Exhibit 10.1
December 29, 2010                    
[Name]
c/o Reliance Standard Life Insurance Company
2001 Market Street, Suite 1500
Philadelphia, Pennsylvania 19103-7303

Re:   Amended and Restated Award Agreement

Dear [Name]:
     This agreement (the “Agreement”) will serve to amend and restate the Stock
Option Award Agreement between Delphi Financial Group, Inc. (“Delphi”) and you
dated August 17, 2009 (the “Existing Agreement”). In such connection, it is
hereby confirmed that, on December 29, 2010, (a) the Compensation Committee (the
“Committee”) of the Board of Directors of Delphi has, pursuant to Sections 5,
6(a) and 9(d) of the 2003 Employee Long-Term Incentive and Share Award Plan, as
amended (the “Plan”), granted to you 25,854 Restricted Shares in exchange for
options to purchase up to 60,000 shares of Delphi’s Class A Common Stock (the
“Stock”), (b) you have surrendered options to purchase up to 80,000 shares of
the Stock as consideration for the modification of the financial performance
goals contained in the Existing Agreement and (c) such goals, as so modified,
shall be as set forth herein. This agreement, once countersigned by you, shall
constitute an “Award Agreement” as defined in Section 2(c) of the Plan.
Capitalized terms used but not defined herein have the meanings given to them in
the Plan.
     After giving effect to the aforementioned matters, the Awards having been
granted to you consist of options to purchase up to 60,000 shares of the Stock
at the price of $24.91 per share (the “Options”) and 25,854 Restricted Shares
(the “Restricted Shares”). Such Awards are subject in all respects to the terms
and conditions described herein.
     As of the date hereof, the Restricted Shares shall be issued in book-entry
form to an account established in your name at Delphi’s transfer agent, American
Stock Transfer and Trust Company. Unless and until the Restricted Shares are
forfeited pursuant to the provisions of this Agreement, you shall be the
beneficial owner of the Restricted Shares and shall have the rights of a
stockholder of Delphi, including voting rights and

 

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[Name]
December 29, 2010
Page 2
the right to receive dividends at the times and in the manner paid to
stockholders generally, subject to the restriction that none of the Restricted
Shares may be sold, exchanged, transferred, assigned, pledged, hypothecated or
otherwise disposed of or hedged in any manner (collectively, the
“Restrictions”).
     The Options will become exercisable and the Restrictions relating to the
Restricted Shares will lapse, in accordance with the procedures set forth
herein, if and to the extent that Reliance Standard Life Insurance Company of
Texas and its consolidated subsidiaries (collectively, “the RSL Companies” and,
each, an “RSL Company”) meet the financial performance goal described in the
following paragraph, as measured and determined in accordance with the
provisions of Exhibit A hereto:
     If the RSL Companies’ aggregate Adjusted Pre-Tax Operating Income, as
defined in Exhibit A hereto (“Adjusted Pre-Tax Operating Income”), for the
period consisting of Delphi’s 2009, 2010, 2011 and 2012 fiscal years (the
“Performance Period”) is at least $696,791,000, (i) 60,000 Options shall become
exercisable and (ii) the Restrictions shall lapse with respect to 25,854 of the
Restricted Shares. Alternatively, if the RSL Companies’ aggregate Adjusted
Pre-Tax Operating Income for the Performance Period does not reach $696,791,000,
but is greater than $657,073,000, (x) a reduced number of the Options shall
become exercisable, such number to be determined by interpolating between zero
and 60,000 in relation to the point at which the Adjusted Pre-Tax Operating
Income amount falls in the range between $657,073,000 and $696,791,000 and
(y) the Restrictions shall lapse with respect to a reduced number of the
Restricted Shares, such number to be determined by interpolating between zero
and 25,854 in relation to the point at which the Adjusted Pre-Tax Operating
Income amount falls in such range, in both cases rounding the number obtained to
the nearest whole number. For example, if the RSL Companies’ aggregate Adjusted
Pre-Tax Operating Income for the Performance Period were exactly $676,927,000,
30,000 Options would become exercisable and the Restrictions would lapse with
respect to 12,927 of the Restricted Shares.

 

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[Name]
December 29, 2010
Page 3
     In addition, if, during the Performance Period, your employment with
Delphi’s subsidiary, Reliance Standard Life Insurance Company (“RSL”),
terminates due to death or Disability or is terminated by RSL without Cause or
by you for Good Reason, then, notwithstanding any provisions hereof or of the
Plan to the contrary, the Options will become exercisable and the Restrictions
shall lapse to such extent, if any, as would have been the case pursuant to such
paragraph if not for such termination; provided, however, that the number of
Options that becomes exercisable and the number of Restricted Shares whose
Restrictions shall lapse will, in each case, be reduced by a percentage equal to
the percentage of the Performance Period during which you were not employed by
RSL by reason of such termination. For purposes of this paragraph, the following
definitions shall apply:
     “Disability” shall mean an illness, injury, accident or condition of either
a physical or psychological nature as a result of which you are unable to
perform substantially the duties and responsibilities of your position during a
period of 180 days during a period of 365 consecutive calendar days.
     “Cause” shall mean (i) conviction of a felony or other crime involving
fraud, dishonesty or moral turpitude, (ii) fraud or intentional
misrepresentation, embezzlement, misappropriation or conversion of assets or
opportunities of Delphi or any Subsidiary thereof, or any unauthorized
disclosure of confidential information or trade secrets of Delphi or any
Subsidiary thereof (a “Breach of Confidentiality”), or (iii) gross neglect of
duties of your office specified by the Board of Directors of RSL.
     “Good Reason” shall mean (i) reduction of your base salary for any fiscal
year to less than 100 percent of the rate of base salary in effect for you as of
the date of this Agreement; or (ii) the failure of RSL to continue in effect any
retirement, life insurance, medical insurance or disability plan in which you
were participating of as the date of this Agreement, except, as to any such
plan, where RSL provides you with a plan that provides substantially comparable
benefits or where the discontinuation of such plan applies generally with
respect to the employees of RSL (or, in the case of a plan furnished only

 

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[Name]
December 29, 2010
Page 4
to a specified group of RSL employees, with respect to such group).
     Options which do not become exercisable pursuant to the provisions of this
Agreement shall expire and terminate in their entirety without becoming
exercisable. Restricted Shares whose Restrictions do not lapse pursuant to such
provisions shall be forfeited in their entirety, effective on the date on which
Delphi provides the written notification contemplated by the third following
paragraph following the completion of the Performance Period indicating the
number of Restricted Shares whose restrictions have failed to lapse. In
addition, if you terminate your employment with RSL during the Performance
Period other than for Good Reason, death or Disability, the Restricted Shares
shall be forfeited in their entirety, effective immediately upon such
termination.
     For purposes of application of the foregoing provisions relating to the
exercisability of the Options, the following procedures shall apply:
     Each determination of Adjusted Pre-Tax Operating Income shall be made by
Delphi, based upon a statement of operations of the RSL Companies for the
applicable period conforming to the provisions of Exhibit A hereto and in form
and substance reasonably acceptable to Delphi.
     Delphi shall notify you in writing, within 65 days following the close of
the Performance Period (or, if later, within 10 days from the date on which
Delphi receives the statement of operations with respect to the Performance
Period pursuant to the preceding paragraph) of its determination as to the level
of aggregate Adjusted Pre-Tax Operating Income achieved and, based on such
determination, the extent to which (if any) the Options have become exercisable
and the Restrictions relating to the Restricted Shares have lapsed pursuant to
the fifth (or, if applicable, sixth) paragraph of this Agreement. Options having
become exercisable, as described in such notice, shall for all purposes of the
Plan be exercisable immediately as of the date of such notice, and lapsing of
the Restrictions with respect to the Restricted Shares, as described in such
notice, shall for all such purposes

 

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[Name]
December 29, 2010
Page 5
be deemed to have occurred as of the date of such notice.
     Options that become exercisable as provided in this Agreement will, if not
sooner exercised or terminated pursuant to the provisions hereof, terminate at
the close of business on August 5, 2019. The Options are in all respects subject
to each of the terms and conditions of the Plan, except as otherwise
specifically provided herein and except that: (i) the provisions of
Sections 5(b)(iii), (iv), (vi) and (viii) of the Plan will not limit your
ability to exercise, following a termination of your employment by RSL or for
the other reasons set forth therein, Options that have become exercisable as of
the date of such termination or that become exercisable thereafter pursuant to
the provisions of clause (c) above; provided, however, that the Options will
terminate in their entirety upon the occurrence of a Breach of Confidentiality
on your part occurring subsequent to such termination of employment; (ii) for
purposes of Section 5(b)(v) of the Plan, your discharge for cause shall result
in the termination of Options that are exercisable at the time of such discharge
only where the Committee determines that the discharge was based on a Breach of
Confidentiality on your part; and (iii) the exercise price for the Options, as
well as the minimum amount of taxes required, in the Company’s judgment, to be
withheld under applicable federal, state and local law in connection with any
exercise of the Options, may be paid by your directing that Delphi withhold from
the shares to be issued pursuant to such Options a number of shares having a
market value equal to such exercise price and/or tax withholding amount, so long
as such payment method will not, in Delphi’s judgment, result in adverse
accounting consequences for Delphi.
     In addition, if RSL terminates your employment without Cause or if you
terminate your employment for Good Reason (as such term is defined above), in
either case subsequent to the occurrence of a Change of Ownership, and, as of
the date of such termination (the “Termination Date”), the Options then remain
outstanding but have not become exercisable (whether such Options are then
exercisable for shares of Delphi or another company, cash or other property) and
the Restricted Shares then remain outstanding, subject to the Restrictions,
then, so long as the Performance Condition has been satisfied as of the
Termination Date, such Options shall immediately become

 

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[Name]
December 29, 2010
Page 6
exercisable in their entirety and the Restrictions shall immediately lapse in
their entirety as to such Restricted Shares. For purposes of this paragraph:
     “Change of Ownership” shall mean, in addition to the events specified in
the definition of such term contained in the Plan, the occurrence of any
transaction pursuant to which Delphi ceases to own, directly or indirectly, a
majority of the total voting power of the voting securities of RSL.
     “Performance Condition” shall mean the attainment by the RSL Companies, for
the period commencing on January 1, 2009 through and including the full calendar
quarter most recently having been completed as of the Termination Date, of
aggregate Adjusted Pre-Tax Operating Income in an amount representing a compound
average annualized growth rate of at least one percent (1%), utilizing
$160,254,000 as the base amount. For example, as to a Termination Date occurring
on July 12, 2011, the Performance Condition would relate to the period from
January 1, 2009 through June 30, 2011, and would require that aggregate Adjusted
Pre-Tax Operating Income for such period equal at least $407,886,574.
     If you are in agreement with and accept each of the terms and conditions of
the Options and the Restricted Shares, as described above, please confirm such
agreement and acceptance by executing and dating both counterparts of this
Agreement and returning one fully executed counterpart to me. The other
counterpart should be retained for your files.

 

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[Name]
December 29, 2010
Page 7

            Very truly yours,

Chad W. Coulter
Senior Vice President, Secretary and General Counsel
   

          Agreed to and accepted:
            [Name]           

 

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Exhibit A
to
Stock Option Award Agreement
Adjusted Pre-Tax Operating Income
     Capitalized terms used but not defined herein shall have the meanings given
to them in the Amended and Restated Award Agreement to which this Exhibit A is
attached (the “Option Agreement”). For purposes of the Option Agreement,
“Adjusted Pre-Tax Operating Income” shall be determined for each of the 2009,
2010, 2011 and 2012 fiscal years and shall consist, for each such year, of the
consolidated net income of the RSL Companies, excluding realized investment
gains and losses and before extraordinary gain or loss and federal income tax
expense, with the following additional adjustments:
     (a) the effect, whether positive or negative, on the RSL Companies’ net
investment income of each and every Alternative Investment held by any of such
companies during such year shall be eliminated, with the same effect as if such
Alternative Investment had not been held by any of the RSL Companies at any time
during such year. For this purpose, an “Alternative Investment” shall mean an
investment (which, for this purpose, shall be deemed to include a derivative
instrument except as provided in the following sentence) whose changes in fair
value (positive or negative) are included in net investment income for purposes
of Delphi’s consolidated financial statements for such year, including but not
limited to investments in investment funds organized as limited partnerships and
limited liability companies, trading account securities and hybrid financial
instruments accounted for under Statement of Financial Accounting Standards
No. 155 or any subsequent replacement thereof or similar accounting
pronouncement. For the purpose of this definition, an Alternative Investment
shall not include any derivative instrument utilized for purposes of funding the
RSL Companies’ interest crediting obligations under indexed annuities.
     (b) the amount of the RSL Companies’ net investment income for such year
shall, after taking into account all adjustments made with respect to such year
pursuant to the preceding clause (a), be adjusted upward by adding to such
amount the product of (i) five percent (5%) (the “Substituted Return Amount”)
and (ii) the Average Alternative Asset Balance for such year. For this purpose,
the “Average Alternative Asset Balance” shall mean, for

 

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such year, (x) the sum of the carrying values of the Alternative Investments
(other than derivative instruments) held by the RSL Companies on the last
business day of each of the twelve calendar months in such year, divided by
(y) twelve.
     (c) for purposes of all calculations relating to the amortization of the
RSL Companies’ deferred acquisition costs performed with respect to such year
which take into account the return of Alternative Investments for such year, the
Substituted Return Amount shall be utilized in lieu of the actual return
percentage of the Alternative Investments for such year.
     (d) for purposes of all calculations relating to the amortization of the
RSL Companies’ deferred acquisition costs performed with respect to such year,
the effect of realized investment gains and losses, including but not limited to
losses arising from other than temporary impairment, shall be removed with the
same effect as if such realized gains and/or losses had not occurred.
     (e) the effects of (i) dividends received with respect to shares of stock
of Delphi held by any of the RSL Companies and (ii) the payment of interest on
surplus notes issued by any of the RSL Companies to Delphi and/or any subsidiary
of Delphi shall be eliminated with the same effect as if such dividends had not
been paid and such interest payments had not been made.
     (f) with respect to the RSL Companies’ Policy Administration and Claims
System (the “System”) presently licensed by RSL from Delphi pursuant to the
Master Software License Agreement dated as of September 1, 2002 (the
“Agreement”), (i) all payments made by RSL pursuant to the Agreement shall be
eliminated with the same effect as if such payments had not been made and
(ii) depreciation expenses associated with the System shall be recognized by the
RSL Companies to the same extent as if RSL were the owner of the System.
     (g) there shall be added as an additional item of expense for each year an
amount equal to the excess, if any, of (i) five percent (5%) of the aggregate
premiums collected by the RSL Companies for such year with respect to disability
(short-term and long-term) and New York Disability Benefits Law (DBL) coverages
under policies issued pursuant to their Integrated Employee Benefits program
(including any similar future program, regardless of its name) over (ii) the
aggregate of all cash

 

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compensation paid by the RSL Companies for such year to their affiliate, Matrix
Absence Management, Inc. (“Matrix”), or any other affiliate of the RSL Companies
which in the future provides services with respect to such program of a nature
similar to those presently provided by Matrix.
     All accounting terms used herein shall be construed in accordance with
United States Generally Accepted Accounting Principles, as in effect as of
January 1, 2009 (“GAAP”), and all calculations relating to Adjusted Pre-Tax
Operating Income required by this Exhibit A shall be made according to GAAP,
subject only to the modifications specifically required by clauses (a) through
(g) of the preceding paragraph. However, if subsequent to January 1, 2009, any
change to GAAP becomes effective which either the RSL Optionholders (as such
term is defined below), on one hand, or Delphi, on the other, believes should be
taken into account for purposes of calculating Adjusted Pre-Tax Operating Income
hereunder (including, for example, a situation in which such change is
anticipated to have a significant impact on Delphi’s reported results), Delphi
and the RSL Optionholders will jointly discuss and consider in good faith
whether any amendments to this Exhibit A would be appropriate to take such
change into account, and jointly recommend to the Committee for adoption any
amendments mutually determined to be appropriate for such purpose.
     All calculations of Adjusted Pre-Tax Operating Income shall be subject to
the further Special Adjustments for which this Exhibit A provides. The
determination of Adjusted Pre-Tax Operating Income will be made by Delphi
annually within 65 days of the end of each year.
Special Adjustments
Adjustment events: Each of the following shall constitute an Adjustment Event
for purposes of the Option Agreement:
     (A) the payment by the RSL Companies of stockholder dividends (other than
dividends paid by a RSL Company to another RSL Company) exceeding $58,000,000 in
the aggregate during the period consisting of Delphi’s 2011 and 2012 fiscal
years (such excess dividends, “Excess Dividends”);
     (B) the making by Delphi of capital and/or surplus contributions to any of
the RSL Companies during the period consisting of Delphi’s 2011 and 2012 fiscal
years,

 

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regardless of the form of such contributions, which exceed $10,000,000 in the
aggregate (such excess contributions, “Excess Contributions”);
     (C) the acquisition by Delphi, directly or indirectly, of a company or a
division or business unit thereof by merger, consolidation, purchase of equity
interests or assets or any other similar transaction, the business activities of
which are substantially related to any of the business activities then conducted
(or intended to be conducted subsequent to such acquisition) by the RSL
Companies.
If an Adjustment Event of the type described in clause (A) above occurs,
Adjusted Pre-Tax Operating Income for the applicable year(s) shall be increased
by the amount of investment income that would have been earned on the amount(s)
constituting Excess Dividends for the relevant portion of the Performance
Period, and if an Adjustment Event of the type described in clause (B) above
occurs, Adjusted Pre-Tax Operating Income for the applicable year(s) shall be
decreased by the amount of investment income deemed to have been earned on the
amount(s) constituting Excess Contributions for the relevant portion of the
Performance Period. For purposes of determining the amount of investment income
that would have been earned or deemed to have been earned pursuant to the
preceding sentence, a yield of 5% per annum shall be assumed.
If an Adjustment Event of the type described in the preceding clause (C) occurs,
Delphi executive management, in consultation with the Chief Executive Officer of
the RSL Companies, may recommend to the Committee any amendments or
modifications to the conditions to vesting of the Options relating to the
financial performance of the RSL Companies, as set forth in clauses (a) and
(b) at page 2 of the Option Agreement (the “Vesting Provisions”), which Delphi
executive management believes in good faith to be necessary or appropriate to
take into account the effect of such Adjustment Event, including but not limited
to the adjustment of one or more of the Adjusted Pre-Tax Operating Income
thresholds set forth therein. Upon receipt of any such recommendation, the
Committee shall determine in its sole discretion whether to amend or modify the
Vesting Provisions based on such Adjustment Event, and the terms and conditions
of any such amendment or modification. Any

 

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such amendment or modification shall be communicated in writing to, and shall be
final and binding on, each holder of Stock options whose terms contain goals
relating to Adjusted Pre-Tax Operating Income for the 2009-2012 period
(collectively, the RSL Optionholders”). For the purpose of avoidance of doubt,
no such amendment or modification shall be deemed to have materially and
adversely affected the rights of any RSL Optionholder under the Options for any
purpose of Section 9(d) of the Plan.
Employee option expenses: SFAS 123R expenses attributable to options granted to
RSL employees on or after January 1, 2009 (other than the options granted to the
RSL Optionholders) shall be included as items of expense.
Arbitration
Delphi shall provide each RSL Optionholder with a detailed written calculation
supporting Delphi’s determination as to whether the applicable goal has been
achieved (each, a “Delphi Determination”) and, where such calculation indicates
such goal having been achieved, confirming the number of Options having become
exercisable as a result thereof, within ninety (90) days after the completion of
the 2012 fiscal period. If a majority of the RSL Optionholders shall disagree
with any Delphi Determination, the RSL Optionholders shall give written notice
of such disagreement to Delphi within ten (10) business days after receipt of
such Delphi Determination. If within twenty (20) business days after Delphi’s
receipt of the notice of disagreement from the RSL Optionholders referenced in
the immediately preceding sentence, Delphi and the RSL Optionholders are unable
to agree with regard to any Delphi Determination, the disagreement may be
submitted to arbitration by either Delphi or the RSL Optionholders, which
arbitration determination shall be final and binding on the parties. The party
instituting the arbitration procedures shall give written notice to the other
party of its desire to arbitrate and such notice shall specify the name and
address of the person designated to act as an arbitrator on its behalf. Within
twenty (20) business days after the service of this notice, the other party
shall notify the first party of the appointment of its arbitrator within the
twenty (20) business day period specified above, then the appointment of the
second arbitrator shall be made in the same manner as hereinafter provided for
the

 

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appointment of a third arbitrator in a case where the two appointed arbitrators
are unable to agree upon a third arbitrator. The two arbitrators so chosen shall
meet within 10 business days after the second arbitrator is appointed and shall
select the third arbitrator by mutual agreement. If the two arbitrators shall
fail to appoint a third arbitrator within 10 business days after the second
arbitrator is appointed, then the third arbitrator shall be appointed by the
American Arbitration Association (“AAA”), or any organization successor thereto,
in accordance with its prevailing rules. Each arbitrator chosen or appointed
pursuant to the foregoing provisions shall be an active or retired officer of an
insurance or reinsurance company and shall be a disinterested person.
The arbitrators shall review the provisions of this Exhibit A and the Option
Agreement, as well as any other documents or materials supplied by either party
supporting such party’s position. The arbitrators shall render their decision
with regard to the disputed Delphi Determination upon the concurrence of at
least two of their number not later than thirty (30) business days after the
appointment of the third arbitrator. The decision of the arbitrators shall be in
writing and counterpart copies shall be delivered to each of Delphi and the RSL
Optionholders. In rendering their decision, the arbitrators shall have no power
to modify any of the provisions of this Agreement. All arbitration proceedings
shall occur in Philadelphia, Pennsylvania. Judgment may be entered on the award
of the arbitrators and may be enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
Immediately upon a party hereto giving written notice of its desire to arbitrate
hereunder, Delphi agrees upon request to provide the RSL Optionholders with
access to the books and records of the RSL Companies which reasonably relate to
the Delphi Determinations (including, without limitation, examination rights and
the right to make abstracts or copies from such books and records) during the
normal business hours of RSL.
Each party shall pay the fees and expenses of the original arbitrator that it
appointed (or in the case of the second party, the arbitrator appointed on its
behalf if it should fail to appoint its own arbitrator). The fees and expenses
of the third arbitrator and all other expenses of the

 

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arbitrators shall be borne by Delphi, on one hand, and the RSL Optionholders, on
the other hand, equally. Each party shall bear the expense of its own counsel
and the preparation and presentation of proof or supportive documentation.