ended September 30, 2016.

The foregoing descriptions of the Offer Letter and the Agreement are only summaries and are qualified in their entirety by reference to the Offer Letter and the Agreement, which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated by reference herein.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are filed herewith:

EXHIBIT INDEX

 

Exhibit No.

  

Exhibit Description

10.1    Offer Letter by Adient plc to Douglas DelGrosso
10.2    Form of Key Executive Severance and Change of Control Agreement between Adient plc and Douglas G. DelGrosso

 

4


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ADIENT PLC
Date: September 13, 2018     By:   /s/ Cathleen A. Ebacher
    Name:   Cathleen A. Ebacher
    Title:   Vice President, General Counsel and Secretary

 

5

Exhibit 10.1

 

LOGO

September 10, 2018

Douglas DelGrosso

1551 Kessler Ave.

Keego Harbor, MI 48320

Dear Mr. DelGrosso:

I am pleased to confirm our offer of employment with Adient plc (Adient). Our offer is as follows:

 

Job Title:    President and Chief Executive Officer of Adient
Expected Start Date:    October 15, 2018
Location:    Plymouth, MI
Role as Director:   

•  Subject to Board approval, you will be elected to the Board of Directors of Adient, with such election to be effective on your expected start date, with your continuing role as a Director subject to shareholder approval and subject to all applicable rules, regulations and Company policies

•  As a Director, you will be subject to Irish tax (subject to changes in the Irish tax laws); the Company will assist with the preparation of the necessary Irish tax returns

Annual Compensation:   

Base Salary: $1,150,000 per year (payable in accordance with Adient’s normal payroll practices)

 

Annual Incentive Performance Program (Cash Bonus):

•  Target of 150% of base salary, with a payout range of 0% to 200% of base salary for performance against metrics

•  Performance metrics to be determined annually by the Compensation Committee

•  Bonus will be subject to the terms of the Annual Incentive Performance Program plan document

 

Long-Term Incentive (Equity):

•  Target grant date value of $7,300,000; currently awarded as 70% performance share units (PSUs) and 30% restricted share units (RSUs)

•  Equity vehicles and applicable performance metrics to be determined annually by Adient’s Compensation Committee

•  Equity awards to be granted under the 2016 Omnibus Incentive Plan or a successor plan using Committee-approved form award agreements

•  Grants made annually in accordance with normal grant practices

 

1


Other Benefits:   

•  You will receive standard Adient employee benefits including participation in Adient’s health and welfare plans, the Adient 401(k) plan and the Adient retirement restoration plan

•  You will receive Adient’s standard Key Executive Severance and Change of Control Agreement

  Non-Change of Control Severance is 1.5x base salary and a cash payment equal to 18 months’ benefits

  Change of Control Severance is 3.0x the sum of base salary and average bonus and a cash payment equal to 36 months’ benefits

Sign-On Awards:   

Equity Award (One-Time Award)

•  PSU award with a grant date target value of $7,000,000

•  PSUs will be earned and become vested based on the difference in (1) the average closing price of Adient ordinary shares over 10 trading days before and 10 trading days after your start date (the “Starting Price”) compared to (2) the average closing price of Adient ordinary shares over 10 trading days before and 10 trading days after the 3 rd anniversary of the grant date (the “Ending Price”) as follows:

   
  

Ending Price as a % of Starting Price

 

  

Multiplier Against Granted PSUs

 

   Less than Starting Price    75%
   Equal to Starting Price    90%
   Over 100% up to 150%    100%
   Over 150% up to 200%    135%
   Over 200% up to 250%    175%
   Over 250%    250%
  

•  The percentage of PSUs earned will not be interpolated for performance between the levels indicated above

•  The PSUs will be forfeited on separation from service prior to the third anniversary, except that a pro rated portion will be eligible to be earned based on actual performance if the separation is due to death or disability

•  Other terms and conditions of the PSUs to be based on the 2016 Omnibus Incentive Plan and Adient’s standard form of PSU award agreement

 

Make-Whole Payment

•  $1,300,000 to compensate you for forfeited 2018 bonus and dividends of prior employer, paid within 30 days following start date

•  The Make-Whole Payment will be subject to repayment in full if your employment with Adient ends for any reason other than termination by Adient without Cause (as defined in the Key Executive Severance and Change of Control Agreement), or due to death or disability, prior to the second anniversary of your start date, and Adient will have the right to collect any repayment amount from your other compensation

 

2


  

•  The Make-Whole Payment will also be subject to adjustment to offset for any partial or full payment your previous employer makes to you with respect to its 2018 bonus plan and for any dividends not clawed back

•  The repayment obligation with respect to the Make-Whole Payment will be documented in a separate Repayment Agreement to be entered into upon your start date

This offer is dependent on your successful completion of Adient’s standard pre-employment screening and verification process. Your employment will be “at will,” terminable by either you or Adient at any time, subject to the terms of your Key Executive Severance and Change of Control Agreement. All amounts stated above are subject to applicable tax and statutory withholdings or other deductions.

By signing this letter, you represent and warrant to Adient that you will not be in breach of any existing or any former terms of employment applicable to you or in breach of any other obligation binding on you, including without limitation any noncompetition, non-solicitation of customers, non-solicitation of employees or other restrictive covenant, by reason of your becoming an employee of Adient or performing your duties for Adient. You further confirm that you will not remove or take any documents or proprietary data or materials of any kind, electronic or otherwise, with you from your current or former employer to Adient without express authorization from your current or former employer. If you have any questions about the ownership of particular documents or other information, discuss such questions with your current or former employer before removing or copying the documents or information.

We look forward to hearing from you by September 11, 2018. Meanwhile, if you have any additional questions, please contact me. On behalf of the Board of Directors, we are excited about the future of Adient and your ability to enhance the value of our Company for our stakeholders.

 

Sincerely,
/s/ John M. Barth
John M. Barth
Chairman

Agreed and accepted this 11 th day of September, 2018.

 

/s/ Douglas DelGrosso
Douglas DelGrosso

 

3

Exhibit 10.2

KEY EXECUTIVE SEVERANCE AND CHANGE OF CONTROL AGREEMENT

THIS AGREEMENT (this “ Agreement ”), is made and entered into as of the 1 st day of October, 2018 (the “ Effective Date ”), by and among Adient plc (along with any successor thereto, the “ Company ”), Adient US LLC (along with any successor thereto, the “ Employer ”) and Douglas DelGrosso (the “ Executive ”).

BACKGROUND

The Executive is becoming an employee of the Employer in a key executive capacity and the Employer desires to provide the Executive with certain compensation and benefits in the event the Executive’s employment with the Employer is terminated under certain circumstances, and to provide certain protections in the event of a change of control of the Company. In addition, the Executive will possess intimate knowledge of the business and affairs of the Company and its affiliates (the Company and all affiliates are collectively referred to herein as the “ Company Group ”) and will acquire certain confidential information and data with respect to the Company Group, which the Company desires to ensure is protected.

NOW, THEREFORE , in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

ARTICLE I

TERM

This Agreement shall become effective on the Effective Date and shall continue until the third anniversary thereof (the “ Initial Term ”). Thereafter, this Agreement shall renew automatically for successive one-year renewal periods unless and until any party provides written notice to the other parties of the intent not to renew this Agreement at least ninety (90) days prior to the end of the Initial Term or any subsequent one-year term. Non-renewal of this Agreement by any party shall not trigger payment of severance benefits under this Agreement. If this Agreement expires without severance benefits becoming payable hereunder, then the Executive will be eligible to receive severance benefits following the expiration of this Agreement pursuant to the Employer’s severance policy as then in effect.

Notwithstanding the foregoing, if a Change of Control (as defined below) occurs prior to the end of the Initial Term or any subsequent one-year term, then the term of the Agreement shall be extended automatically until the second anniversary of such Change of Control (the “ Change of Control Period ”). For purposes of this Agreement, a “ Change of Control ” shall have the meaning given in the Adient plc 2016 Omnibus Incentive Plan, or any successor or replacement plan thereto.


ARTICLE II

SEVERANCE BENEFITS

Section 2.01     Eligibility for Severance Benefits .

(a)     Eligibility . If the Executive’s Separation from Service (as defined below) occurs due to (i) a termination by the Employer for reasons other than Cause (as defined below), death or disability, or (ii) a resignation for Good Reason (as defined below), and if the Executive complies with the requirements of Section 2.03, then the Executive shall be entitled to the benefits described in Section 2.02. For purposes hereof, if such a Separation from Service occurs during the Change of Control Period, then such separation is referred to as a “ Change of Control Termination .”

(b)     Definitions . For purposes of this Agreement:

 

  i.

“Cause” shall mean any of the Executive’s (A) substantial failure (other than due to the Executive’s disability) or refusal to perform the essential duties and responsibilities of his or her job as required by the Employer, (B) material violation of any fiduciary duty owed to the Company Group, (C) conviction of, or entry of a plea of no contest with respect to (1) a felony or (2) a misdemeanor which involves dishonesty, fraud or morally repugnant behavior, (D) dishonesty or theft in connection with the Company Group, (E) a material violation of any of the Company Group’s material rules or material policies applicable to the Executive, or (F) other egregious or morally repugnant conduct that has, or could have, a serious and detrimental impact on the Company Group or its employees. The Compensation Committee of the Board of Directors of the Company (the “ Committee ”) shall determine, in good faith and exercising reasonable judgment, whether Cause exists.

 

  ii.

“Good Reason” shall mean the occurrence of one of the following events without the Executive’s written consent:

 

  A.

Before or after the Change of Control Period: (1) a change in the principal geographic location at which the Executive must perform services to a location that is more than thirty (30) miles outside of Plymouth, Michigan; or (2) a material reduction to the Executive’s total cash compensation target or equity award value target; provided that a material reduction to any of the aforementioned will not give rise to a Good Reason if such material reduction is the result of a widespread reduction in compensation applied consistently to other peer executives.

 

2


  B.

During the Change of Control Period, (1) an event described in clause A.(1) above; (2) either (x) a material reduction to the Executive’s total cash compensation target or equity award value target from the levels in effect immediately prior to the Change of Control Period; or (y) the application of performance goals to the Executive’s incentive compensation awards for which the probability of attainment is materially more difficult than the probability of attainment applicable to the goals under the Company Group’s incentive plans as in effect immediately prior to the Change in Control; (3) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s authority, duties or responsibilities as in effect immediately prior to the Change of Control Period which represent a diminution of such duties, or any other action by the Company Group which results in a material diminution in such authority, duties or responsibilities; or (4) a material diminution of the duties or responsibilities of the Executive such that the position held is no longer commensurate with that of a Chief Executive Officer.

 

      

The Executive shall be considered to resign for Good Reason under Section 2.01(b)(ii)(A) or (B) only if the Executive provides, within ninety (90) days after the Good Reason event, a written notice to the Company in accordance with Section 5.02 specifying in reasonable detail the events or conditions causing Good Reason. Within thirty (30) days after receipt of such notice, the Company Group shall have the opportunity, but shall have no obligation, to cure such events or conditions that give rise to the Good Reason resignation. If the Company Group does not cure such events or conditions within the thirty (30)-day period, the Executive’s resignation for Good Reason will be effective at the end of such thirty (30)-day cure period.

 

  iii.

“Separation from Service” (or derivations thereof) shall have the meaning given in Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “ Code ”).

Section 2.02     Amount of Severance Benefits . Subject to the conditions of Sections 2.01 and 2.03, and the limitations described in Section 2.05, the Employer shall pay or provide the Executive with the following severance benefits:

(a)     Salary Replacement Benefits . A cash payment equal to one and one-half (1.5) times the Executive’s annual base salary, or, in the event of a Change of Control Termination, a cash payment equal to three (3.0) times the sum of (i) the Executive’s annual base salary and (ii) the Executive’s Average Bonus Amount.

 

3


For purposes hereof, the “ Average Bonus Amount ” means the average gross annual cash bonuses paid (or if earned, payable), to the Executive by the Employer in respect of the three fiscal years immediately preceding the fiscal year in which the Executive’s Separation from Service occurs; provided that if the Executive’s Separation from Service occurs prior to completing three full fiscal years of employment, then the Average Bonus Amount shall be the average of the annual cash bonuses paid (or if earned, payable) to the Executive in respect of the complete fiscal years of the Executive’s employment; and provided further that, if the Executive has not completed one full fiscal year of employment with the Employer as of the date of his or her Separation from Service, then the Average Bonus Amount shall be the Executive’s annual target bonus amount as in effect on the date of Separation from Service. All annual bonus amounts used to determine the Average Bonus Amount shall be determined without regard to any mandatory or voluntary deferrals of such amounts.

(b)     Bonus . A cash payment of his or her annual bonus for the fiscal year in which the Separation from Service occurs, determined based on actual performance at the end of the applicable performance period, and prorated to reflect the length of employment during the performance period; provided that, in the event of a Change of Control Termination, the annual bonus will not be subject to proration.

(c)     Benefits Replacement Payment . A cash payment equal to the monthly Employer contributions being made for the Executive’s medical, dental, vision, life insurance and disability coverages (based on the level of coverage in effect immediately prior to the Separation from Service), plus the monthly amount of Employer contributions that were being made to the Executive’s qualified and nonqualified retirement accounts immediately prior to the Separation from Service, plus the monthly amount the Executive was receiving under the Employer’s perquisite program immediately prior to the Separation from Service, plus the monthly payment the Employer paid on the Executive’s car lease or provided as a car allowance, whichever is applicable, immediately prior to the Separation from Service, multiplied by 18; provided that in the event of a Change of Control Termination, the multiplier shall instead be 36. If any amounts described herein were determined on other than a monthly basis prior to the Executive’s Separation from Service, such amount will be converted into a monthly amount as determined in good faith by the Employer.

(d)     Equity Awards . Unless an award agreement provides a more favorable result, the Executive’s equity awards shall vest on a prorated basis, based on the portion of the vesting or performance period, as applicable, which the Executive has completed at the time of the Executive’s Separation from Service, provided that all performance based awards shall vest at the end of the performance period only if and to the extent the performance goals thereunder are achieved.

Section 2.03     Additional Requirements to Receive Severance Benefits . In order to receive severance benefits, the Executive must: (a) execute a release in the form provided by the Employer within the time period specified in such release, and not revoke such release during the revocation period provided in such release; and (b) comply with all the terms and conditions of such release and the covenants set forth in

 

4


Article III. If the Employer determines that the Executive has not fulfilled these requirements, or if the Committee determines after the Executive’s Separation from Service that the Executive (i) has engaged in conduct that constitutes Cause at any time prior to the Executive’s Separation from Service (and the facts underlying the Cause determination were not fully known to the Employer at the time of such Separation from Service), or (ii) has been convicted of or entered a plea of no contest with respect to a crime based on conduct which occurred prior to the Executive’s Separation from Service, then the Employer may discontinue the payment or provision of the severance benefits, and may require the Executive to repay any portion of the severance benefits already received under this Agreement upon written notice. The form of release provided by the Employer shall contain provisions that are typical for such releases and may contain the covenants set forth in Article III, but modified as the Employer deems reasonably necessary to ensure compliance with the maximum time, service, scope, geographic or other limitations, as the case may be, permitted by applicable laws.

Section 2.04     Payment . The cash severance benefits shall be paid in a single lump sum payment within ninety (90) days following the Executive’s Separation from Service, or shall be paid in such amounts during such period (not to exceed the number of months of continuation pay represented by the amount of the benefit following the Executive’s Separation from Service), as is determined in the sole discretion of the Committee. Notwithstanding the foregoing, no discretion as to the timing and form of payment is allowed for the amount of the cash severance benefits that exceed the lesser of (a) two times the Executive’s annualized compensation (as determined pursuant to Code Section 409A) for the calendar year preceding the year of Separation from Service, or (b) two times the compensation limit in effect under Code Section 401(a)(17) for the year in which the Separation from Service occurs; such amount shall be required to be paid in a lump sum within ninety (90) days following the Executive’s Separation from Service. The annual bonus amount payable pursuant to Section 2.02(b) shall be paid at the same time as bonuses would be payable under the applicable bonus or incentive plan or program. The equity awards that vest pursuant to Section 2.02(e) shall be paid or settled at the time provided in such awards. All payments under this Agreement are subject to applicable federal, state and local taxes and withholdings. In the event of the Executive’s death prior to receiving the full cash payment due to him or her, the remaining amount of such payment shall be paid to the Executive’s estate in a single lump-sum payment within thirty (30) days following the Executive’s death, to the extent practicable, or otherwise at the time when the Executive would have been entitled to the payment had the Executive survived.

Notwithstanding any provision of this Agreement to the contrary, if and to the extent required by Code Section 409A, the payment of severance benefits hereunder shall be delayed until the six-month anniversary of the Executive’s Separation from Service. In such case, the accumulated amounts that were payable during such six-month period shall be paid in a lump sum after the end of such six-month period (or, if earlier, within thirty (30) days after the Executive’s death to the extent practicable, or otherwise at the time the Executive would have been entitled to the payment had the Executive survived).

 

5


Section 2.05     Limitation on Benefits . If any payment or distribution by the Company Group to or for the benefit of the Executive (whether paid or provided pursuant to the terms of this Agreement or otherwise) (the “ Payments ”) would subject the Executive to an excise tax under Code Section 4999, then the aggregate present value of the benefits provided to the Executive pursuant to this Agreement (the “ Benefit Payments ”) shall be reduced to an amount which maximizes the aggregate present value of Benefit Payments without causing any of the Payments to be subject to such tax by the Executive (the “ Reduced Amount ”); provided that the foregoing reduction shall not apply if the value of such Payments (after payment of all federal, state and local income taxes, federal employment taxes and the excise taxes due under Code Section 4999) would exceed the after-tax value of the Reduced Amount. If Benefit Payments are required to be reduced, then the Benefit Payments shall be reduced such that the economic loss to the Executive is minimized. All determinations required to be made under this Section 2.05 shall be made by a nationally recognized accounting or consulting firm selected by the Executive Vice President and Chief Human Resources Officer of the Company (or the equivalent) (the “ Firm ”). Any such determination by the Firm shall be binding upon the Employer, its successors and the Executive.

Section 2.06     Termination for Cause, Death, Disability and Voluntary Resignation . If the Employer terminates the Executive’s employment for Cause or if the Executive’s employment is terminated due to death, disability or voluntary resignation (that is not for Good Reason), then the Executive shall not be entitled to receive any severance benefits under this Agreement and shall be entitled only to those benefits that are legally required to be provided to the Executive. The Employer may withhold paying severance benefits and the Company may delay causing any equity awards to vest under this Agreement pending prompt resolution of any good faith inquiry that is likely to lead to a finding resulting in Cause.

Section 2.07     Offset to Severance Benefits . To the extent consistent with law, the Employer reserves the right to offset from any severance benefits due hereunder, the amount of any monies owed to the Company Group by the Executive or the value of Company Group property that the Executive has retained in his or her possession. Prior to such offset, the Company shall provide a written accounting to the Executive of the monies owed or the value of the property for which the offset applies.

ARTICLE III

RESTRICTIVE COVENANTS

Section 3.01     Confidential Information . The Executive agrees that, during his or her employment with the Employer and at all times thereafter, the Executive shall hold for the benefit of the Company Group all secret or confidential information, knowledge, or data relating to the Company Group and their respective businesses (“ Confidential Information ”), which shall have been obtained by the Executive during the Executive’s employment by the Employer or during his or her consultation with the Company Group after his termination of employment, and which is not public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). Except in the good faith performance of his or her duties for the Company Group, the

 

6


Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge, or data to anyone other than the Company Group and those designated by it. Nothing in this Section 3.01 is intended or shall be construed to limit in any way Section 3.02.

Section 3.02     Trade Secrets . During employment with the Employer, the Executive shall preserve and protect Trade Secrets (as defined below) of the Company Group from unauthorized use or disclosure, and after termination of such employment, the Executive shall not use or disclose any Trade Secret of the Company Group until such time as that Trade Secret is no longer a secret as a result of circumstances other than a misappropriation involving the Executive. For purposes of this Agreement, “ Trade Secret ” means information of the Company Group, including a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and that is the subject of efforts by the Company Group to maintain its secrecy that are reasonable under the circumstances.

Section 3.03     Non-Competition . The Executive agrees that, while the Executive is employed by the Employer and for the longer of (a) twelve (12) months after the Executive’s termination of employment for any reason or (b) if the Executive experiences a Separation from Service entitling him or her to severance benefits, eighteen (18) months after such Separation from Service (the “ Restricted Period ”), the Executive shall not, except as permitted by the Company’s prior written consent, in any capacity in which Confidential Information or Trade Secrets of the Company Group would reasonably be regarded as useful, engage in, be employed by, or in any way advise or act for any business that competes with the Company Group (a) with respect to any products or services provided by any division or group within the Company Group in the year immediately preceding the Executive’s termination of employment with the Employer, and (b) within the national and international geographic markets served by any such division or group. This restriction shall also apply to any ownership or other financial interest in any such competing business except the ownership of less than 5% of the shares of any corporation whose shares are listed on a recognized stock exchange or trade in an over-the-counter market. The Executive acknowledges and agrees that this Section 3.03 could potentially apply to a geographic area coextensive with the Company Group’s global operations. For the avoidance of doubt, and without limitation, the following entities, among others, compete with the Company Group: Magna International Inc., Lear Corporation, Faurecia S.A., Toyota Boshoku Corp., DYMOS, Brose Fahrzeugteile GmbH & Co., Woodbridge Foam Corp., and Tachi-S Co., Ltd.

Section 3.04     Non-Solicitation . The Executive agrees that, during the Restricted Period, the Executive shall not, directly or indirectly, (a) solicit, induce or attempt to induce any individual who is, on the date of the Executive’s Separation from Service (or was, during the six-month period prior to the date of Separation from Service), employed by the Company Group in an e-band salaried position to terminate or refrain

 

7


from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than the Company Group; or (b) induce or attempt to induce any customer or investor (in each case, whether former, current, or prospective), supplier, licensee, or other business relation of the Company Group to cease doing business with the Company Group, or in any way interfere with the relationship between any such customer, investor, supplier, licensee, or business relation, on the one hand, and the Company Group on the other hand.

Section 3.05     Non-Disparagement . The Executive agrees that, following the Executive’s Separation from Service, the Executive shall not make any public statements that materially disparage the Company Group.

Section 3.06     Equitable Remedies . The Executive acknowledges that the Company Group would be irreparably injured by a violation of this Article III and the Executive agrees that the Company Group, in addition to any other remedies available to it for such breach or threatened breach, on meeting the standards required by law, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the Executive from any actual or threatened breach of this Article III. If a bond is required to be posted in order for the Company Group to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum.

Section 3.07     Severability; Blue Pencil . The Executive acknowledges and agrees that the Executive has had the opportunity to seek advice of counsel in connection with this Agreement and the restrictive covenants contained herein are reasonable in geographical scope temporal duration and in all other respects. If it is determined that any provision of this Article III is invalid or unenforceable, the remainder of the provisions of this Article III shall not thereby be affected and shall be given full effect, without regard to the invalid or unenforceable portions. If any court or other decision-maker of competent jurisdiction determines that any of the covenants in this Article III are invalid or unenforceable because of the duration, geographic scope or other limitation of such provision, then the duration, scope or other limitation of such provision, as the case may be, shall be modified to the minimum extent needed so that such provision becomes valid and enforceable, and in its modified form, such provision shall be enforced.

Section 3.08     Whistleblower Rights . Notwithstanding any provision of this Agreement to the contrary, the covenants set forth in this Article III are not intended to (a) interfere with the Executive’s right and responsibility to give truthful testimony under oath or to make truthful statements and provide information to a government agency, (b) prohibit the Executive from filing a charge or complaint with, making a report to, participating in any investigation or proceeding conducted by, or otherwise cooperating with a government agency, or (c) limit or restrict the Executive from exercising any legally protected whistleblower rights (including pursuant to Rule 21F under the Securities Exchange Act of 1934, as amended, or any successor provision).

 

8


ARTICLE IV

TREATMENT OF EQUITY AWARDS UPON A CHANGE OF CONTROL

If the Executive is employed by the Employer immediately prior to a Change of Control, and either (a) the purchaser, successor or surviving corporation (or parent thereof) (the “ Survivor ”) fails to either assume all of the Executive’s outstanding equity awards without change, or fails to issue replacement awards with the same economic value and with similar terms and conditions, or (b) the Company or Survivor terminates the Executive’s equity awards in connection with the Change of Control, then the Executive’s equity awards will vest upon the Change of Control as follows:

(a)    Each award that vests on the basis of continued employment (without regard to the attainment of any performance goals) shall vest in full; and

(b)    Each award that pays out on the basis of the achievement of performance goals shall vest in full upon the Change of Control, with the payout amount determined by the Committee in its sole discretion. In making such determination, the Committee must take into account the extent to which the performance goals have already been achieved, or, if applicable, the trend at which the performance goals are being achieved.

All payments of cash and issuance of equity required hereunder shall be made as soon as practicable after, but in no event more than ninety (90) days following, the date of the Change of Control.

ARTICLE V

MISCELLANEOUS

Section 5.01     Survival . The obligations contained in Article III shall survive the expiration of this Agreement and shall be fully enforceable thereafter. In addition, the expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.

Section 5.02     Nonalienation of Benefits . None of the payments, benefits or rights of the Executive shall be subject to any claim of any creditor of the Executive, and the Executive shall not have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments that he or she may expect to receive, contingently or otherwise, under this Agreement.

Section 5.03     Notices . All notices and other communications required hereunder shall be in writing and shall be delivered personally or by registered mail or overnight express courier service, (a) in the case of the Executive, addressed to him or her at the home address which he or she most recently communicated to the Company Group in writing, and (b) in the case of the Company Group, to the attention of the Executive Vice President and Chief Human Resources Officer of the Company at 49200 Halyard Drive, Plymouth, MI 48170, with a copy to the Chairperson of the Committee, sent to the same address.

 

9


S ection 5.04     Contents of Agreement; Amendment . This Agreement sets forth the entire understanding between the parties hereto with respect to the severance benefits and supersedes any prior or other agreement or understanding between the parties with respect to such subject matter, including specifically any severance policy maintained by the Employer.

This Agreement may not be amended or modified at any time except by written instrument executed by the Company, the Employer and the Executive.

Section 5.05     No Contract of Employment . This Agreement shall not be construed as giving the Executive the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if this Agreement had never been executed.

Section 5.06     Severability of Provisions . Except as set forth in Section 3.07, if any provision of this Agreement shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect any other provisions hereof, and this Agreement shall be deemed amended to the minimum extent necessary to permit such provision to be valid and enforceable, or if such deemed amendment is prohibited by law, then construed and enforced as if such provisions had not been included.

Section 5.07     Headings and Captions . The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Agreement, and shall not be employed in the construction of this Agreement.

Section 5.08     Controlling Law; Venue . This Agreement shall be construed and enforced according to the internal laws of the State of Michigan, without reference to the choice of law provisions thereof. The Executive irrevocably and unconditionally (a) agrees that any suit, action or other legal proceeding arising under this Agreement, including without limitation, any action commenced by any member of the Company Group for preliminary and permanent injunctive relief or other equitable relief under Article III, may be brought in the United States District Court for the Eastern District of Michigan, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Michigan, (b) consents to be subject to the non-exclusive personal jurisdiction of any such court in any such suit, action or proceeding, and (c) waives any objection which the Executive may have to the laying of venue of any such suit, action or proceeding in any such court. The Employer is a Michigan limited liability company. The responsibilities of the Executive’s employment have substantial relation to the Employer’s business in Michigan.

 

10


IN WITNESS WHEREOF , the parties have executed this Agreement as of the day and year first above written.

 

    ADIENT PLC
    By:    
      Name:  
      Title:  
    ADIENT US LLC
    By:    
      Name:  
      Title:  
    EXECUTIVE
     
    Douglas DelGrosso

 

11