Change in Control Agreement

 

 

 

EX-10.II 3 l35553aexv10wii.htm EX-10(II)

Exhibit (10) (ii)

EMPLOYMENT AGREEMENT
AMENDED AND RESTATED

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into this 22 day of December, 2008, between COOPER TIRE & RUBBER COMPANY, a Delaware corporation (the “Company”), and Roy V. Armes (the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Executive and the Company entered into an Employment Agreement dated as of December 19, 2006 (the “Original Agreement”); and

     WHEREAS, the Executive and the Company agree that the substantive provisions of the Original Agreement shall remain in full force and effect, but also agree that it is desirable to modify the terms of the Original Agreement in certain respects in order to satisfy the requirements Section 409A of the Code imposes on those payments under the Agreement which can be considered “deferred compensation” for purposes of Section 409A;

     WHEREAS, the Company desires to continue to retain the services of the Executive as its President and Chief Executive Officer and the Executive desires to continue to be so employed by the Company; and

     WHEREAS, the Company and the Executive desire to enter into this Agreement setting forth the terms and conditions of such continued employment.

     NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and intending to be legally bound hereby, the Company and the Executive hereby amend and restate the Original Agreement to read as follows:

1. Certain Defined Terms. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:

     (a) “Affiliate” means any corporation, limited liability company, joint venture, partnership, or other legal entity in which the Company owns, directly or indirectly, or has previously owned, at least fifty percent (50%) of the capital stock, profits, interest or capital interest.

     (b) “Annual Incentive Compensation” means the amount paid or (but for any deferral) payable to the Executive for a year under any annual bonus compensation programs or arrangements. Annual Incentive Compensation shall not include or take into account long-term incentive compensation, stock option or other equity awards (regardless of whether granted annually), pension or other retirement benefit contributions or accruals, perquisites or other fringe benefits. For the avoidance of doubt, “Annual Incentive Compensation” may be zero.

     (c) “Average Annual Incentive Compensation” means:

     (i) the average of the Annual Incentive Compensation earned and certified by the Compensation Committee of the Board for the Executive for the three (3) fiscal years preceding the year in which a Termination Date occurs; (provided that, for purposes of this Section 1(c), if a fiscal year is less than 12 complete months, the bonus will be annualized by dividing the bonus amount for such year by the fraction the numerator of which is the number of days constituting such short fiscal year and the denominator of which is 365);

     (ii) if the Executive has been employed by the Company and the Annual Incentive Compensation that has been earned and certified by the Compensation Committee of the Board for the Executive for fewer than three (3) fiscal years, the average of the Annual Incentive Compensation that has been earned and certified by the Compensation Committee of the Board for the Executive for the number of fiscal years through the Termination Date; or

     (iii) if the Termination Date occurs prior to the date Annual Incentive Compensation is earned and certified by the Compensation Committee of the Board for the Executive for the 2007 fiscal year, the target Annual Incentive Compensation for fiscal year 2007.

     (d) “Base Pay” means the Executive’s rate of annual base salary payable under this Agreement (which rate shall not be deemed to be reduced for purposes of Sections 5 or Section 6 hereof by reason of any elective deferrals of annual base salary) at the

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time a termination of employment occurs or, if applicable, immediately before any reduction in such amount that serves as a basis for a termination for Good Reason.

     (e) “Board” means the Board of Directors of the Company.

     (f) “Cause” means:

(X) prior to a Change in Control, termination of the Executive’s employment with the Company by the Board because of:

     (i) the willful and continued failure by the Executive to perform substantially the duties of the Executive’s position, and the failure of the Executive to correct such failure of performance within thirty (30) days after notification by the Board of any such failure (other than by reason of the incapacity of the Executive due to physical or mental illness); or

     (ii) any other willful act or omission which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or any Affiliate thereof, and failure of the Executive to correct such act or omission within thirty (30) days after notification by the Board of any such act or omission (other than by reason of the incapacity of the Executive due to physical or mental illness); or

     (iii) the Executive is found guilty of, or pleads guilty or nolo contendere to, a felony or any criminal act involving fraud, embezzlement, theft, or moral turpitude; or

     (iv) the Executive is found guilty of, or pleads guilty or nolo contendere to, any criminal act committed in the course of the Executive’s employment with the Company or against the Company or any Affiliate, or the Executive is found liable in a civil action, in which an allegation involves a dishonest act, fraud, embezzlement or theft committed in the course of the Executive’s employment with the Company or against the Company or any Affiliate.

(Y) following a Change in Control, termination of the Executive’s employment with the Company by the Board because of:

     (i) any act or omission constituting a material breach by the Executive of any of his significant obligations or agreements under this Agreement or the continued willful failure or refusal of the Executive to adequately perform the duties reasonably required hereunder which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or any Affiliate thereof, after notification by the Board of such breach, failure or refusal and the failure of the Executive to correct such breach, failure or refusal within thirty (30) days of such notification (other than by reason of the incapacity of the Executive due to physical or mental illness); or

     (ii) any other willful act or omission which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or any Affiliate thereof, and failure of the Executive to correct such act or omission within thirty (30) days after notification by the Board of any such act or omission (other than by reason of the incapacity of the Executive due to physical or mental illness); or

     (iii) the Executive is found guilty of, or pleads guilty or nolo contendere to, a felony or any criminal act involving fraud, embezzlement, theft, or moral turpitude; or

     (iv) the Executive is found guilty of, or pleads guilty or nolo contendere to, any criminal act committed in the course of the Executive’s employment with the Company or against the Company or any Affiliate, or the Executive is found liable in a civil action, in which an allegation involves a dishonest act, fraud, embezzlement or theft committed in the course of the Executive’s employment with the Company or against the Company or any Affiliate.

For purposes of this Agreement, no act, or failure to act, on the Executive’s part shall be deemed “willful” if done, or omitted to be done, by the Executive in good faith and with a reasonable belief that the Executive’s action or omission was in the best interest of the Company. Any notification to be given by the Board in accordance with Section 1(f)(X)(i), 1(f)(X)(ii), 1(f)(Y)(i) or 1(f)(Y)(ii) shall be in writing and shall specifically identify the breach, failure, refusal, act or omission to which

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the notification relates and, in the case of Section 1(f)(X)(ii), 1(f)(Y)(i) or 1(f)(Y)(ii), shall describe the injury to the Company, and such notification must be given within twelve (12) months of the Board becoming aware, or within twelve (12) months of when the Board should have reasonably become aware of the breach, failure, refusal, act, omission or injury identified in the notification. Notwithstanding Section 23 hereto, failure to notify the Executive within any such twelve (12) month period shall be deemed to be a waiver by the Board of any such breach, failure, refusal, act or omission by the Executive and any such breach, failure, refusal, act or omission by the Executive shall not then be determined to be a breach of this Agreement. For the avoidance of doubt and for the purpose of determining Cause, the exercise of business judgment by the Executive shall not be determined to be Cause, even if such business judgment materially injures the financial condition or business reputation of, or is otherwise materially injurious to the Company or any Affiliate thereof, unless such business judgment by the Executive was not made in good faith, or constitutes willful or wanton misconduct, or was an intentional violation of state or federal law.

     (g) “Change in Control” means the occurrence during the Term of any of the following events:

     (i) the Company merges into itself, or is merged or consolidated with, another entity and as a result of such merger or consolidation less than 51% of the voting power of the then-outstanding voting securities of the surviving or resulting entity immediately after such transaction are directly or indirectly beneficially owned in the aggregate by the former stockholders of the Company immediately prior to such transaction;

     (ii) all or substantially all the assets accounted for on the consolidated balance sheet of the Company are sold or transferred to one or more entities or persons, and as a result of such sale or transfer less than 51% of the voting power of the then-outstanding voting securities of such entity or person immediately after such sale or transfer is directly or indirectly beneficially held in the aggregate by the former stockholders of the Company immediately prior to such transaction or series of transactions;

     (iii) a person, within the meaning of Section 3(a)(9) or 13(d)(3) (as in effect on the date of this Agreement) of the Securities Exchange Act of 1934, (the “Exchange Act”) becomes the beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange Commission pursuant to the Exchange Act) of 35% or more of the voting power of the then-outstanding voting securities of the Company; provided, however, that the foregoing does not apply to any such acquisition that is made by (w) any Affiliate of the Company; (x) any employee benefit plan of the Company or any Affiliate; or (y) any person or group of which employees of the Company or of any Affiliate control a greater than 25% interest unless the Board determines that such person or group is making a “hostile acquisition;” or (z) any person or group that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Executive; or

     (iv) a majority of the members of the Board are not Continuing Directors, where a “Continuing Director” is any member of the Board who (x) was a member of the Board on the date of this Agreement or (y) was nominated for election or elected to such Board with the affirmative vote of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election, provided that any director appointed or elected to the Board to avoid or settle a threatened or actual proxy contest shall in no event be deemed to be a Continuing Director.

     (h) “Code” means the Internal Revenue Code of 1986, as amended.

     (i“Committee” means the Compensation Committee of the Board.

     (j) “Common Stock” means the Company’s common stock, par value $1.00 per share.

     (k) “Company” means the Company as hereinbefore defined.

     (l) “Disability” or “Disabled” means when the Executive has been totally disabled by bodily injury or disease so as to prevent him from being physically able to perform the job duties as required under this Agreement, and such total disability shall have continued for five (5) consecutive months, and, in the opinion of a qualified physician selected by the Company (and reasonably acceptable to the Executive), such disability will presumably be permanent and continuous during the remainder of the Executive’s life. Notwithstanding the preceding sentence, for any payment or benefit payable under this Agreement which is considered “deferred compensation” subject to Section 409A of the Code, the payment or benefit shall not be payable to the Executive solely by reason of a Disability unless such Disability is by reason of a medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than twelve (12) months or to result in death, and such Disability has caused the Executive to be either (i) unable to engage in any substantial, gainful activity, or (ii) eligible to receive income replacement benefits under an accident and health plan of the Company for a period of at last three (3) months.

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     (m) “Good Reason” means the occurrence of any of the following conditions, without the Executive’s express, prior written consent in each case, provided that the Executive has provided express written notice of the condition to the Company within ninety (90) days of the initial existence of the condition and the Company has failed to remedy such breach within thirty (30) days after its receipt of such written notice from the Executive:

     (i) a material (greater than 5%) reduction in the Executive’s Base Pay, other than as part of a reduction applicable at the same time to executive officers of the Company generally; provided, any such reduction applicable to other executive officers shall not for the Executive exceed the percentage of reduction applicable to such other executive officers, and thereafter such reduction shall cease to apply at the same time and to the same extent (on a like percentage basis) as the reduction may cease to apply to such other executive officers;

     (ii) a material breach by the Company of Section 2(a) or Section 4 of this Agreement, including but not limited to, the assignment to the Executive of any duties inconsistent with his status as President and Chief Executive Officer of the Company, or his removal from such position, or a substantial alteration in the nature or status of his responsibilities from those described herein (except, in each case, in connection with a promotion of the Executive), or a change in Executive’s reporting relationship such that the Executive no longer reports directly to the full Board, or the failure of the Executive to be elected or reelected to the Board;

     (iii) the relocation of the office of the Company where the Executive is employed to a location at least fifty (50) miles from Findlay, Ohio, except for required travel on the Company’s business to an extent reasonably required to perform his duties hereunder;

     (iv) except as required by law, the Company directly or indirectly materially reducing the level of benefits or award opportunities provided to the Executive under the Plans below the level required by Section 4 of this Agreement, other than a reduction or change in such benefits or opportunities applicable to executive officers of the Company generally or the Company failing to provide the Executive with the number of paid vacation days to which he is entitled on the basis of years of service with the Company in accordance with the Company’s then current normal vacation policy for the Company’s senior executives;

     (v) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as required in Section 19 hereof or, if the business of the Company for which the Executive’s services are principally performed is sold, the failure of the purchaser of such business to assume this Agreement or to provide the Executive with the same or a comparable position, duties, benefits, base salary and incentive compensation as provided in Sections 2 and 4 of this Agreement; or

     (vi) the failure of the Board to elect the Executive to his existing position or an equivalent position.

Any notification to be given by the Executive in accordance with Section 1(m) shall specifically identify the breach or failure to which the notification relates, and such notification must be given within ninety (90) days of the Executive becoming aware, or within ninety (90) days of when the Executive should have reasonably become aware of, the breach or failure identified in the notification. Notwithstanding Section 23 hereto, failure to notify the Company within any such ninety (90) day period shall be deemed to be a waiver by the Executive of any such breach or failure and any such breach or failure shall not then be considered “Good Reason.”

     (n) “Incentive Compensation Plan” means the Cooper Tire & Rubber Company 1998, 2001 and 2006 Incentive Compensation Plans, as amended, and any successor to such plans.

     (o) “Long-Term Performance-Based Incentive Compensation” means any cash or equity-based compensation program in which the amounts paid, earned or vested are based upon achievement of specified performance goals over a period of more than one year. For the avoidance of doubt, equity awards that are earned, vest or become exercisable based solely upon continued employment and/or the passage of time are not “Long-Term Performance-Based Incentive Compensation.”

     (p) “Nonqualified Supplementary Benefit Plan” means the Cooper Tire & Rubber Company Nonqualified Supplementary Benefit Plan, effective November 8, 1984, as amended.

     (q) “Retirement Plans” means the Spectrum Retirement Plan and the Nonqualified Supplementary Benefit Plan or any successor plans thereto which provide comparable benefits.

     (r) “Spectrum Retirement Plan” means the Cooper Tire & Rubber Company Spectrum Retirement Plan, effective January 1, 2002, as amended.

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     (s) “Termination” means:

     (i) the involuntary termination of the Executive’s employment by the Company at any time for any reason other than retirement, death, disability, Cause or the reason set forth in subparagraph (iii) of this Section 1(s), or

     (ii) termination of the Executive’s employment by the Executive for Good Reason, or

     (iii) termination of the Executive’s employment at the end of the Term as a result of the Company delivering a notice of non-extension pursuant to Section 3 prior to the Executive’s 64th birthday.

     (t) “Termination Date” means the date on which the Executive’s employment with the Company is terminated by the Company or the Executive for any reason or for no reason. If the Executive’s employment is terminated by the Company, such date shall be specified in a written notice of termination (which date shall be no earlier than the date of furnishing such notice), or if no such date is specified therein, the date of receipt by the Executive of such written notice of termination. The Executive shall specify such termination date in any written notice of his resignation.

     (u) “1998 Option Plan” means the Cooper Tire & Rubber Company 1998 Employee Stock Option Plan, as amended.

2. Employment and Duties.

     (a) General. The Company hereby employs the Executive and the Executive agrees upon the terms and conditions herein set forth to serve as President and Chief Executive Officer, said employment to commence on January 1, 2007, and, in such capacity, shall perform such duties as may be delineated in the Bylaws of the Company, and such other duties, commensurate with the Executive’s title and position of President and Chief Executive Officer, as may be assigned to the Executive from time to time by the Board. The Executive shall report directly to the full Board. The Board shall appoint the Executive as a member of the Board effective January 1, 2007.

     (b) Exclusive Services. Throughout the Term (as defined in Section 3), the Executive shall, except as may from time to time be otherwise agreed in writing by the Company and during reasonable vacations and unless prevented by ill health, devote his full-time and undivided attention during normal business hours to the business and affairs of the Company consistent with his senior executive position, shall in all respects conform to and comply with the lawful and reasonable directions and instructions given to him by the Board (provided that such directions and instructions are not inconsistent with Section 2(a)), and shall use his best efforts to promote and serve the interests of the Company.

     (c) Restrictions on Other Employment. Throughout the Term and provided that such activities do not contravene the provisions of Section 2(b) hereof or Section 15 hereof:

     (i) the Executive may engage in charitable and community affairs;

     (ii) the Executive may perform inconsequential services without specific compensation therefore in connection with the management of personal investments; and

     (iii) the Executive may, directly or indirectly, render services to any other person or organization (including service as a member of the Board of Directors of any other unaffiliated company), for which he receives compensation, that is not in competition with the Company, subject in each case to the prior written approval of the Board which approval will not be unreasonably withheld. The Executive may retain all fees he receives for such services, and the Company shall not reduce his compensation by the amount of such fees. For purposes of this Section 2(c)(iii) competition shall have the same meaning as intended for the purposes of Section 15.

3. Term of Employment. Subject to the provisions of Section 5 through Section 10 hereof, the Company shall retain the Executive pursuant to this Agreement and the Executive shall serve in the employ of the Company for a period (the “Term”) commencing on January 1, 2007 and continuing in effect through December 31, 2009; provided, however, that on each January 1 after the commencement of the Term until the year in which the Executive’s 64th birthday occurs, the Term shall automatically be extended for one additional year unless, no later than September 30 of the preceding year, the Company or the Executive shall have given notice to the other that it does not wish to extend this Agreement.

4. Compensation and Other Benefits. Subject to the provisions of this Agreement, the Company shall pay and provide the following compensation and other benefits to the Executive during the Term as compensation for services rendered hereunder:

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     (a) Base Pay. The Company shall pay to the Executive Base Pay at the rate of $700,000 per annum, payable biweekly. The Base Pay will be reviewed not less frequently than annually by the Board or by the Committee.

     (b) Employee Benefit Plans. At all times during the Term, the Executive shall be provided the opportunity to participate in the Cooper Tire & Rubber Company Spectrum Retirement Plan as a Spectrum Participant and the Cooper Tire & Rubber Company Nonqualified Supplementary Benefit Plan, and such employee pension and retirement benefit plans, whether or not qualified, and employee welfare benefit or perquisite plans, programs and arrangements (collectively, the “Plans”) as are, from time to time hereafter, based on the Executive’s date of hire, generally made available to executives of the Company.

     (c) Annual Incentive Compensation. The Executive shall be eligible to participate in such Annual Incentive Compensation programs or arrangements established from time to time for executives of the Company. The Executive shall be eligible for a target award equal to 85% of Base Pay and a maximum award equal to 170% of Base Pay under such Annual Incentive Compensation programs or arrangements pursuant to the terms and conditions established therein, from time to time, for executives of the Company. Notwithstanding the terms and conditions of the Annual Incentive Compensation programs or arrangements established for the 2007 fiscal year, the Executive shall receive an award of not less than 85% of Base Pay for Annual Incentive Compensation attributable to the 2007 fiscal year payable on or before March 15, 2008 or as soon thereafter as practical (but in no event later than December 31, 2008.

     (d) Long-Term Performance-Based Incentive Compensation. The Executive shall be eligible to participate in such long-term performance-based incentive compensation plans and programs as the Company generally provides from time to time to its senior executives.

     (e) Initial Restricted Stock Unit Award.

     (i) Grant. As of commencement of employment or as soon thereafter as may be practicable, the Executive shall be awarded a grant of such number of restricted stock units pursuant to the Company’s 2006 Incentive Compensation Plan (“Plan”) as equals the quotient of (x) $4,000,000 divided by (y) the average closing price of one (1) share of Common Stock for all trading days during the month of December 2006, each such unit representing a right to receive one (1) share of Common Stock (the “Initial RSU Award” and each such restricted stock unit a “Unit”) in accordance with such terms and conditions as may be determined by the Board, consistent with the provisions of this Section 4(e).

     (ii) Vesting and Deferral. The Initial RSU Award shall vest on December 31, 2009 provided that, except as set forth in Sections 5, 6, 8 and 9, the Executive is continuously employed by the Company through such date for such Initial RSU Award to so vest. The Initial RSU Award (including both Units initially awarded under Section 4(e)(i) and dividend equivalent Units provided under Section 4(e)(iii)) shall be payable in two installments:

     (X) the first such installment of vested Units shall be paid in shares of Common Stock on the date following the date on which the Initial RSU Award vests (or as soon thereafter as may be practical) in such number of shares as are equal to 75% of the sum of the number of Units initially awarded under Section 4(e)(i) and dividend equivalent Units provided under Section 4(e)(iii); and

     (Y) the second such installment of vested Units shall be paid in such number of shares of Common Stock on the Executive’s Termination Date or, for any termination not resulting from the Executive’s death or Disability, such delayed payout date six months and one day later as may be required to comply with Section 409A of the Code pursuant to Section 24 of this Agreement equal to the Units attributable to the Initial RSU Award (including Units attributable to dividend equivalents) that have not been settled in accordance with clause (X) next above;

provided that, to the extent that the Termination Date occurs prior to December 31, 2009 and the Units become vested by reason of the occurrence of a Termination, such vesting and distribution will be subject to the applicable requirements of Section 5 or Section 6, as applies, that the Executive sign a Release. For the avoidance of doubt, it is recited here that, for purposes of this Agreement, the Initial RSU Award shall be treated as an award that vests in a single sum; provided that this sentence shall not be construed to exclude other awards being treated as awards that vest in a single sum.

     (iii) Dividend Equivalents. The Initial RSU Award shall provide for accrual of dividend equivalents until the date of payment of such award, as follows. As of each dividend date with respect to shares of Common Stock, a dollar amount equal to the amount of the dividend that would have been paid on the number of shares of Common Stock equal to the number of Units awarded under the Initial RSU Award held by the Executive as of the close of business on the record date for such dividend shall be converted into a number of Units equal to the number of whole and fractional shares of Common Stock that could have been purchased at the closing price on the dividend payment date with such dollar amount, which Units shall be subject to all terms and conditions applicable to Units under the Initial RSU Award. In the case of any

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dividend declared on shares of Common Stock which is payable in shares of Common Stock, the Executive shall be credited with an additional number of Units equal to the product of (x) the number of his Units then held on the related dividend record date multiplied by the (y) the number of shares of Common Stock (including any fraction thereof) distributable as a dividend on a share of Common Stock; provided that in the event of a dividend of stock of a subsidiary of the Company, or other similar event, the Initial RSU Award shall be adjusted in the same manner and to the same extent as the adjustment to other restricted stock or restricted stock unit awards held by executives of the Company.

     (f) Vacation. The Executive shall be entitled to paid annual vacation during the Term in accordance with the Company’s then current vacation policy for the Company’s senior executives.

5. Termination Without Cause or for Good Reason or Non-Renewal of Term Prior to a Change in Control.

     (aSeverance and Benefits. Upon a Termination prior to, or more than two (2) years following, a Change in Control, the Company shall pay the Executive the amount set forth in Section 5(a)(i) and, subject to and conditioned upon the provisions of Section 24 and to the Executive’s delivering to the Company the Release provided for in Section 16 with all periods for revocation expired, the Company shall pay or provide to the Executive the amounts and benefits set forth in Section 5(a)(ii) through 5(a)(iv):

     (ii) a single lump sum cash payment within thirty (30) days following the expiration of such revocation period equal to the Executive’s then current Base Pay, to the extent unpaid, through the date of the Executive’s Termination;

     (iii) lump sum cash payment within thirty (30) days following the expiration of such revocation period equal to the pro-rated portion of the benefit payable under each Long-Term Performance-Based Compensation award or program in which Executive participates (including, without limitation, any performance-based restricted stock unit award); and

     (iv) a single lump sum in cash within thirty (30) days following the expiration of such revocation period equal to the sum of (A) $75,000 plus (B)(I) two (2) times (II) the sum of (x) the Executive’s Base Pay plus (y) the Average Annual Incentive Compensation; provided, if such Termination occurs at any time on or prior to December 31, 2009 (other than a Termination occurring at the end of the Term ending on December 31, 2009 as a result of the Company delivering a notice of non-extension pursuant to Section 3), the amount set forth in clause (B)(I) shall be equal to three (3); provided that, the portion (if any) of such lump sum payment which may be paid immediately upon expiration of such revocation period shall be limited to two (2) times the lesser of (i) the maximum limit on the annual compensation that may be taken into account by a qualified retirement under Section 401(a)(17) of the Code for the year which includes the date of Termination or (ii) the Executive’s annualized compensation from the Company for the calendar year preceding the year of the Termination, and the remainder of this lump sum payment shall not be paid to the Executive until the delayed payment date prescribed by Section 24 below; and

     (v) for twenty-four (24) months following the Termination Date, the Company shall provide the Executive with life, accident and health insurance benefits substantially similar to those to which the Executive and the Executive’s family were entitled immediately prior to the Termination, provided that, to the extent such health benefits are determined to be taxable benefits by reason of Section 105(h) of the Code or otherwise, such health coverage shall be limited to eighteen (18) months following the Termination Date. Thereafter the Company shall provide retiree medical and life insurance coverage to the extent the Executive is eligible for such benefits under the terms of the applicable Plans in effect immediately prior to the Termination. Benefits otherwise receivable by the Executive pursuant to this Section 5(a)(iiiiv) shall be reduced to the extent the Executive is eligible to receive comparable benefits from other employment, and any such benefits eligibility shall be reported to the Company.

     (b) Time-Vested Restricted Stock Units. Subject to and conditioned upon the Executive’s delivering to the Company the Release provided for in Section 16 with all periods for revocation expired, the Initial RSU Award (including dividend equivalents credited thereon pursuant to Section 4(e)(iii)), if then unvested, shall fully vest immediately upon Termination and shall be payable in accordance with Section 4(e)(ii). Notwithstanding any provision in any award agreement between the Company and the Executive or this Section 5, subject to and conditioned upon the Executive’s delivering to the Company the Release provided for in Section 16 with all periods for revocation expired, (i) all restricted stock units granted to the Executive, other than the Initial RSU Award, that vest based solely upon the Executive’s continued employment with the Company and which have not otherwise vested shall vest and shall be payable in accordance with the terms of the particular award under which they were granted; provided, any outstanding restricted stock unit award that vests in a single sum determined solely on the basis of the Executive’s continuous employment through a stated vesting date shall vest as to such number of restricted stock units on the date of the Executive’s Termination as equals the fraction the numerator of which is the number of full months (based on the monthly “anniversary” date of the award) so continuously employed from the first day of such vesting period through the Termination Date and the denominator of which is the total number of months comprising the vesting period of such award; and (ii) for all such restricted stock units (other than the Initial RSU Award), within five (5) days after the Termination Date, the Company shall either (1) pay to the Executive an amount equal to the fair market value

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(computed as the average of the high and low trades reported on the New York Stock Exchange) of the Common Stock represented by such vested restricted stock units determined as of the Termination Date, or (2) issue Common Stock under such vested awards to the Executive. Any such cash payment shall be deemed to be in lieu of and in substitution for any right the Executive may have to such vested restricted stock units under the terms of any award agreement between the Company and the Executive, and the Executive agrees to surrender all such vested restricted stock units being cashed out hereunder immediately prior to receiving the cash payment described above. For purposes hereunder, the term “restricted stock unit” should be read to include all other similar equity instruments (other than the Initial RSU Award), including, but not limited to, restricted stock.

     (c) Stock Options. Subject to and conditioned upon the Executive’s delivering to the Company the Release provided for in Section 16 with all periods for revocation expired and notwithstanding any provision in the Incentive Compensation Plan, the 1998 Option Plan, other relevant plan or program or this Section 5:

     (i) for a period of ninety (90) days following the date of the Executive’s Termination (or such longer period as may be set forth in the applicable stock option plan or award agreement), but not later than the expiration of the stated option term under the award, all stock options granted to the Executive by the Company that are both outstanding and vested immediately prior to Termination (in accordance with their then existing terms and this Section 5(c)) shall remain outstanding and exercisable, after which all such stock options that have not been exercised shall immediately terminate; and

     (ii) all stock options granted to the Executive by the Company which have not otherwise vested shall be forfeited immediately upon Termination; provided, any outstanding unvested stock option award that vests in a single sum determined solely on the basis of the Executive’s continuous employment through a stated vesting period of more than one (1) year shall vest as to such number of stock options stock on the date of the Executive’s Termination as equals the fraction the numerator of which is the number of full months (based on the monthly “anniversary” date of the award) so continuously employed from the first day of such vesting period through the Termination Date and the denominator of which is the total number of months comprising the vesting period of such award, and such vested options shall remain outstanding and exercisable thereafter for a period of ninety (90) days following the date of the Executive’s Termination (or such longer period as may be set forth in the applicable stock option plan or award agreement), but not later than the expiration of the stated option term under the award, after which all such stock options that have not been exercised shall immediately terminate.

For purposes hereunder, the term “stock option” also means all other similar equity instruments, including, but not limited to, stock appreciation rights.

     (d) Section 409A. Notwithstanding anything herein to the contrary, in no event shall amounts in respect of any restricted stock units or other stock rights that, as determined by the Company, provides for the “deferral of compensation” (as such term is defined under Section 409A of the Code and the regulations and other Treasury Department guidance promulgated thereunder (collectively, “Section 409A”)), be distributed pursuant to Section 5(b) or Section 5(c) prior to the occurrence of the earlier of either (i) the Termination Date (or such later date required under Section 24), (ii) the Executive’s death or “Disability” (as such term is defined under Section 409A and in Section 1(l) above), (iii) a “change in the ownership or effective control” of the Company or in the “ownership of a substantial portion of the assets” of the Company (each as defined under Section 409A), or (iv) the specified time or fixed schedule as may be elected by the Executive in accordance with the applicable plan or arrangement and Section 409A. This Section 5(d) shall not apply to any stock options which are not considered deferred compensation subject to Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(5).

6. Severance and Other Benefits Upon or Following a Change in Control.

     (aSeverance and Benefits. Upon a Termination that occurs at any time during the period commencing on the occurrence of a Change in Control and ends on the second anniversary of such Change in Control, the Company shall pay the Executive the amount set forth in Section 6(a)(i) and, subject to and conditioned upon the provisions of Section 24 and to the Executive’s delivering to the Company the Release provided for in Section 16 with all periods for revocation expired, the Company shall pay or provide to the Executive the amounts and benefits set forth in Section 6(a)(ii), 6(a)(iii) and 6(a)(iv):

     (i) a single lump sum cash payment within five (5) days following the expiration of such revocation period equal to the Executive’s then current Base Pay, to the extent unpaid, through the date of the Executive’s Termination, plus

     (ii) a lump sum cash payment within five (5) days following the expiration of such revocation period equal to the pro-rated portion of the benefit payable under each Long-Term Performance-Based Compensation award or program in which Executive participates (including, without limitation, any performance-based restricted stock unit award); and

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     (iii) a single lump sum in cash within thirty (30) days following the expiration of such revocation period equal to the sum of (A) $75,000 plus (B)(I) two (2) times (II) the sum of (x) the Executive’s Base Pay plus (y) the Average Annual Incentive Compensation; provided, if such Termination occurs at any time on or prior to December 31, 2009 (other than a Termination occurring at the end of the Term ending on December 31, 2009 as a result of the Company delivering a notice of non-extension pursuant to Section 3), the amount set forth in clause (B)(I) shall be equal to three (3); provided that, the portion (if any) of such lump sum payment which may be paid immediately upon the expiration of such revocation period shall be limited to two times the lesser of (i) the maximum limit on the annual compensation that may be taken into account by a qualified retirement under Section 401(a)(17) of the Code for the year which includes the date of Termination or (ii) the Executive’s annualized compensation from the Company for the calendar year preceding the year of the Termination, and the remainder of this lump sum payment shall not be paid to the Executive until the delayed payment date prescribed by Section 24 below; and

     (iv) for twenty-four (24) months following the Termination Date, the Company shall provide the Executive with life, accident and health insurance benefits substantially similar to those to which the Executive and the Executive’s family were entitled immediately prior to the Termination, provided that, to the extent such health benefits are determined to be taxable by reason of Section 105(h) of the Code or otherwise, such health coverage shall be limited to eighteen (18) months following the Termination Date, and thereafter the Company shall provide retiree medical and life insurance coverage to the extent the Executive is eligible for such benefits under the terms of the applicable Plans in effect immediately prior to the Termination. Benefits otherwise receivable by the Executive pursuant to this Section 6(a)(iv) shall be reduced to the extent the Executive is eligible to receive comparable benefits from other employment, and any such benefits eligibility shall be reported to the Company.

For purposes of Sections 5(a)(ii), 6(a)(ii), 8(a), 9(a) and 10, the “pro-rated portion of the benefit payable” under a compensation arrangement shall be an amount pro-rated based upon the number of full months (based on the monthly “anniversary” date of the first day of the performance period) between the beginning of the year or other performance period and the Termination Date relative to the total number of months in the year or in the applicable performance period, and the amount that is so pro-rated shall be, for an amount or benefit that is payable, earned and/or vested based solely on the achievement of objective performance criteria, based on actual performance through the end of the most recent fiscal quarter prior to the Termination Date.

     (b) Time-Vested Restricted Stock Units. Notwithstanding any provision in any award agreement between the Company and the Executive or this Section 6, and subject to and conditioned upon the Executive’s delivering to the Company the Release provided for in Section 16 with all periods for revocation expired, (i) upon a Termination that occurs upon the date of the Change in Control or thereafter on or before the second anniversary of the date of the Change in Control, all restricted stock units granted to the Executive that vest based solely upon the Executive’s continuous employment with the Company through a stated vesting date, including, without limitation, the Initial RSU Award (including dividend equivalents credited thereon pursuant to Section 4(e)(iii)), if then unvested, shall fully vest immediately upon Termination and shall be payable in accordance with the terms thereof (the Initial RSU Award shall be payable in accordance with Section 4(e)(ii)); provided, such restricted stock units shall vest immediately upon the consummation of a Change in Control if the successor to the Company has not assumed (expressly or impliedly) the Company’s obligations under the applicable restricted stock unit award or plan document or issued to the Executive a substitute equity-based award of equivalent value on no less favorable terms for vesting or payment as provided under the restricted stock unit award so replaced (including, without limitation, the Initial RSU Award); and (ii) within five (5) days after the Termination Date, the Company shall either (1) pay to the Executive an amount equal to the fair market value (computed as the average of the high and low trades reported on the New York Stock Exchange) of the Common Stock represented by such vested restricted stock units (other than the Initial RSU Award) determined as of the Termination Date, or (2) issue Common Stock under such vested awards to the Executive. Any such cash payment shall be deemed to be in lieu of and in substitution for any right the Executive may have to such vested restricted stock units under the terms of any award agreement between the Company and the Executive, and the Executive agrees to surrender all such vested restricted stock units being cashed out hereunder immediately prior to receiving the cash payment described above. For purposes hereunder, the term “restricted stock unit” should be read to include all other similar equity instruments s (other than the Initial RSU Award), including, but not limited to, restricted stock.

     (c) Stock Options. Subject to and conditioned upon the Executive’s delivering to the Company the Release provided for in Section 16 with all periods for revocation expired and notwithstanding any provision in the Incentive Compensation Plan, the 1998 Option Plan, other relevant plan or program or this Section 6, all stock options granted to the Executive by the Company which have not otherwise vested shall vest immediately upon a Termination that occurs upon the date of the Change in Control or thereafter on or before the second anniversary of the Change in Control and such vested stock options shall remain exercisable for a period of ninety (90) days following the Termination Date (or such longer period as may be set forth in the applicable stock option plan or award agreement), but not later than the expiration of the stated option term; provided, however, such stock options shall vest immediately upon the consummation of a Change in Control if the successor entity has not either assumed (expressly or impliedly) the Company’s obligations under the applicable option award or plan document or issued to the Executive a substitute stock option award of equivalent value on no less favorable terms for vesting or payment as provided under the stock option award so replaced; provided

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further that, subject to Section 6(d), within five (5) days after all periods for revocation have expired in the Release provided for in Section 16, the Company may, at its election, pay to the Executive in cash an amount equal to the aggregate of the difference between the exercise price of each stock option granted to the Executive prior to the consummation of the Change in Control that remains outstanding and unexercised at the time of Termination, and the fair market value (computed as the average of the high and low trades reported on the New York Stock Exchange) of the Common Stock subject to the option, determined as of the Termination Date. Such cash payment shall be deemed to be in lieu of and in substitution for any right the Executive may have to exercise such stock option or a related stock appreciation right under the terms of the relevant stock option plan describing such rights, and the Executive agrees to surrender all stock options and related stock appreciation rights being cashed out hereunder prior to receiving the cash payment described above. For purposes hereunder, the term “stock option” should be read to include all other similar equity instruments, including, but not limited to, stock appreciation rights.

     (d) Section 409A. Notwithstanding anything herein to the contrary, in no event shall amounts in respect of any restricted stock units or other stock rights that, as determined by the Company, provides for the “deferral of compensation” (as such term is defined under Section 409A) be distributed pursuant to Section 6(b) or Section 6(c) prior to the occurrence of the earlier of either (i) the Termination Date (or such later date required under Section 24), (ii) the Executive’s death or “Disability” (as such term is defined under Section 409A or Section 1(l) above), (iii) a “change in the ownership or effective control” of the Company or in the “ownership of a substantial portion of the assets” of the Company (each as defined under Section 409A), or (iv) the specified time or fixed schedule as may be elected by the Executive in accordance with the applicable plan or arrangement and Section 409A. This Section 6(d) shall not apply to any stock options which are not considered deferred compensation subject to Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(5).

7. Termination for Cause or Without Good Reason. If, prior to the expiration of the Term, the Executive’s employment is terminated by the Company for Cause, or if the Executive terminates his employment hereunder without Good Reason, the Executive shall not be eligible to receive Base Pay under Section 4(a) or to participate in any Plans under Section 4(b) with respect to periods after the Termination Date, and except as otherwise provided by applicable law, and except for the right to receive vested benefits under any Plan in accordance with the terms of such Plan.

8. Termination by Death. If the Executive dies prior to the expiration of the Term, the Executive’s designated beneficiaries (and, with respect to amounts payable under Section 8(a), the Executive’s estate if he has not designated any beneficiaries) shall be entitled to:

     (a) receive a lump sum cash payment within thirty (30) days following the Termination Date equal to the Executive’s then current Base Pay, to the extent unpaid, through the Termination Date;

     (b) receive a lump sum cash payment within thirty (30) days following the Termination Date equal to the full target bonus for the year in which termination occurs under the Annual Incentive Compensation program in which the Executive participates and the pro-rated portion of the benefit payable under each Long-Term Performance-Based Incentive Compensation award or program in which the Executive participates (including, without limitation, any performance-based restricted stock unit award);

     (c) for twenty-four (24) months following the Termination Date, receive non-taxable health insurance benefits substantially similar to those to which the Executive’s family were entitled immediately prior to the Executive’s death (which coverage shall not be counted toward the period of coverage that the Company must provide in accordance with COBRA), and thereafter any continuation coverage the Executive’s covered beneficiaries are entitled to under COBRA; and

     (d) to the extent not already vested, immediate vesting of the Initial RSU Award (including dividend equivalents credited thereon pursuant to Section 4(e)(iii)) and payment of that portion of the initial RSU Award not previously paid, to be paid to the Executive promptly after the Termination Date, without regard to the delayed payment prescribed by Section 24 below.

9. Termination by Disability. If, prior to the expiration of the Term, the Executive becomes Disabled, the Company or the Executive shall be entitled to terminate his employment, and the Executive shall be entitled to:

     (a) receive a lump sum cash payment within thirty (30) days following the Termination Date equal to the Executive’s then current Base Pay, to the extent unpaid, through the Termination Date;

     (b) receive a lump sum cash payment within thirty (30) days following the Termination Date equal to the full target annual bonus for the year in which termination occurs under the Annual Incentive Compensation program in which the Executive participates and the pro-rated portion of the benefit payable under each Long-Term Performance-Based Incentive

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Compensation award or program in which the Executive participates (including, without limitation, any performance-based restricted stock unit award);

     (c) for twenty-four (24) months following the Termination Date, receive life, accident and health insurance benefits substantially similar to those to which the Executive and the Executive’s family were entitled immediately prior to the Termination Date (which coverage shall not be counted toward the period of coverage that the Company must provide in accordance with COBRA), provided that, to the extent such health benefits are determined to be taxable by reason of Section 105(h) of the Code or otherwise, such health coverage shall be limited to eighteen (18) months following the Termination Date unless the Executive has provided the Company with evidence that he has received a Social Security disability award, and thereafter any continuation coverage the Executive and/or his covered beneficiaries are entitled to under COBRA; and

     (d) to the extent not already vested, immediate vesting of the Initial RSU Award (including dividend equivalents credited thereon pursuant to Section 4(e)(iii)) and payment of that portion of the initial RSU Award not previously paid, to be paid to the Executive promptly after the Termination Date, without regard to the delayed payment prescribed by Section 24 below.

10. Termination by Retirement. If, prior to the expiration of the Term, the Executive voluntarily elects to retire under Article B-I of the Spectrum Retirement Plan, the Executive’s employment will be terminated as of the date of such retirement and the Executive shall be entitled to a single lump sum cash payment within thirty (30) days following the Termination Date equal to the Executive’s then current Base Pay, to the extent unpaid, through the Termination Date, plus an additional lump sum cash payment within thirty (30) days following the Termination Date equal to the pro-rated portion of the benefit payable under each Annual Incentive Compensation program and Long-Term Performance-Based Incentive Compensation award or program in which the Executive participates (including, without limitation, any performance-based restricted stock unit award). All stock options (or similar equity instruments, including, but not limited to stock appreciation rights) granted to the Executive by the Company that are both outstanding and vested immediately prior to the Termination Date (in accordance with their then existing terms) shall remain outstanding and exercisable for such period as set forth in the applicable stock option plan or award agreement, after which all such stock options that have not been exercised shall immediately terminate.

11. Funding Upon Potential Change in Control.

     (a) Upon the earlier to occur of (i) a Change in Control or (ii) a declaration by the Board that a Change in Control is imminent, the Company shall promptly pay to the extent it has not done so, and in any event within five (5) business days, a sum equal to the present value on the date of the Change in Control (or on such fifth business day if the Board has declared a Change in Control to be imminent) of the payments to be made to the Executive under the provisions of Sections 6 and 12 hereof, which shall be transferred to National City Bank (the “Trustee”) and added to any principal of the Trust under a Master Grantor Trust Agreement, dated November 9, 2001 between the Company and Trustee (the “Trust Agreement”).

     (b) Any payments of compensation, pension, severance or other benefits by the Trustee pursuant to the Trust Agreement shall, to the extent thereof, discharge the Company’s obligation to pay compensation, pension, severance and other benefits hereunder, it being the intent of the Company that assets in such Trust be held as security for the Company’s obligation to pay compensation, pension, severance and other benefits under this Agreement.

12. Certain Additional Payments by the Company.

     (a) In the event it shall be determined (as hereafter provided) that any payment, benefit or distribution or combination thereof (other than the Gross-Up Payments provided for in this Section 12) from the Company, any affiliate, or trusts established by the Company or by any affiliate thereof to the Executive or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, performance share, performance unit, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto), or any similar tax imposed by state or local law or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment or payments (collectively, a “Gross-Up Payment”); provided, however, that no Gross-Up Payment shall be made with respect to the Excise Tax, if any, attributable to (i) any incentive stock option (“ISO”), as defined by Section 422 of the Code (or any successor provision thereto) granted prior to the execution of this Agreement where the addition of a Gross-Up Payment would cause the ISO to lose such status, or (ii) any stock appreciation or similar right, whether or not limited, granted in tandem with any ISO described in clause (i). The Gross-Up Payment shall be in an amount such that, after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

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Notwithstanding the foregoing, to the extent that amounts are characterized as Payments by reason of accelerated vesting or payment that results from the Executive’s termination of employment, the right to the Gross-Up Payment shall be contingent on the Executive entering into a Release as described in Section 16.

     (b) Subject to the provisions of Section 12(f), all determinations required to be made under this Section 12, including whether an Excise Tax is payable by the Executive and the amount of such Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to the Executive and the amount of such Gross-Up Payment, if any, shall be made by a nationally recognized accounting firm (the “Accounting Firm”) selected by the Company in its sole discretion. The Accounting Firm shall submit its determination and detailed supporting calculations to both the Company and the Executive within 30 calendar days after the Termination Date, if applicable, and any such other time or times as may be requested by the Company or the Executive. If the Accounting Firm determines that any Excise Tax is payable by the Executive, the Company shall pay the required Gross-Up Payment to the Executive within five (5) business days after receipt of such determination and calculations with respect to any Payment to the Executive . If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Company and the Executive a written statement that the Executive has substantial authority not to report any Excise Tax on his federal, state or local income or other tax return. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) and the possibility of similar uncertainty regarding applicable state or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts or fails to pursue its remedies pursuant to Section 12(f) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and submit its determination and detailed supporting calculations to both the Company and the Executive as promptly as possible. Any such Underpayment shall be promptly paid by the Company to, or for the benefit of, the Executive within five (5) business days after receipt of such determination and calculations.

     (c) The Company and the Executive shall each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or the Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determinations and calculations contemplated by Section 12(b). Any determination by the Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon the Company and the Executive.

     (d) The federal, state and local income or other tax returns filed by the Executive shall be prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax payable by the Executive. The Executive shall make proper payment of the amount of any Excise Payment, and at the request of the Company, provide to the Company true and correct copies (with any amendments) of his federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company, evidencing such payment. If prior to the filing of the Executive’s federal income tax return, or corresponding state or local tax return, if relevant, the Accounting Firm determines that the amount of the Gross-Up Payment should be reduced, the Executive shall within five (5) business days pay to the Company the amount of such reduction.

     (e) The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by Section 12(b) shall be borne by the Company. If such fees and expenses are initially paid by the Executive, the Company shall reimburse the Executive the full amount of such fees and expenses within five (5) business days after receipt from the Executive of a statement therefore and reasonable evidence of his payment thereof.

     (f) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service or any other taxing authority that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notification shall be given as promptly as practicable but no later than ten (10) business days after the Executive actually receives notice of such claim and the Executive shall further apprise the Company of the nature of such claim and the date on which such claim is requested to be paid (in each case, to the extent known by the Executive). The Executive shall not pay such claim prior to the earlier of (i) the expiration of the 30-calendar-day period following the date on which he gives such notice to the Company and (ii) the date that any payment of amount with respect to such claim is due. If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

     (i) provide the Company with any written records or documents in his possession relating to such claim reasonably requested by the Company;

     (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation accepting legal representation with respect to such claim by an attorney competent in respect of the subject matter and reasonably selected by the Company;

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     (iii) cooperate with the Company in good faith in order to effectively contest such claim; and

     (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest and shall indemnify and hold harmless the Executive, on an after-tax basis, for and against any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 12(f), the Company shall control all proceedings taken in connection with the contest of any claim contemplated by this Section 12(f) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim (provided, however, that the Executive may participate therein at his own cost and expense) and may, at its option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay the tax claimed and sue for a refund, the Company shall advance the amount of such payment to the Executive on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income or other tax, including interest or penalties with respect thereto, imposed with respect to such advance; and provided further, however, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which the contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of any such contested claim shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

     (g) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 12(f), the Executive receives any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 12(f)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after any taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 12(f), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial or refund prior to the expiration of thirty (30) calendar days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of any such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid by the Company to the Executive pursuant to this Section 12.

     (h) Notwithstanding the foregoing provisions of this Section 12, if the Accounting Firm determines that, absent this sentence, the Executive is entitled to a Gross-Up Payment, but that the portion of the Payments that would be treated as “parachute payments” under Code Section 280G (the “Parachute Payments”) does not exceed 110% of the greatest amount of Parachute Payments that could be paid to the Executive such that the receipt of such Parachute Payments would not give rise to any Excise Tax (the “Safe Harbor Amount”), then no Gross-Up Payment shall be paid to the Executive (unless for any reason the Executive is determined to be subject to the Excise Tax after application of the balance of this sentence, in which case the full Gross-Up Payment shall be paid), and the Parachute Payments shall be reduced so that the Parachute Payments, in the aggregate, are reduced to the Safe Harbor Amount. As soon as practicable, the Company shall notify the Executive of any intent to reduce the amount of any Payments in accordance with this Section 12(h), and the Executive shall have the right to designate which of the Payments shall be reduced and to what extent, provided that the Executive may not so elect to the extent that, in the determination of the Company, such election would cause the Executive to be subject to the Excise Tax.

13. Mitigation. Nothing in this Agreement shall be construed to require the Executive to mitigate his damages upon termination of employment without Cause or for Good Reason. The Company hereby acknowledges that it will be difficult and may be impossible for the Executive to find reasonably comparable employment following the Termination Date and that the non-competition covenant contained in Section 15 will further limit the employment opportunities for the Executive. In addition, the Company acknowledges that its severance pay plans applicable in general to its salaried employees do not provide for mitigation, offset or reduction of any severance payment received thereunder. Accordingly, the payment of the severance compensation by the Company to the Executive in accordance with the terms of this Agreement is hereby acknowledged by the Company to be reasonable, and the Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor will any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive hereunder or otherwise, except as provided in Sections 5(a)(iii) and 6(a)(iv); provided, to the extent that the Executive becomes entitled to any payments, benefits or other entitlements pursuant to any severance payable in connection with a severance or change in control severance plan, program or policy made available to other employees of the Company, any amounts payable by the Company pursuant to any of Sections 5, 6, 7, 8, 9 or 10, shall be offset by such severance payments.

14. Legal Fees and Expenses.

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     (a) Agreement Negotiation. The Company shall reimburse the Executive for up to $25,000 of reasonable attorneys’ fees incurred by the Executive in connection with the negotiation and preparation of this Agreement, subject to submission to the Company of appropriate supporting invoices. If applicable, any such reimbursement shall be grossed up for tax purposes.

     (b) Dispute Related to this Agreement. It is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of the Executive’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of the Executive’s choice, at the expense of the Company as hereafter provided, to advise and represent the Executive in connection with any such interpretation, enforcement or defense. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive’s entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship shall exist between the Executive and such counsel. The Company will pay and be solely financially responsible for any and all reasonable attorneys’ and related fees and reasonable expenses incurred by the Executive in connection with any of the foregoing; provided that, in regard to such matters, the Executive has not failed to prevail in at least one asserted claim, has not acted frivolously, in bad faith or with no colorable claim, and has not asserted a claim in violation of the Release.

15. Secrecy and Non-Competition.

     (a) No Competing Employment. For so long as the Executive is employed by the Company and continuing for two (2) years after the Termination Date for any reason (the “Non-Compete Period”), the Executive shall not, unless he receives the prior written consent of the Board, directly or indirectly, whether as owner, consultant, employee, partner, venturer, agent, through stock ownership (except ownership of less than one percent (1.0%) of the number of shares outstanding of any securities which are publicly traded), investment of capital, lending of money or property, rendering of services, or otherwise, compete with any of the businesses engaged in by the Company or any Affiliate at the time of the termination of the Executive’s employment hereunder (such businesses are herein after referred to as the “Business”), or assist, become interested in or be connected with any corporation, firm, partnership, joint venture, sole proprietorship or other entity which so competes with the Business. The restrictions imposed by this Section 15(a) shall not apply to any geographic area in which neither the Company nor any Affiliate is engaged in the Business.

     (b) No Interference. During the Non-Compete Period, the Executive shall not, whether for his own account or for the account of any other individual, partnership, firm, corporation or other business organization or entity (other than the Company), intentionally solicit, endeavor to entice away from the Company or any Affiliate or otherwise interfere with the relationship of the Company or any Affiliate with, any person who is employed by or associated with the Company or any Affiliate (including, but not limited to, any independent sales representatives or organizations) or any person or entity who is, or was within the then most recent 12-month period, a customer or client of the Company or any Affiliate.

     (c) Secrecy. The Executive recognizes that the services to be performed by him hereunder are special, unique and extraordinary in that, by reason of his employment hereunder and his past employment with the Company, he may acquire or has acquired confidential information and trade secrets concerning the operation of the Company or any Affiliate, the use or disclosure of which could cause the Company substantial loss and damages which could not be readily calculated and for which no remedy at law would be adequate. Accordingly, the Executive covenants and agrees with the Company that he will not at any time, except in performance of the Executive’s obligations to the Company hereunder or with the prior written consent of the Board, directly or indirectly, disclose any secret or confidential information that he may learn or has learned by reason of his association with the Company or any Affiliate, or use any such information to the detriment of the Company or any Affiliate. The term “confidential information”, includes, without limitation, information not previously disclosed to the public or to the trade by the Company’s management with respect to the Company’s or any Affiliate’s products, manufacturing processes, facilities and methods, research and development, trade secrets, know-how and other intellectual property, systems, procedures, manuals, confidential reports, product price lists, customer lists, marketing plans or strategies, financial information (including the revenues, costs or profits associated with the Company’s or any Affiliate’s products), business plans, prospects or opportunities. The Executive understands and agrees that the rights and obligations set forth in this Section 15(c) are perpetual and, in any case, shall extend beyond the Non-Compete Period and the Executive’s employment hereunder.

     (d) Exclusive Property. The Executive confirms that all confidential information is and shall remain the exclusive property of the Company. All business records, papers and documents kept or made by the Executive relating to the business of the Company shall be and remain the property of the Company. Upon the termination of his employment with the Company or upon the

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request of the Company at anytime, the Executive shall promptly deliver to the Company, and shall not, without the consent of the Board (which consent shall not be unreasonably withheld), retain copies of, any written materials not previously made available to the public, records and documents made by the Executive or coming into his possession concerning the business or affairs of the Company excluding records relating exclusively to the terms and conditions of his employment relationship with the Company; provided, however, that the Executive shall be entitled to retain a copy of any rolodex or other compilation maintained by him of the names of business contacts with their addresses, telephone numbers and similar information. The Executive understands and agrees that the rights and obligations set forth in this Section 15(d) are perpetual and, in any case, shall extend beyond the Non-Compete Period and the Executive’s employment hereunder.

     (e) Stock Ownership. Other than as specified in Section 2(c) or 15(a) hereof, nothing in this Agreement shall prohibit the Executive from acquiring or holding any issue of stock or securities of any company or other business entity.

     (f) Injunctive Relief. Without intending to limit the remedies available to the Company, executive acknowledges that a breach of any of the covenants contained in this Section 15 may result in material irreparable injury to the Company for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining the Executive from engaging in activities prohibited by this Section 15 or such other relief as may be required to specifically enforce any of the covenants in this Section 15.

     (g) Extension of Non-Compete Period. In addition to the remedies the Company may seek and obtain pursuant to Section 15(f), the Non-Compete Period shall be extended by any and all periods during which the Executive shall be found by a court possessing personal jurisdiction over him to have been in violation of the covenants contained in this Section 15.

16. Release. The receipt of payments provided for in Section 5, Section 6 and Section 12 is conditioned upon the Executive executing and delivering a release substantially in the form of Annex A hereto, and upon the expiration of the revocation period provided for in Annex A; provided that payments under Section 12 shall be subject to this Section 16 only to the extent required by Section 12(a).

17. Breach; Reimbursement.

     (a) In addition to the remedies provided for in Section 15(f), in the case of a breach of any of Section 15(a), Section 15(b) or Section 15(c) of this Agreement, the Company may immediately suspend payment or provision of all remaining payments and benefits described in Section 5, Section 6 or Section 12 of this Agreement, and terminate all remaining payments and benefits described in Section 5, Section 6 or Section 12 of this Agreement and obtain reimbursement from the Executive of all payments by the Company already provided pursuant to Section 5, Section 6 or Section 12 of this Agreement, plus any expenses, fees and damages incurred as a result of the breach; provided, the Board shall give the Executive a written notice (that provides detail as to the contractual and factual basis for the alleged breach of Section 15(a), 15(b) or 15(c)) (the “Notice”) and, within thirty (30) days after the date of the Notice, an opportunity for the Executive to appear before the Board with counsel to respond and/or, at the Executive’s option, to present to the Board a written response to the Notice (the opportunity to appear with counsel and/or provide a written response within thirty (30) days of the date of the Notice is hereafter referred to as a “Hearing”), and after due consideration of the Executive’s appearance and/or written response, a majority of the Board specifically determines that the acts or omissions that gave rise to the alleged breach actually occurred as described in the Notice and that such acts or omissions constitute a breach of Section 15(a), 15(b) or 15(c), as applicable.

     (b) In the event that the Company issues restated or reclassified annual financial statements after the Termination Date that reflect a reduction in previously published financial results and such restatement or reclassification is attributable, in whole or in material part, directly or indirectly, to the malfeasance or gross negligence of the Executive, the Company may, at its sole option, immediately suspend payment or provision of all remaining payments and benefits described in Section 5, Section 6 or Section 12 of this Agreement, and terminate all remaining payments and benefits described in Section 5, Section 6 or Section 12 of this Agreement and obtain reimbursement from the Executive of all payments by the Company already provided pursuant to Section 5, Section 6 or Section 12 of this Agreement; provided that the Board provides the Executive Notice (that provides detail as to the contractual and factual basis for the suspension of payments and benefits by the Company and, if applicable, for the claim for reimbursement of previously paid amounts) and a Hearing, and that a majority of the Board (excluding any directors who have been recused from such determination due to a conflict of interest) specifically determines, after due consideration of the Executive’s appearance and/or written response to the Notice, that the acts or omissions specified in the Notice occurred and that such acts or omissions constitute malfeasance or gross negligence of the Executive with respect to which the issuance of such restated or reclassified annual financial statements is attributable, in whole or material part, which determination shall not be unreasonably delayed. In the event that the Company issues restated or reclassified annual financial statements, regardless of whether before or after the Termination Date, that reflect a reduction in previously published financial results as a result of misconduct and the previously published financial results provided the basis for any previously paid incentive compensation, the Company may, at its sole option, obtain reimbursement from

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the Executive of all payments by the Company to the extent such payments would not have been made based upon the restated or reclassified financial statements.

     (c) If the Company suspends or terminates the Executive’s payments or benefits or seeks reimbursement under this Section 17, the remainder of this Agreement, and all promises and covenants herein, will nonetheless remain in full force and effect. Notwithstanding anything herein to the contrary, any payments or benefits suspended will immediately be reinstated, no benefits or payments will be terminated and any effort to obtain reimbursement will be halted within five (5) days of the applicable Board determination described in this Section 17 under which the Board determines that there is no basis for the suspension, termination or repayment of such benefits or payments pursuant hereto. Nothing herein shall be interpreted to deny Executive his rights to a de novo review in arbitration pursuant to Section 26 of this Agreement of the Board’s determination under this Section 17.

18. Continued Availability and Cooperation.

     (a) Following any Termination Date, the Executive shall cooperate fully with the Company and with the Company’s counsel in connection with any present and future actual or threatened litigation or administrative proceeding involving the Company that relates to events, occurrences or conduct occurring (or claimed to have occurred) during the period of the Executive’s employment by the Company. This cooperation by the Executive shall include, but not be limited to:

     (i) making himself reasonably available for interviews and discussions with the Company’s counsel as well as for depositions and trial testimony;

     (ii) if depositions or trial testimony are to occur, making himself reasonably available and cooperating in the preparation therefore as and to the extent that the Company or the Company’s counsel reasonably requests;

     (iii) refraining from impeding in any way the Company’s prosecution or defense of such litigation or administrative proceeding; and

     (iv) cooperating fully in the development and presentation of the Company’s prosecution or defense of such litigation or administrative proceeding.

     (b) In addition to the Executive’s obligations under this Section 18, during the Non-Compete Period, the Executive shall make himself available for consultation with and advice to the Company at times and for periods of time which are mutually agreeable to the Company and the Executive.

     (c) Notwithstanding the foregoing, the Executive’s obligation under this Section 18 shall be subject to the following: (i) The Company will consult with the Executive, and make reasonable efforts to schedule any assistance otherwise required so as not to materially disrupt the Executive’s other full-time business endeavors. (ii) The Executive shall not be required to take any action, or fail to take any action, that would otherwise be required under this Section 18, if the Executive or the Executive’s counsel determines that compliance with this Section 18 would require him to violate any law or otherwise compromise or interfere with his legal rights. (iii) This Section 18 shall not prevent the Executive from honestly testifying at a legal proceeding in response to a lawful and properly served subpoena in a proceeding involving the Company or its Affiliates or from cooperating with any governmental investigation.

19. Successors; Assignability.

     (a) By the Executive. Neither this Agreement nor any right, duty, obligation or interest hereunder shall be assignable or delegable by the Executive without the Company’s prior written consent; provided, however, that nothing in this Section 19(a) shall preclude the Executive from designating any of his beneficiaries to receive any benefits payable hereunder upon his death, or the executors, administrators, or other legal representatives, from assigning any rights hereunder to the person or persons entitled thereto.

     (b) By the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive had terminated his employment for Good Reason subsequent to a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Termination Date.

20. Employment Rights. Nothing expressed or implied in this Agreement shall create any right or duty on the part of the Company or the Executive to have the Executive remain in the employment of the Company at any time prior to a Change in Control;

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provided, however, that any Termination of the Executive or the removal of the Executive from the office or position in the Company following the commencement of any discussion with a third person that ultimately results in a Change in Control shall be deemed to be a Termination of the Executive after a Change in Control for purposes of this Agreement. The Executive expressly acknowledges that he is an employee at will, and that the Company may terminate him at any time during the Term for any reason if the Company makes the payments and provides the benefits provided for under Section 5 or 6 of this Agreement, and otherwise comply with its other continuing covenants in this Agreement, including without limitation, Sections 4, 12 and 14(b).

21. Withholding of Taxes. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or government regulation or ruling.

22. Severability. If the final determination of a court of competent jurisdiction declares, after the expiration of the time within which judicial review (if permitted) of such determination may be perfected, that any term or provision hereof is invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired and (b) the invalid or unenforceable term or provision shall be replaced by a term or provision that is mutually agreeable to the parties hereto and is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. Notwithstanding the foregoing, the invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement which shall nevertheless remain in full force and effect.

23. Amendment; Waiver. This Agreement may not be modified, amended or waived in any manner except by an instrument in writing signed by both parties hereto. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.

24. Effect of Section 409A of the Code. Notwithstanding anything to the contrary in this Agreement, if the Company determines that any payments or taxable benefits to be provided to the Executive pursuant to Sections 5 through 12 of this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A (the “409A Taxes”) as applicable at the time such payments and benefits are otherwise required under this Agreement unless payment is delayed for at least six (6) months following the date of the Executive’s “separation from service” (as such term is defined under Section 409A) with the Company, then:

     (a) (i) such payments shall be delayed until the date that is six months after the date of the Executive’s “separation from service” (as such term is defined under Section 409A) with the Company, or for shorter period of time that the Company determines is sufficient to avoid the imposition of the 409A Taxes (the “Payments Delay Period”), and (ii) such payments shall be increased by an amount equal to interest on such payments for the Payments Delay Period at a rate equal to the prime rate in effect as of the date the payment was first due (for this purpose, the prime rate will be based on the rate published from time to time in the Wall Street Journal) (the “Interest Rate”); and

     (b) (i) with respect to the provision of such taxable benefits, for a period of six months following the date of the Executive’s “separation from service” (as such term is defined under Section 409A) with the Company, or for shorter period of time that the Company determines is sufficient to avoid the imposition of the 409A Taxes (the “Benefits Delay Period”), the Executive shall be responsible for the full cost of providing such taxable benefits, and (ii) on the first day following the Benefits Delay Period, the Company shall reimburse the Executive for the costs of providing such benefits imposed on the Executive during the Benefits Delay Period, plus interest accrued at the Interest Rate.

25. Governing Law. All matters affecting this Agreement, including the validity thereof, are to be governed by, interpreted and construed in accordance with the substantive laws of the State of Ohio, without giving effect to the principles of conflict of laws of such State.

26. Arbitration. The parties hereto shall endeavor to settle all disputes by amicable negotiations. Any claim, dispute, disagreement or controversy that arises among the parties relating to this Agreement (excluding enforcement by the Company of its rights under the Section 15) that is not amicably settled shall be resolved by arbitration with respect to any claims as to which arbitration is not prohibited by applicable federal or state law. Such arbitration shall be conducted, as follows:

(a) An arbitration may be commenced by any party to this Agreement by the service of a written request for arbitration upon the other affected party(ies). Such request for arbitration shall summarize the controversy or claim to be arbitrated.

(b) Any such arbitration shall be heard in the State of Ohio, and except as the parties may otherwise agree, before a panel consisting of three (3) arbitrators, each of whom shall be independent and impartial. One of the arbitrators shall be appointed by the Company, one shall be appointed by the Executive, and the third shall be appointed by the first two arbitrators. If the first two arbitrators cannot agree on the third arbitrator within 30 days of the appointment of the second

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arbitrator, then the third arbitrator shall be named by the appropriate official in the Cincinnati, Ohio office of the American Arbitration Association or, in the event of his or her unavailability by reason of disqualification or otherwise, by the appropriate official in the New York City office of the American Arbitration Association. In determining the appropriate background of the third arbitrator, the appointing authority shall give due consideration to the issues to be resolved, but his or her decision as to the identity of the arbitrator shall be final. Any arbitrator shall be an individual who is an attorney licensed to practice law in the State of Ohio. Such arbitrator shall be neutral within the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration Association; provided, however, that the arbitration shall not be administered by the American Arbitration Association. Any challenge to the neutrality of an arbitrator shall be resolved by the arbitrator whose decision shall be final and conclusive. The arbitration shall be administered and conducted by the arbitrator(s) pursuant to the then-current employment dispute resolution rules of the American Arbitration Association.

(c) The parties hereby expressly waive punitive damages, and under no circumstances shall an award contain any amount that in any way reflects punitive damages.

(d) The decision of the arbitrator on the issue(s) presented for arbitration shall be final and conclusive and may be enforced in any court of competent jurisdiction.

(e) It is intended that controversies or claims submitted to arbitration under this Section 26 shall remain confidential, and to that end it is agreed by the parties that neither the facts disclosed in the arbitration, the issues arbitrated, nor the views or opinions of any persons concerning them, shall be disclosed to third persons at any time, except to the extent necessary to enforce an award or judgment or as required by law or regulation, including the federal securities laws and the regulations thereunder, in response to legal process or in connection with such arbitration.

27. Notices. Any notice hereunder by either party to the other shall be given in writing by personal delivery or certified mail, return receipt requested. If addressed to the Executive, the notice shall be delivered or mailed to the Executive at his principal residence, or to such other address as the Executive shall give notice in writing in accordance herewith. If addressed to the Company, the notice shall be delivered or mailed to the Company at its executive offices at 701 Lima Avenue, Findlay, Ohio 45840 to the attention of the Board. A notice shall be deemed given, if by personal delivery, on the date of such delivery or, if by certified mail, on the date shown on the applicable return receipt.

28. Representations; Entire Agreement.

     (a) The Executive represents and warrants that he is free to enter into and perform each of the terms and conditions of this Agreement and is not subject to any agreement, judgment, order or restriction that would be violated by being employed by the Company or that in any way restricts the services that may be rendered to the Company.

     (b) This agreement embodies the entire representations, warranties, covenants and agreements in relation to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not expressly set forth in this Agreement.

29. Counterparts. This Agreement may be executed by either of the parties hereto in counterpart, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

30. Headings. The headings of sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by an officer pursuant to the authority of its Board, and the Executive has executed this Agreement, as of the day and year first written above.

 

 

 

 

 

COOPER TIRE & RUBBER COMPANY

 

 

 

 

 

 

 

By:

 

Roy V. Armes

 

 

 

 

 

 

 

Title:

 

Chairman, CEO, & President

 

 

 

 

 

 

 

 

EXECUTIVE:

 

/s/ Roy V. Armes

 

 

 

 

 

Roy V. Armes

 

 

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ANNEX A
Form of Release

     WHEREAS, there has been a Termination (as such term is defined in the Employment Agreement (the “Agreement”) made and entered into on , 20___ between the undersigned (the “Executive”) and COOPER TIRE & RUBBER COMPANY (“Cooper”), of the Executive’s employment from Cooper; and

     WHEREAS, the Executive is required to sign this Release in order to receive the severance benefits as described in Section 5, Section 6 and Section 12 (to the extent provided in Section 12) of the Agreement.

     NOW THEREFORE, in consideration of the promises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and intending to be legally bound, the Executive agrees as follows:

     1. This Release is effective on the date hereof and will continue in effect as provided herein.

     2. In consideration of the payments to be made and the benefits to be received by the Executive pursuant to Section 5, Section 6 and Section 12 of the Agreement, which the Executive acknowledges are in addition to payments and benefits which the Executive would be entitled to receive absent the Agreement, the Executive, for himself and his dependents, successors, assigns, heirs, executors and administrators (and his and their legal representatives of every kind), hereby releases, dismisses, remises and forever discharges its predecessors, parents, subsidiaries, divisions, related or affiliated companies, officers, directors, stockholders, members, employees, heirs, successors, assigns, representatives, agents and counsel (the “Company”) from any and all arbitrations, claims, including claims for attorney’s fees, demands, damages, suits, proceedings, actions and/or causes of action of any kind and every description, whether known or unknown, which the Executive now has or may have had for, upon, or by reason of any cause whatsoever (“claims”), against the Company, including but not limited to:

     (a) any and all claims arising out of or relating to the Executive’s employment by or service with the Company and his termination from the Company;

     (b) any and all claims of discrimination, including but not limited to claims of discrimination on the basis of sex, race, age, national origin, marital status, religion or handicap, including, specifically, but without limiting the generality of the foregoing, any claims under the Age Discrimination in Employment Act, as amended, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, Ohio Revised Code Section 4101.17 and Ohio Revised Code Chapter 4112, including Sections 4112.02 and 4112.99 thereof, and any other applicable state statutes and regulations, and

     (c) any and all claims of wrongful or unjust discharge or breach of any contract or promise, express or implied;

provided, however, that the foregoing shall not apply to claims to enforce rights that the Executive may have as of the date hereof or in the future under any of Cooper’s health, welfare, retirement, pension or incentive plans, under any indemnification agreement between the Executive and Cooper, under Cooper’s indemnification by-laws, under the directors’ and officers’ liability coverage maintained by Cooper, under the applicable provisions of the Delaware General Corporation Law, or that the Executive may have in the future under the Agreement or under this Release.

     3. The Executive understands and acknowledges that the Company does not admit any violation of law, liability or invasion of any of his rights and that any such violation, liability or invasion is expressly denied. The consideration provided for this Release is made for the purpose of settling and extinguishing all claims and rights (and every other similar or dissimilar matter) that the Executive ever had or now may have against the Company to the extent provided in this Release. The Executive further agrees and acknowledges that no representations, promises or inducements have been made by the Company other than as appear in the Agreement.

     4. The Executive further agrees and acknowledges that:

     (a) The release provided for herein releases claims to and including the date of this Release;

     (b) The Executive has been advised by the Company to consult with legal counsel prior to executing this Release, has had an opportunity to consult with and to be advised by legal counsel of his choice, fully understands the terms of this Release, and enters into this Release freely, voluntarily and intending to be bound;

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     (c) The Executive has been given a period of twenty-one (21) days to review and consider the terms of this Release, prior to its execution and that he may use as much of the twenty-one (21) day period as he desires; and

     (d) The Executive may, within 7 days after execution, revoke this Release. Revocation shall be made by delivering a written notice of revocation to the General Counsel at Cooper. For such revocation to be effective, written notice must be actually received by the General Counsel at Cooper no later than the close of business on the 7th day after the Executive executes this Release. If the Executive does exercise his right to revoke this Release, all of the terms and conditions of the Release shall be of no force and effect and Cooper shall not have any obligation to make further payments or provide benefits to the Executive as set forth in Section 5, Section 6, and Section 12 of the Agreement.

     5. The Executive agrees that he will never file a lawsuit or other complaint asserting any claim that is released in this Release.

     6. The Executive waives and releases any claim that he has or may have to reemployment after the Termination Date as defined in the Agreement.

     IN WITNESS WHEREOF, the Executive has executed and delivered this Release on the date set forth below.

 

 

 

 

 

Dated:                                          ,                     

 

 

 

 

 

 

Roy V. Armes

 

 

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EX-10.1 2 l40465exv10w1.htm EX-10.1

Exhibit 10.1

COOPER TIRE & RUBBER COMPANY
CHANGE IN CONTROL SEVERANCE PAY PLAN
(AMENDED AND RESTATED AS OF AUGUST 4, 2010)

 

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TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

 

1. General Statement of Purpose

 

 

1

 

2. Definitions

 

 

1

 

3. Change in Control: Long-Term Performance-Based Incentive Compensation and Annual Bonus

 

 

6

 

4. Eligibility: Termination Following a Change in Control

 

 

7

 

5. Severance and Other Compensation

 

 

9

 

6. Funding Upon Potential Change in Control

 

 

10

 

7. Reduction of Certain Severance Compensation Payments

 

 

10

 

8. No Mitigation Obligation

 

 

12

 

9. Certain Payments not Considered for Other Benefits, etc

 

 

12

 

10. Confidentiality and Non-Compete Agreement and Release

 

 

12

 

11. Legal Fees and Expenses

 

 

12

 

12. Employment Rights

 

 

13

 

13. Withholding of Taxes

 

 

13

 

14. Successors and Binding Effect

 

 

13

 

15. Effect of Section 409A of the Code

 

 

14

 

16. Governing Law

 

 

15

 

17. Validity

 

 

15

 

18. Headings

 

 

15

 

19. Construction

 

 

16

 

20. Administration of the Plan

 

 

16

 

21. Amendment and Termination

 

 

17

 

22. Other Plans, etc

 

 

17

 

Exhibit A Severance Compensation

 

 

 

 

Exhibit B Form of Confidentiality and Non-Compete Agreement

 

 

 

 

Exhibit C Form of Release

 

 

 

 

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COOPER TIRE & RUBBER COMPANY
CHANGE IN CONTROL SEVERANCE PAY PLAN
(AMENDED AND RESTATED AS OF AUGUST 4, 2010)

1.

 

General Statement of Purpose. The Board of Directors (the “Board”) of Cooper Tire & Rubber Company (the “Company”) has considered the effect a change in control of the Company may have on certain executives of the Company and its Affiliated Employers (as defined below). The executives have made and are expected to continue to make major contributions to the short-term and long-term profitability, growth and financial strength of the Company. The Company recognizes that, as is the case for most publicly held companies, the possibility of a change in control exists, desires to assure itself of both the present and future continuity of management, desires to establish certain minimum severance benefits for certain of its executives applicable in a change in control, and wishes to insure that its executives are not practically disabled from discharging their duties in respect of a proposed or actual transaction involving a change in control.

 

 

As a result, the Board believes that the Cooper Tire & Rubber Company Change in Control Severance Pay Plan (the “Plan”) will assist the Company in attracting and retaining qualified executives. Accordingly, the Plan originally effective as of June 6, 2000 (the “Effective Date”), as subsequently amended, is amended and restated as of August 4, 2010.

 

2.

 

Definitions. Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates otherwise:

 

(a)

 

“Affiliated Employer” means any corporation, partnership, limited liability company, joint venture, unincorporated association or other entity in which the Company has a direct or indirect ownership or other equity interest.

 

 

(b)

 

“Award Agreement” means an award agreement evidencing a grant of an equity award between the Executive and the Company.

 

 

(c)

 

“Base Pay” means, with respect to each Executive, the rate of annual base salary payable to the Executive at the time the Executive’s employment is terminated pursuant to either Section 4(b) or Section 4(c) of this Plan (including a Pre-Change in Control Qualifying Termination) (without regard to any reduction that would otherwise constitute Good Reason), or, if greater, the rate of annual base salary payable to the Executive on the date immediately prior to a Change in Control.

 

 

(d)

 

“Board” means the Board of Directors of the Company.

 

 

(e)

 

“Cause” means that, prior to any termination of employment pursuant to Section 4(c), the Executive shall have committed:

 

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(i)

 

any act or omission constituting a material breach by the Executive of any of his significant obligations to or agreements with the Company or an Affiliated Employer or the continued failure or refusal of the Executive to adequately perform the duties reasonably required by the Company or an Affiliated Employer which, in each case, is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or any Affiliated Employer thereof, after notification by the Board of such breach, failure or refusal and failure of the Executive to correct such breach, failure or refusal within thirty (30) days of such notification (other than by reason of the incapacity of the Executive due to physical or mental illness); or

 

 

(ii)

 

any other willful act or omission which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or any Affiliated Employer, and failure of the Executive to correct such act or omission within thirty (30) days after notification by the Board of any such act or omission (other than by reason of the incapacity of the Executive due to physical or mental illness); or

 

 

(iii)

 

the Executive is found guilty of, or pleads guilty or nolo contendere to, a felony or any criminal act involving fraud, embezzlement, or theft.

For purposes of this Plan, no act, or failure to act, on the Executive’s part shall be deemed “willful” if done, or omitted to be done, by the Executive in good faith and with a reasonable belief that the Executive’s action or omission was in the best interest of the Company or any Affiliated Employer. Any notification to be given by the Board in accordance with Section 2(e)(i) or 2(e)(ii) shall be in writing and shall specifically identify the breach, failure, refusal, act or omission to which the notification relates and, in the case of Section 2(e)(i) or 2(e)(ii) shall describe the injury to the Company or any Affiliated Employer, and such notification must be given within twelve (12) months of the Board becoming aware of the breach, failure, refusal, act, omission or injury identified in the notification. Failure to notify the Executive within any such twelve (12) month period shall be deemed to be a waiver by the Board of any such breach, failure, refusal, act or omission by the Executive and any such breach, failure, refusal, act or omission by the Executive shall not then be determined to be a breach of this Plan. For the avoidance of doubt and for the purpose of determining Cause, the exercise of business judgment by the Executive shall not be determined to be Cause, even if such business judgment materially injures the financial condition or business reputation of, or is otherwise materially injurious to the Company or any Affiliated Employer, unless such business judgment by the Executive was not made in good faith, or constitutes willful or wanton misconduct, or was an intentional violation of state or federal law. In addition, for purposes of this definition of “Cause,” references to an “Affiliated Employer” shall mean the applicable Affiliated Employer for whom the Executive provides services.

 

(f)

 

“Change in Control” means the occurrence of any of the following events:

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(i)

 

the Company merges into itself, or is merged or consolidated with, another entity and as a result of such merger or consolidation less than 51% of the voting power of the then-outstanding voting securities of the surviving or resulting entity immediately after such transaction are directly or indirectly beneficially owned in the aggregate by the former stockholders of the Company immediately prior to such transaction;

 

 

(ii)

 

all or substantially all the assets accounted for on the consolidated balance sheet of the Company are sold or transferred to one or more entities or persons, and as a result of such sale or transfer less than 51% of the voting power of the then-outstanding voting securities of such entity or person immediately after such sale or transfer is directly or indirectly beneficially held in the aggregate by the stockholders of the Company immediately prior to such transaction or series of transactions;

 

 

(iii)

 

a person, within the meaning of Section 3(a)(9) or 13(d)(3) (as in effect on the Effective Date) of the Securities Exchange Act of 1934, (the “Exchange Act”) (a “Person”) becomes the beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange Commission pursuant to the Exchange Act) (a “Beneficial Owner”) of 35% or more of the voting power of the then-outstanding voting securities of the Company; provided, however, that the foregoing does not apply to any such acquisition that is made by (w) any Affiliated Employer; (x) any employee benefit plan of the Company or any Affiliated Employer; or (y) any person or group of which employees of the Company or of any Affiliated Employer control a greater than 25% interest unless the Board determines that such person or group is making a “hostile acquisition;” or (z) any person or group that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Executive; or

 

 

(iv)

 

a majority of the members of the Board are not Continuing Directors, where a “Continuing Director” is any member of the Board who (x) was a member of the Board on the Effective Date or (y) was nominated for election or elected to such Board with the affirmative vote of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election, provided that any director appointed or elected to the Board to avoid or settle a threatened or actual proxy contest (including but not limited to a consent solicitation) shall in no event be deemed to be a Continuing Director.

 

 

(g)

 

“Code” means the U.S. Internal Revenue Code of 1986 and the rulings and regulations promulgated thereunder, as such law, rulings, and regulations may be amended, from time to time.

 

 

(h)

 

“Committee” means the Compensation Committee of the Board.

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(i)

 

“Committee Action” means a writing by, or minutes of the actions of, the Committee, the substance of which, as to an Executive, has been communicated to such Executive.

 

 

(j)

 

“Common Stock” means the Company’s common stock, par value $1.00 per share.

 

 

(k)

 

“Company” means the Company as hereinbefore defined.

 

 

(l)

 

“Employee Benefits” means the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which an Executive is entitled to participate, including without limitation any savings, pension, supplemental executive retirement, or other retirement income or welfare benefit, stock option, performance share, performance unit, stock purchase, stock appreciation, deferred compensation, incentive compensation, group or other life, health, medical/hospital or other insurance (whether funded by actual insurance or self-insured by the Company or any Affiliated Employer), disability, salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements that may now exist or any policies, plans, programs or arrangements that may be adopted hereafter by the Company or an Affiliated Employer.

 

 

(m)

 

“Employer” means the Company and any Affiliated Employer to which the Plan has been extended by the Board and which has adopted the Plan.

 

 

(n)

 

“Executive” means any employee of an Employer who is designated by the Committee to be eligible under the Plan in a Committee Action and is notified in writing by the Company of his participation in the Plan (the notification letter referred to as a “Participation Acknowledgement Letter”).

 

 

(o)

 

“Executive’s Multiple” means the number determined by the Committee from time to time to be identified and provided in the Participation Acknowledgement Letter provided by the Company to each Executive, such number to be used for calculating a portion of each Executive’s Severance Pay and benefits.

 

 

(p)

 

“Incentive Compensation Plans” means the Cooper Tire & Rubber Company 1998, 2001, 2006 and 2010 Incentive Compensation Plans, as amended, and any successor or subsequent incentive compensation plan.

 

 

(q)

 

“Long-Term Performance-Based Incentive Compensation” or “LTP-BIC” means any cash or equity-based compensation program and associated dividend equivalent rights (other than any annual bonus compensation program) in which the amounts paid, earned or vested are based upon achievement of specified performance goals. For the avoidance of doubt, equity awards that are earned, vest or become exercisable based solely upon continued employment and/or the passage of time are not “Long-Term Performance-Based Incentive Compensation.”

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(r)

 

“Plan” means this Cooper Tire & Rubber Company Change in Control Severance Pay Plan (amended and restated as of August 4, 2010), as it may be further amended.

 

 

(s)

 

Potential Change in Control” means the occurrence of any of the following events:

 

(i)

 

The Company enters into a definitive agreement, the consummation of which would result in the occurrence of a Change in Control;

 

 

(ii)

 

Any Person (other than the Company or any Affiliated Employer) commences (within the meaning of Regulation 14D promulgated under the Exchange Act or any successor regulation) a tender or exchange offer which, if consummated, would result in a Change in Control;

 

 

(iii)

 

Any Person (other than the Company or any Affiliated Employer) files with the Securities and Exchange Commission a preliminary or definitive proxy statement relating to an election contest with respect to the election or removal of directors of the Company which solicitation, if successful, would result in a Change in Control;

 

 

(iv)

 

The acquisition by any Person of an aggregate Beneficial Ownership of 15% or more of the voting power of the then-outstanding voting securities of the Company (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this Section 2(s)(iv), the following acquisitions shall not constitute a Potential Change in Control: (A) any acquisition by the Company or any Affiliated Employer, (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Employer; or (C) any acquisition by a Person that is permitted to, and actually does, report its beneficial ownership on Schedule 13G promulgated under the Exchange Act (or any successor schedule); provided that, if such Person subsequently becomes required to or does report its beneficial ownership on Schedule 13D promulgated under the Exchange Act (or any successor schedule), and at the time has Beneficial Ownership of 15% or more of the Outstanding Company Voting Securities, then a Potential Change in Control shall be deemed to occur at such time; or

 

 

(v)

 

The Board adopts a resolution to the effect that a Potential Change in Control has occurred.

 

 

(t)

 

“Potential Change in Control Period” means the time period commencing on the date a Potential Change in Control occurs and ending on the first to occur of (i) the failure of a Change in Control to occur within six (6)months after the occurrence of a Potential Change in Control or (ii) delivery to the Trustee under

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the Trust Agreement (as defined in Section 6) of a declaration by the Board that the contemplated Change in Control is not likely to occur.

 

 

(u)

 

“Severance Compensation” means Severance Pay and other benefits provided by Section 5(a) of this Plan.

 

 

(v)

 

“Severance Pay” means the amounts payable as set forth in Section 5(a) of this Plan.

 

 

(w)

 

“Severance Period” means the period of time commencing on the date of the first occurrence of a Change in Control and continuing until the earlier of (i) the second anniversary of the occurrence of the Change in Control; (ii) the Executive’s death; or (iii) the date the Executive becomes disabled and qualifies, or would have qualified, to receive disability benefits pursuant to the Company’s long term disability plan in effect immediately prior to the Change in Control, provided that the Executive is eligible to participate in such long-term disability plan (regardless of whether or not the Executive has elected to participate in such long-term disability plan).

 

 

(x)

 

“1998 Option Plan” means the Cooper Tire & Rubber Company 1998 Employee Stock Option Plan, as amended.

3.

 

Change in Control: Long-Term Performance-Based Incentive Compensation and Annual Bonus.

 

 

(a)

 

Long-Term Performance-Based Incentive Compensation. Upon the occurrence of a Change in Control or a Pre-Change in Control Qualifying Termination (as defined in Section 4(a) below), the Executive shall receive: (i) any outstanding LTP-BIC award which has been notionally earned by or allocated or awarded to the Executive for a fiscal year or performance period or other measuring period completed prior to the date of the Change in Control (or the date of the Pre-Change in Control Qualifying Termination, if applicable) but has not yet been paid (or settled in the case of any equity-based awards), based on the achievement of performance goals for such completed fiscal year, performance period, or other measuring period; and (ii) any outstanding LTP-BIC award which has not been notionally earned by or allocated or awarded to the Executive for an uncompleted fiscal year, performance period, or other measuring period, assuming achievement of performance goals at target level, pro-rated for the number of full and partial months (on a fractional basis based on the number of days in the applicable month) between the commencement date of the current uncompleted fiscal year, performance period or other measuring period and ending on the date of the Change in Control (or the date of the Pre-Change in Control Qualifying Termination, if applicable). The foregoing payments to be made upon a Pre-Change in Control Qualifying Termination are referred to as the “Accelerated Pre-Change in Control Qualifying Termination LTP-BIC Payment” and the payments to be made upon the occurrence of a Change in Control are referred to as the “Accelerated Change in Control LTP-BIC Payment.”

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The cash-based portion of the Accelerated Change in Control LTP-BIC Payment shall be paid to the Executive on the 5th day following the Change in Control and the equity-based portion of the Accelerated Change in Control LTP-BIC Payment shall be paid to the Executive at the same time (and in the same form) as the Company pays the per share merger consideration to holders of its Common Stock; provided, that in each case, any cash or equity-based Accelerated Change in Control LTP-BIC Payment subject to a prior deferral election shall be paid in accordance with the terms of such deferral election. The cash and equity-based Accelerated Pre-Change in Control Qualifying Termination LTP-BIC Payment shall be paid to the Executive in accordance with Exhibit A.

 

 

(b)

 

Annual Bonus Compensation: Upon the occurrence of a Change in Control or a Pre-Change in Control Qualifying Termination, the Executive shall receive: (i) any outstanding annual bonus award which has been notionally earned by or allocated or awarded to the Executive for a fiscal year completed prior to the date of the Change in Control (or the date of the Pre-Change in Control Qualifying Termination, if applicable) but has not yet been paid, based on the achievement of performance goals for such completed fiscal year; and (ii) any outstanding annual bonus award which has not been notionally earned by or allocated or awarded to the Executive for an uncompleted fiscal year, performance period, or other measuring period, assuming achievement of performance goals at target level, pro-rated for the number of full and partial months (on a fractional basis based on the number of days in the applicable month) between the commencement date of the current uncompleted fiscal year and ending on the date of the Change in Control (or the date of the Pre-Change in Control Qualifying Termination, if applicable). The foregoing payments to be made upon a Pre-Change in Control Qualifying Termination are referred to as the “Accelerated Pre-Change in Control Qualifying Termination Annual Bonus Payment” and the payments to be made upon the occurrence of a Change in Control are referred to as the “Accelerated Change in Control Annual Bonus Payment.”

 

 

 

 

The Accelerated Change in Control Annual Bonus Payment shall be paid to the Executive on the 5th day following the Change in Control; provided, that in each case, any Accelerated Change in Control Annual Bonus Payment subject to a prior deferral election shall be paid in accordance with the terms of such deferral election. The Accelerated Pre-Change in Control Qualifying Termination Annual Bonus Payment shall be paid to the Executive in accordance with Exhibit A.

4.

 

Eligibility: Termination Following a Change in Control.

 

 

(a)

 

Subject to Section 3 above and the limitations described below, the Plan applies to: (i) Executives who are employed on the date that a Change in Control occurs and (ii) Executives whose employment with the Company is terminated pursuant to Sections 4(b) or 4(c) at a time when the Company is party to a definitive agreement, the consummation of which would result in the occurrence of a Change in Control (whether or not a Change in Control actually occurs) (such

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termination of employment, a “Pre-Change in Control Qualifying Termination”).

 

 

(b)

 

If an Executive’s employment is terminated by an Employer during the Severance Period and such termination is without Cause, the Executive will be entitled to the Severance Compensation described in Section 5.

 

 

(c)

 

An Executive may, during the Severance Period, terminate his employment with an Employer with the right to Severance Compensation described in Section 5 upon the occurrence of one or more of the following events (regardless of whether any other reason, other than Cause, for such termination exists or has occurred including, without limitation, other employment) (“Good Reason”):

 

(i)

 

(A) a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position with the Employer which the Executive held immediately prior to the Change in Control, (B) a material (greater than 5%) reduction in the Executive’s Base Pay, other than as part of across the board reductions (on a like percentage basis) applicable at the same time to other Executives and the executive officers of the ultimate parent, if applicable, or (C) the termination or denial of the Executive’s rights to Employee Benefits or a material (greater than 5%) reduction in the scope or aggregate value thereof, other than as part of a reduction applicable at the same time to executive officers of the Company and, if applicable, the ultimate parent; or

 

 

(ii)

 

the relocation of the office of the Company where the Executive is employed to a location at least fifty (50) miles from the Executive’s current work location, except for required travel on the Company’s business to an extent reasonably required to perform his duties hereunder; or

 

 

(iii)

 

any material breach of its obligations under the Plan by the Company or any successor thereto.

 

 

 

 

Notwithstanding anything in the Plan to the contrary, a termination of employment by the Executive for one of the reasons set forth in Sections 4(c)(i) through (iii), above, will not constitute “Good Reason” unless the Executive provides, within ninety (90) days of the initial existence of the condition described in Sections 4(c)(i) through (iii), above, written notice to the Company or the applicable Affiliated Employer of the existence of the condition and the Company has not remedied such condition within thirty (30) days of the receipt of such notice.

 

 

(d)

 

A termination by an Employer pursuant to Subsection (b) of this Section 4 or by an Executive pursuant to Subsection (c) of this Section 4 will not affect any rights that the Executive may have pursuant to any agreement, policy, plan, program or

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arrangement of the Company or an Affiliated Employer providing Employee Benefits, which rights shall be governed by the terms thereof.

 

 

(e)

 

Notwithstanding the preceding provisions of this Section 4, an Executive will not be entitled to Severance Compensation if his employment with an Employer is terminated during the Severance Period because the Executive (i) dies or (ii) becomes disabled and, in the case of disability, qualifies to receive disability benefits pursuant to the Company’s long term disability plan in effect immediately prior to the Change in Control, provided that the Executive is eligible to participate in such long-term disability plan (regardless of whether or not the Executive has elected to participate in such long-term disability plan), provided, however, that in the case of Subsection 4(e)(i), in the event an Executive dies following notice of the Executive’s termination of employment by the Company without Cause or by the Executive for Good Reason, in either case, during the Severance Period and on or prior to such Executive’s actual termination of employment, the Executive shall be deemed to have terminated employment on the date of such notice, and the Executive’s estate shall be entitled to any Severance Compensation or continuation of Severance Compensation to which the Executive would otherwise be entitled under this Plan, and the provisions of Section 10 of the Plan shall not apply to the Executive’s estate.

5.

 

Severance and Other Compensation.

 

 

(a)

 

If an Executive’s employment is terminated during the Severance Period pursuant to Section 4(b) of the Plan or if an Executive terminates his employment during the Severance Period pursuant to Section 4(c) of the Plan (including, in either case, a Pre-Change in Control Qualifying Termination), the Company shall pay to the Executive as Severance Pay the amounts described on Exhibit A within the time periods specified therein, and shall continue to provide to the Executive the other Severance Compensation described on Exhibit A for the periods described therein. In addition, the Company shall pay to the Executive (i) any unpaid Base Pay, through the date of the Executive’s termination, in accordance with the Company’s normal payroll practice; (ii) for any fiscal year prior to the fiscal year of termination, any unpaid benefits (as determined by the Committee) payable under each bonus compensation program in which the Executive participates, in accordance with the Company’s normal payroll practice with respect to such bonus compensation program but in no event later than March 15th of the year following the year in which termination occurs (or, to the extent such bonus is subject to a prior deferral election, in accordance with the terms of such deferral election); and (iii) the benefits the Executive has accrued through the date of the Executive’s termination under the Company’s Nonqualified Supplementary Benefit Plan, and any successor plan thereto which provides comparable benefits, in accordance with the terms of such plan.

 

 

(b)

 

Without limiting the rights of an Executive at law or in equity, if the Company fails to make any payment or provide any benefit required to be made or provided hereunder on a timely basis, the Company shall pay interest on the amount or

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value thereof at an annualized rate of interest equal to the so-called composite “prime rate” as quoted from time to time during the relevant period in The Wall Street Journal plus the lesser of 5% or the maximum rate of interest allowed by law (the “Interest Rate”). Such interest will be payable as it accrues on demand. Any change in such prime rate will be effective on and as of the date of such change.

 

 

(c)

 

Notwithstanding any provision of the Plan to the contrary, the rights and obligations under this Section 5 and Section 11 will survive any termination or expiration of the Plan or the termination of an Executive’s employment following a Change in Control for any reason whatsoever.

6.

 

Funding Upon Potential Change in Control.

 

 

(a)

 

Upon the occurrence of each of a Potential Change in Control or a Change in Control, the Company shall promptly deposit to the extent it has not done so, and in any event within five (5) business days of the applicable event, a sum equal to (i) the present value as of the date of the Potential Change in Control or the Change in Control, as applicable, of the payments to be made to the Executives under the provisions of Sections 3 and 5 hereof (other than with respect to options to acquire shares of Common Stock), plus (ii) the actuarial equivalent of the benefits the Executives have accrued under the Company’s Nonqualified Supplementary Benefit Plan, and any successor plan thereto which provides comparable benefits, on the date of the applicable event, in the Trust under the Cooper Tire & Rubber Company Master Grantor Trust Agreement, between the Company and National City Bank, as Trustee (the “Trust Agreement”) or any successor Trustee under the Trust Agreement at the time of the funding required by this Section 6; provided, however, the Trust shall not be funded if the funding thereof would result in taxable income to the Executive by reason of Section 409A(b) of the Code. For purposes of this Section 6, “actuarial equivalent” shall be determined using the 1994 Uninsured Pensioner Mortality Table (UP-94) and annual compound interest at the Corporate Bond yield average for bonds rated AAA by Moody’s reduced by fifty (50) basis points (.5 percent). The rate chosen from such table will be for the calendar month five months prior to the month which contains the effective date of payment and will be truncated to the lower 0.25% increment (e.g. 6.00%, 6.25%, 6.50%, etc.).

 

 

(b)

 

Any payments of compensation, pension, severance or other benefits by the Trustee pursuant to the Trust Agreement shall, to the extent thereof, discharge the Company’s obligation to pay compensation, pension, severance and other benefits hereunder, it being the intent of the Company that assets in such Trust be held as security for the Company’s obligation to pay compensation, pension, severance and other benefits under this Plan. Any similar payments made directly by the Company to an Executive pursuant to this Plan will relieve the Trustee of the obligation to make such payments, will relieve the Company of the obligation to fund the Trust to the extent of such payments, and the Company may seek

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reimbursement from the Trustee for the payment or other arrangements made directly by the Company, as provided in the Trust Agreement.

 

 

(c)

 

In the event a Change in Control does not occur prior to the end of a Potential Change in Control Period, the Company may request within six (6) months of the end of such Potential Change in Control Period that the Trustee pay to the Company any amounts contributed to and remaining on hand in the Trust pursuant to Section 1(h) of the Trust Agreement as a result of the occurrence of the Potential Change in Control.

7.

 

Reduction of Certain Severance Compensation Payments.

 

 

(a)

 

Notwithstanding any other provisions in this Plan, in the event that any payment or benefit received or to be received by an Executive (including any payment or benefit received in connection with a Change of Control or the termination of the Executive’s employment, whether pursuant to the terms of this Plan or any other plan, program, arrangement or agreement) (all such payments and benefits, together the “Total Payments”) would be subject (in whole or part), to any excise tax imposed under Section 4999 of the Code, or any successor provision thereto (the “Excise Tax”), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Executive’s payments and/or benefits under this Plan, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the foregoing reduction shall not be made if the Total Payments to be provided to the Executive, determined on an after-tax basis (taking into account the Excise Tax, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income, OASDI and Medicare taxes) exceed 110% of the amount calculated without such reduction. In the event that any payment or benefit intended to be provided hereunder is required to be reduced pursuant to this Section 7, such payments or benefits will be reduced in the following order: (i) benefits under Exhibit A, Section l(g) (outplacement services) which are considered Parachute Payments; (ii) benefits under Exhibit A, Section 1(b) (lump sum severance) which are considered Parachute Payments; (iii) benefits under Section 3(b) and/or Exhibit A, Section 1(a) (pro-rated annual bonus compensation) which are considered Parachute Payments; (iv) benefits under Exhibit A, Section 1(c) (continued insurance benefits) which are considered Parachute Payments; (v) benefits under Section 3(a) and/or Exhibit A, Section 1(d) (LTP-BIC compensation) which are considered Parachute Payments; (vi) benefits under Exhibit A, Section 1(e) (time-vested restricted stock units) which are considered Parachute Payments; and (vii) benefits under Exhibit A, Section 1(f) (stock options) which are considered Parachute Payments (together, the “Potential Payments”).

 

 

(b)

 

For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such

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manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account; (ii) no portion of the Total Payments shall be taken into account which, in the opinion of nationally recognized tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change of Control, the Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” (“Parachute Payments”) within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as set forth in Section 280G(b)(3) of the Code) that is allocable to such reasonable compensation; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

 

 

(c)

 

At the time that payments are made under this Plan, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations, including any opinions or other advice the Company received from Tax Counsel, the Auditor, or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). If the Executive objects to the Company’s calculations based on an opinion or other advice the Executive received from his Tax Counsel or other advisors or consultants (and any such opinions or advice which are in writing shall be provided by the Executive to the Company), the Company shall pay to the Executive such portion of the Potential Payments (up to 100% thereof) as the Executive determines is necessary to result in the proper application of this Section 7. All determinations required by this Section 7 (or requested by either the Executive or the Company in connection with this Section 7) shall be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 7 shall not of itself limit or otherwise affect any other rights of the Executive under this Plan.

8.

 

No Mitigation Obligation. The Company hereby acknowledges that it will be difficult and may be impossible for an Executive to find reasonably comparable employment following his termination of employment with the Company and the Affiliated Employers and that the non-competition agreement required by Section 10 will further limit the employment opportunities for an Executive. Accordingly, the provision of Severance Compensation by the Company to an Executive in accordance with the terms of the Plan is hereby acknowledged by the Company to be reasonable, and an Executive will not be required to mitigate the amount of any payment provided for in the Plan by seeking other employment or otherwise, nor will any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of an Executive hereunder or otherwise, except as expressly provided in Section l(c) of Exhibit A.

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9.

 

Certain Payments not Considered for Other Benefits, etc. The legal fee and expense reimbursement provided under Section 11 and reimbursements for outplacement counseling provided under Section l(g) of Exhibit A will not be included as earnings for the purpose of calculating contributions or benefits under any employee benefit plan of the Company.

 

10.

 

Confidentiality and Non-Compete Agreement and Release. Receipt of Severance Compensation by an Executive is conditioned upon the Executive executing and delivering to the Company a Confidentiality and Non-Compete Agreement substantially in the form provided in Exhibit B and a Release substantially in the form provided in Exhibit C.

 

11.

 

Legal Fees and Expenses. It is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of the Executive’s rights under the Plan by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under the Plan or in the event that the Company or any other person takes or threatens to take any action to declare the Plan void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of the Executive’s choice, at the expense of the Company as hereafter provided, to advise and represent the Executive in connection with any such interpretation, enforcement or defense. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive’s entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship shall exist between the Executive and such counsel. The Company shall pay and be solely financially responsible for any and all reasonable fees and related expenses incurred by the Executive in connection with any of the foregoing, and any reimbursement to the Executive hereunder will be made as soon as practical but in no event no later than the end of the calendar year following the year in which the legal fees and expenses are paid by the Executive. Notwithstanding the above, the Company shall not be obligated to reimburse or pay Executive for attorney fees and related expenses hereunder in the event any one or more of the following shall occur: (i) the Executive fails to prevail in at least one asserted claim; (ii) a court of competent jurisdiction determines that the Executive acted in bad faith, frivolously or with no colorable claim; or (iii) a court of competent jurisdiction determines that the Executive asserted a claim in violation of the Release.

 

12.

 

Employment Rights.

 

(a)

 

Nothing expressed or implied in the Plan shall create any right or duty on the part of the Company, an Affiliated Employer or an Executive to have the Executive remain in the employment of the Company or an Affiliated Employer at any time prior to or following a Change in Control.

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(b)

 

Each Executive covered by this Plan expressly acknowledges that he is an employee at will, and that the Company may terminate him at any time prior to a Change in Control.

13.

 

Withholding of Taxes. The Company may withhold from any amounts payable under the Plan all federal, state, city or other taxes as shall be required pursuant to any law or government regulation or ruling.

 

14.

 

Successors and Binding Effect.

 

 

(a)

 

The Company will require any successor, (including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company, or any specific group of the Company as designated by the Board, and to the extent of any delegation of the Board to a committee, by such committee, whether by purchase, merger, consolidation, reorganization or otherwise, and such successor shall thereafter be deemed the Company and an Employer for the purposes of the Plan), to expressly assume and agree to perform the obligations under the Plan in the same manner and to the same extent the Company and an Employer would be required to perform if no such succession had taken place. The Plan shall be binding upon and inure to the benefit of the Company and any successor to the Company, but shall not otherwise be assignable, transferable or delegable by the Company.

 

 

(b)

 

The rights under the Plan shall inure to the benefit of and be enforceable by each Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and/or legatees.

 

 

(c)

 

The rights under the Plan are personal in nature and neither the Company nor any Executive shall, without the consent of the other, assign, transfer or delegate the Plan or any rights or obligations hereunder except as expressly provided in this Section 14. Without limiting the generality of the foregoing, an Executive’s right to receive payments hereunder shall not be assignable, transferable or delegable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by his or her will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 14, the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.

 

 

(d)

 

The obligation of the Company to make payments and/or provide benefits hereunder shall represent an unsecured obligation of the Company.

 

 

(e)

 

The Company recognizes that each Executive will have no adequate remedy at law for breach by the Company of any of the agreements contained herein and, in the event of any such breach, the Company hereby agrees and consents that each Executive shall be entitled to a decree of specific performance, mandamus or other appropriate remedy to enforce performance of obligations of the Company under the Plan.

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15.

 

Effect of Section 409A of the Code.

 

(a)

 

Notwithstanding anything to the contrary in the Plan, a termination of employment shall not be deemed to have occurred for purposes of any provision providing for payment upon or following a termination of an Executive’s employment unless such termination is also a “Separation from Service” within the meaning of Section 409A of the Code and, for purposes of any such provision, references to a “termination,” “termination of employment” or like terms shall mean Separation from Service, and references to the “termination date,” “date of termination” or like terms shall mean the date of Separation from Service.

 

 

(b)

 

Notwithstanding anything to the contrary in the Plan, if the Executive is a “specified employee” (within the meaning of Section 409A of the Code and determined pursuant to policies adopted by the Company) and the Company determines that any payments or taxable benefits to be provided to the Executive pursuant to Sections 5 and 11 of the Plan are or may become subject to the additional tax under Section 409A(a)(l)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code (the “409A Taxes”) as applicable at the time such payments and benefits are otherwise required under the Plan unless payment is delayed for at least six (6) months following the date of the Executive’s “separation from service” (as such term is defined under Section 409A of the Code) with the Company, then:

 

 

(i)

 

(A) such payments shall be delayed until the date that is six months after the date of the Executive’s “separation from service” (as such term is defined under Section 409A of the Code) with the Company, or for shorter period of time that the Company determines is sufficient to avoid the imposition of the 409A Taxes (the “Payments Delay Period”), and (B) such payments shall be increased by an amount equal to interest on such payments for the Payments Delay Period at the Interest Rate; and

 

 

(ii)

 

(A) with respect to the provision of such taxable benefits, for a period of six months following the date of the Executive’s “separation from service” (as such term is defined under Section 409A of the Code) with the Company, or for shorter period of time that the Company determines is sufficient to avoid the imposition of the 409A Taxes (the “Benefits Delay Period”), the Executive shall be responsible for the full cost of securing such taxable benefits, and (B) on the first day following the Benefits Delay Period, the Company shall reimburse the Executive for the costs of providing such benefits imposed on the Executive during the Benefits Delay Period, plus interest accrued at the Interest Rate.

16.

 

Governing Law. All matters affecting this Plan, including the validity, interpretation, construction and performance of the Plan shall be governed by the laws of the State of Ohio, without giving effect to the principles of conflict of laws of such State.

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17.

 

Validity. If any provisions of the Plan or the application of any provision hereof to any person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of the Plan and the application of such provision to any other person or circumstances shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

 

18.

 

Headings. The headings in the Plan are for convenience of reference only and do not define, limit or describe the scope or intent of the Plan or any part hereof and shall not be considered in any construction hereof.

 

19.

 

Construction. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender and the singular shall be deemed to include the plural, unless the context clearly indicates to the contrary.

 

20.

 

Administration of the Plan.

 

(a)

 

In General: The Plan shall be administered by the Company, which shall be the named fiduciary under the Plan.

 

 

(b)

 

Delegation of Duties: The Company may delegate any of its administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval and payment of Severance Pay, to named administrator or administrators.

 

 

(c)

 

Regulations: The Company shall promulgate any rules and regulations it deems necessary in order to carry out the purposes of the Plan or to interpret the terms and conditions of the Plan; provided, however, that no rule, regulation or interpretation shall be contrary to the provisions of the Plan.

 

 

(d)

 

Claims Procedure: Subject to the provisions of Section 7, the Company shall determine the rights of any employee of the Company to any Severance Compensation. Any employee or former employee of the Company or an Affiliated Employer who believes that he has not received any benefit under the Plan to which he believes he is entitled, may file a claim in writing with the General Counsel of the Company. The Company shall, no later than 90 days after the receipt of a claim, either allow or deny the claim by written notice to the claimant. If a claimant does not receive written notice of the Company’s decision on his claim within such 90-day period, the claim shall be deemed to have been denied in full.

A denial of a claim by the Company, wholly or partially, shall be written in a manner calculated to be understood by the claimant and shall include:

 

(i)

 

the specific reason or reasons for the denial;

 

 

(ii)

 

specific reference to pertinent Plan provisions on which the denial is based;

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(iii)

 

a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

 

 

(iv)

 

an explanation of the claim review procedure.

A claimant whose claim is denied (or his duly authorized representative) may, within thirty (30) days after receipt of denial of his claim, request a review of such denial by the Company by filing with the Secretary of the Company a written request for review of his claim. If the claimant does not file a request for review with the Company within such 30-day period, the claimant shall be deemed to have acquiesced in the original decision of the Company on his claim. If a written request for review is so filed within such 30-day period, the Company shall conduct a full and fair review of such claim. During such full review, the claimant shall be given the opportunity to review documents that are pertinent to his claim and to submit issues and comments in writing. The Company shall notify the claimant of its decision on review within sixty (60) days after receipt of a request for review. Notice of the decision on review shall be in writing. If the decision on review is not furnished to the claimant within such 60-day period, the claim shall be deemed to have been denied on review.

 

(e)

 

Requirement of Receipt: Upon receipt of any Severance Compensation hereunder, the Company reserves the right to require any Executive to execute a receipt evidencing the amount and payment of such Severance Compensation.

21.

 

Amendment and Termination. The Board reserves the right, except as hereinafter provided, at any time and from time to time, to amend, modify, change or terminate the Plan and/or any Committee Action, including any Exhibit thereto; provided, however, that during the pendency of a Potential Change in Control and after the occurrence of a Change in Control any such amendment, modification, change or termination that adversely affects the rights of any Executive under the Plan may not be made without the written consent of any such Executive.

 

22.

 

Other Plans, etc. If the terms of this Plan are inconsistent with the provisions of any other plan, program, contract or arrangement of the Company or any Affiliated Employer, to the extent such plan, program, contract or arrangement may be amended by the Company or an Affiliated Employer, the terms of the Plan will be deemed to so amend such plan, program, contract or arrangement, and the terms of the Plan will govern.

          IN WITNESS WHEREOF, Cooper Tire & Rubber Company has caused the Plan to be executed as of the 4th day of August 2010.

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COOPER TIRE & RUBBER COMPANY
 

 

 

By:  

/s/ Brenda S. Harmon

 

 

 

Brenda S. Harmon 

 

 

 

Senior Vice President
Chief Human Resources Officer 

 

 

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EXHIBIT A

COOPER TIRE & RUBBER COMPANY
CHANGE IN CONTROL SEVERANCE PAY PLAN

Severance Compensation

1.

 

Severance Pay. Except as otherwise provided in this Exhibit A, each Executive whose employment is terminated during the Severance Period pursuant to Section 4(b) or Section 4(c) of the Plan (including a Pre-Change in Control Qualifying Termination) shall, subject to and conditioned upon compliance with Section 15 of the Plan and Section 2 of this Exhibit A, receive Severance Compensation from the Company as follows:

 

(a)

 

Pro-Rated Annual Bonus Compensation:

 

 

(i)

 

With respect to an Executive who experiences a Pre-Change in Control Qualifying Termination, the Company shall pay to the Executive the Accelerated Pre-Change in Control Qualifying Termination Annual Bonus Payment on the 31st day following the date of the Executive’s Pre-Change in Control Qualifying Termination; provided however, that any Accelerated Pre-Change in Control Qualifying Termination Annual Bonus Payment subject to a prior deferral election shall be paid in accordance with the terms of such deferral election;

 

 

(ii)

 

With respect to an Executive who does not experience a Pre-Change in Control Qualifying Termination, a single lump sum cash payment on the 31st day following the Executive’s termination of employment equal to an amount determined by multiplying the Executive’s target annual bonus amount by a fraction, the numerator of which is the number of full and partial months (on a fractional basis based on the number of days in the applicable month) from the beginning of the performance period (that commences after the Change in Control) to the date of termination and the denominator of which is 12 (or such other number of months in the applicable performance period) (the “Pro Rated Annual Bonus”); provided, that if such Pro Rated Annual Bonus is subject to a prior deferral election, the Pro Rated Annual Bonus will be paid in accordance with the terms of such deferral election;

 

(b)

 

Lump Sum Severance: a single lump sum cash payment on the 31st day following the Executive’s termination of employment equal to the Executive’s Multiple times the sum of (i) the Executive’s Base Pay plus (ii) the greater of (A) the Executive’s target annual incentive compensation for the year in which the Change in Control occurs, and (B) the Executive’s target annual incentive compensation for the year immediately prior to the Change in Control;

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(c)

 

Continued Insurance Benefits: for the number of months determined by multiplying the Executive’s Multiple times twelve (12) following Executive’s termination date, the Company shall provide the Executive with life, accident and health insurance benefits substantially similar to those to which the Executive and the Executive’s family were entitled immediately prior to Executive’s termination, provided that, to the extent such health benefits are determined to be taxable by reason of Section 105(h) of the Code or otherwise, such health coverage shall be limited to eighteen (18) months following Executive’s termination date, and thereafter the Company shall provide retiree medical and life insurance coverage to the extent the Executive is eligible for such benefits under the terms of the applicable plans in effect immediately prior to Executive’s termination. Benefits otherwise receivable by the Executive pursuant to this Exhibit A, Section 1(c) shall be reduced to the extent the Executive is eligible to receive comparable benefits from other employment, and any such benefits eligibility shall be reported to the Company;

 

 

(d)

 

LTP-BIC: With respect to an Executive who experiences a Pre-Change in Control Qualifying Termination, the Company shall pay to the Executive (or settle in the case of equity-based awards) the cash and equity-based Accelerated Pre-Change in Control Qualifying Termination LTP-BIC Payment on the 31st day following the date of the Executive’s Pre-Change in Control Qualifying Termination; provided, however, with respect to an Executive that experiences a Pre-Change in Control Qualifying Termination, if there occurs a Change in Control during the 31-day period following the date of the Executive’s Pre-Change in Control Qualifying Termination, the Executive will be entitled to receive the full value of each equity-based Accelerated Pre-Change in Control Qualifying Termination LTP-BIC Payment award based upon the per share consideration received by holders of the Common Stock upon the Change in Control, payable on the 31st day following the Executive’s termination of employment; provided further, that in each case, any cash or equity-based Accelerated Pre-Change in Control Qualifying Termination LTP-BIC Payment subject to a prior deferral election shall be paid in accordance with the terms of such deferral election;

 

 

(e)

 

Time-Vested Restricted Stock Units: notwithstanding any provision in the Plan, this Exhibit A or any Award Agreement between the Executive and the Company to the contrary,

 

 

(i)

 

with respect to an Executive who experiences a Pre-Change in Control Qualifying Termination, all restricted stock units granted to the Executive that vest based solely upon the Executive’s continuous employment with the Company through a stated vesting date, (including dividend equivalents credited thereon), if then unvested, shall fully vest immediately upon the Executive’s termination of employment, and if not previously distributed, on the 31st day following the Executive’s termination of employment (or, if applicable, in accordance with the terms of any previously elected deferral election), the Company shall

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deliver to the Executive with respect to each such vested restricted stock unit one share of Common Stock (or equivalent shares of the acquiring company’s common stock); provided, however, if there occurs a Change in Control during such 31-day period, the Executive shall be entitled to receive the full value of each such vested restricted stock unit based upon the per share consideration received by holders of the Common Stock upon the Change in Control, payable on the 31st day following the Executive’s termination of employment (or, if applicable, in accordance with the terms of any previously elected deferral election);

 

 

(ii)

 

with respect to an Executive who does not experience a Pre-Change in Control Qualifying Termination,

 

 

(A)

 

if upon a Change in Control, the successor to the Company assumes (expressly or impliedly by operation of law) the Company’s obligations under any applicable restricted stock unit award or plan document or issues to the Executive a substitute equity-based award of equivalent value on no less favorable terms for vesting or payment as provided under the restricted stock unit award so replaced, all restricted stock units granted to the Executive that vest based solely upon the Executive’s continuous employment with the Company through a stated vesting date, (including dividend equivalents credited thereon), if then unvested, shall vest and be paid in accordance with the terms and conditions of such award; provided, however, if the Executive’s employment is subsequently terminated during the Severance Period pursuant to Section 4(b) or Section 4(c) of the Plan, all restricted stock units granted to the Executive that vest based solely upon the Executive’s continuous employment with the Company through a stated vesting date, (including dividend equivalents credited thereon), if then unvested, shall fully vest immediately upon the Executive’s termination of employment, and if not previously distributed, on the 31st day following the Executive’s termination of employment (or, if applicable, in accordance with the terms of any previously elected deferral election), the Company shall deliver to the Executive with respect to each such vested restricted stock unit one share of Common Stock (or equivalent shares of the acquiring company’s common stock);

 

 

(B)

 

if upon the Change in Control, the successor to the Company has not assumed (expressly or impliedly by operation of law) the Company’s obligations under any applicable restricted stock unit award or plan document or issued to the Executive a substitute equity-based award of equivalent value on no less favorable terms for vesting or payment as provided under the restricted stock unit award so replaced, all restricted stock units granted to the

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Executive that vest based solely upon the Executive’s continuous employment with the Company through a stated vesting date, (including dividend equivalents credited thereon), if then unvested, shall fully vest immediately upon the consummation of the Change in Control, and if not previously distributed, the Company shall pay to the Executive with respect to each such vested restricted stock unit the full value thereof based upon the per share consideration received by holders of the Common Stock upon the Change in Control, payable at the same time as such holders of the Common Stock receive their consideration (or, if applicable, in accordance with the terms of any previously elected deferral election);

 

 

(f)

 

Stock Options. Notwithstanding any provision in the Plan, this Exhibit A, the Incentive Compensation Plan, the 1998 Option Plan, any other relevant plan or program or any Award Agreement between the Company and the Executive to the contrary,

 

(i)

 

regardless of whether or not the Executive’s employment is terminated during the Severance Period pursuant to Section 4(b) or 4(c) of the Plan, if upon a Change in Control, the successor to the Company has not assumed (expressly or impliedly by operation of law) the Company’s obligations under the applicable option award or plan document or issued to the Executive a substitute stock option award of equivalent value on no less favorable terms for vesting or payment as provided under the stock option award so replaced, all stock options granted to the Executive by the Company which have not otherwise vested shall vest immediately upon the consummation of the Change in Control, and such vested stock options, to the extent that the shares of Common Stock underlying the stock options remain outstanding, shall remain exercisable for a period of ninety (90) days following the Executive’s termination (or such longer period as may be set forth in the Incentive Compensation Plan, the 1998 Option Plan, other relevant plan or program, or Award Agreement, as applicable), but not later than the expiration of the stated option term. In the event that the shares of Common Stock underlying the stock options do not remain outstanding, on the date such shares of Common Stock cease to be outstanding, the Company shall pay to the Executive with respect to each such stock option a lump sum cash payment equal to the excess of the per share consideration received by holders of the Common Stock upon the Change in Control over the exercise price of such stock option;

 

 

(ii)

 

with respect to an Executive whose employment is terminated during the Severance Period pursuant to Section 4(b) or Section 4(c) of the Plan (other than a Pre-Change in Control Qualifying Termination), if upon a Change in Control, the successor to the Company assumes (expressly or impliedly by operation of law) the Company’s obligations

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under the applicable option award or plan document or issues to the Executive a substitute stock option award of equivalent value on no less favorable terms for vesting or payment as provided under the stock option award so replaced, all stock options granted to the Executive by the Company which have not otherwise vested shall vest immediately upon the Executive’s termination of employment during the Severance Period pursuant to Section 4(b) or 4(c) of the Plan, and such vested stock options shall remain exercisable for a period of ninety (90) days following the Executive’s termination (or such longer period as may be set forth in the Incentive Compensation Plan, the 1998 Option Plan, other relevant plan or program, or Award Agreement, as applicable), but not later than the expiration of the stated option term;

 

 

(iii)

 

with respect to an Executive who experiences a Pre-Change in Control Qualifying Termination, all stock options granted to the Executive by the Company which have not otherwise vested shall vest immediately upon the termination of the Executive’s employment, and such vested stock options, to the extent that the shares of Common Stock underlying the stock options remain outstanding, shall remain exercisable for a period of ninety (90) days following the Executive’s termination (or such longer period as may be set forth in the Incentive Compensation Plan, the 1998 Option Plan, other relevant plan or program, or Award Agreement, as applicable), but not later than the expiration of the stated option term. In the event that the shares of Common Stock underlying the stock options do not remain outstanding, on the date such shares of Common Stock cease to be outstanding, the Company shall pay to the Executive with respect to each such stock option a lump sum cash payment equal to the excess of the per share consideration received by holders of the Common Stock upon the Change in Control over the exercise price of such stock option;

 

 

 

 

For purposes hereunder, the term “stock option” should be read to include all other similar equity instruments, including, but not limited to, stock appreciation rights;

 

 

(g)

 

Outplacement Services: outplacement services by a firm selected by the Executive from a list provided by the Company so long as such services are commenced within twelve (12) months following termination, at the expense of the Company in an amount up to 15% of the Executive’s Base Pay, payable within thirty (30) days after receipt of an invoice from the outplacement firm.

 

 

(h)

 

Notwithstanding anything herein to the contrary, in no event shall amounts in respect of any restricted stock units, performance-based equity awards or other stock rights that, as determined by the Company, provides for the “deferral of compensation” (as such term is defined under Section 409A of the Code), that were granted or became vested on or after January 1, 2005, be distributed pursuant to Exhibit A prior to the occurrence of the earlier of either (i) the

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Executive’s termination (or such later date required under Section 15 of the Plan), (ii) the Executive’s death or “disability” (as such term is defined under Section 409A of the Code), (iii) a “change in the ownership or effective control” of the Company or in the “ownership of a substantial portion of the assets” of the Company (each as defined under Section 409A of the Code), or (iv) the specified time or fixed schedule as may be elected by the Executive in accordance with the applicable plan or arrangement and Section 409A of the Code. This provision shall not apply to any stock options which are not considered deferred compensation subject to Section 409A of the Code pursuant to Treasury Regulation Section 1.409A-l(b)(5); and

 

 

(i)

 

Any cash payment under Section 1(d) or Section 1(e) of this Exhibit A shall be deemed to be in lieu of and in substitution for any right the Executive may have to such vested restricted stock units and/or performance-based equity awards, as applicable, under the terms of any Award Agreement between the Company and the Executive, and the Executive agrees to surrender all such vested restricted stock units and/or performance-based equity awards, as applicable, being cashed out hereunder immediately prior to receiving the cash payment described above. For purposes hereunder, the term “restricted stock unit” and/or “performance-based equity award” should be read to include all other similar equity instruments, including, but not limited to, restricted stock;

2.

 

Release. Notwithstanding the foregoing, with respect to each Executive whose employment is terminated during the Severance Period pursuant to Section 4(b) or Section 4(c) of the Plan (including a Pre-Change in Control Qualifying Termination), as a condition to the payment of any Severance Compensation pursuant to Section 5(a) of the Plan and Section 1 of this Exhibit A, within thirty (30) days of the date of the Executive’s termination of employment, the Executive will be required to deliver to the Company (a) two (2) fully executed and non-revocable originals of the Release, substantially in the form set forth in Exhibit C of the Plan, and (b) two (2) fully executed and non-revocable originals of the Confidentiality and Non-Compete Agreement, substantially in the form set forth in Exhibit B of the Plan. Failure by the Executive to deliver a valid Release and a valid Confidentiality and Non-Compete Agreement, each within thirty (30) days of the Executive’s termination of employment, shall relieve the Company of its obligations under Section 1 of this Exhibit A.

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EXHIBIT B

COOPER TIRE & RUBBER COMPANY
CHANGE IN CONTROL SEVERANCE PAY PLAN

Confidentiality and Non-Compete Agreement

WHEREAS, the Executive’s employment has been terminated in accordance with Section 4(b) or (c) of the Cooper Tire & Rubber Company Change in Control Severance Pay Plan, (amended and restated as of August 4, 2010 ) (the “Plan”); and

WHEREAS, the Executive is required to sign this Confidentiality and Non-Compete Agreement (“Agreement”) in order to receive the Severance Compensation and the other benefits described in the Plan.

NOW THEREFORE, in consideration of the promises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and intending to be legally bound, the Executive agrees as follows:

1.

 

Effective Date of Agreement. This Agreement is effective on the date set forth below and will continue in effect as provided herein.

 

2.

 

Confidentiality; Confidential Information. In consideration of the payments to be made and the benefits to be received by the Executive pursuant to the Plan:

 

(a)

 

The Executive acknowledges and agrees that in the performance of his duties as an employee of the Cooper Tire & Rubber Company (the “Company”) or an Affiliated Employer, he was brought into frequent contact with, had access to, and became informed of confidential and proprietary information of the Company and the Affiliated Employers and/or information which is a trade secret of the Company and/or an Affiliated Employer (collectively, “Confidential Information”), as more fully described in Subsection (b) of this Section. The Executive acknowledges and agrees that the Confidential Information of the Company and the Affiliated Employers gained by the Executive during his association with the Company and the Affiliated Employers was developed by and/or for the Company and the Affiliated Employers through substantial expenditure of time, effort and money and constitutes valuable and unique property of the Company and the Affiliated Employers.

 

 

(b)

 

The Executive will keep in strict confidence, and will not, directly or indirectly, at any time, disclose, furnish, disseminate, make available, use or suffer to be used in any manner any Confidential Information of the Company or an Affiliated Employer without limitation as to when or how the Executive may have acquired such Confidential Information. The Executive specifically acknowledges that Confidential Information includes any and all information, whether reduced to writing (or in a form from which information can be obtained, translated, or derived into reasonably usable form), or maintained in the mind or memory of the

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Executive and whether compiled or created by the Company or an Affiliated Employer, which derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from the disclosure or use of such information, that reasonable efforts have been put forth by the Company and the Affiliated Employers to maintain the secrecy of Confidential Information, that such Confidential Information is and will remain the sole property of the Company and the Affiliated Employers, and that any retention or use by the Executive of Confidential Information after the termination of the Executive’s employment with and services for the Company and the Affiliated Employers shall constitute a misappropriation of the Company’s Confidential Information.

 

 

(c)

 

The Executive further agrees that he shall return, within ten (10) days of the effective date of his termination as an employee of the Company and the Affiliated Employers, in good condition, all property of the Company and the Affiliated Employers then in his possession, including, without limitation, whether in hard copy or in any other media (i) property, documents and/or all other materials (including copies, reproductions, summaries and/or analyses) which constitute, refer or relate to Confidential Information of the Company or an Affiliated Employer, (ii) keys to property of the Company or an Affiliated Employer, (iii) files and (iv) blueprints or other drawings.

 

 

(d)

 

The Executive further acknowledges and agrees that his obligation of confidentiality shall survive until and unless such Confidential Information of the Company or an Affiliated Employer shall have become, through no fault of the Executive, generally known to the public or the Executive is required by law (after providing the Company with notice and opportunity to contest such requirement) to make disclosure. The Executive’s obligations under this Section are in addition to, and not in limitation or preemption of, all other obligations of confidentiality which the Executive may have to the Company and the Affiliated Employers under general legal or equitable principles or statutes.

 

3.

 

Non-Compete. The Executive agrees that he will not, without prior Committee Action, for the period equal to the Executive’s Multiple number of year or years utilized in the determination of Severance Pay in Section 1(b) of Exhibit A of the Plan (the “Non-Compete Period”), engage in Competitive Activity, as hereafter defined.

 

4.

 

Non-solicitation. The Executive further agrees that he will not, directly or indirectly, during the Non-Compete Period:

 

(a)

 

induce or attempt to induce customers, business relations or accounts of the Company or any of the Affiliated Employers to relinquish their contracts or relationships with the Company or any of the Affiliated Employers; or

 

 

(b)

 

solicit, entice, assist or induce other employees, agents or independent contractors to leave the employ of the Company or any of the Affiliated Employers or to terminate their engagements with the Company and/or any of the Affiliated

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Employers or assist any competitors of the Company or any of the Affiliated Employers in securing the services of such employees, agents or independent contractors.

 

5.

 

Definitions. For purposes of this Agreement, “Competitive Activity” means the Executive’s participation, without the written consent of any one of the Chairman, Chief Executive Officer, or Chief Operating Officer, if any, of the Company, in the management of any business enterprise if such enterprise engages in substantial and direct competition with the Company or any Affiliated Employer and such enterprise’s sales of any product or service competitive with any product or service of the Company or any Affiliated Employer amounted to 5% of such enterprise’s net sales for its most recently completed fiscal year and if the Company’s net sales of said product or service amounted to 5% of, as applicable, the Company’s or Affiliated Employer’s net sales for its most recently completed fiscal year. “Competitive Activity” will not include (i) the mere ownership of 5% or more of securities in any such enterprise and the exercise of rights appurtenant thereto or (ii) participation in the management of any such enterprise other than in connection with the competitive operations of such enterprise. Capitalized terms in this Agreement shall have the definitions contained in the Plan.

          IN WITNESS WHEREOF, the Executive has executed and delivered this Agreement on the date set forth below.

 

 

 

 

 

 

 

 

Dated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[               ]

 

 

 

 

 

 

Executive

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EXHIBIT C

COOPER TIRE & RUBBER COMPANY
CHANGE IN CONTROL SEVERANCE PAY PLAN

Release

          WHEREAS, the Executive’s employment has been terminated in accordance with Section 4(b) or (c) of the Cooper Tire & Rubber Company Change in Control Severance Pay Plan, (amended and restated as of August 4, 2010) (the “Plan”); and

          WHEREAS, the Executive is required to sign this Release in order to receive the Severance Compensation (as such term is defined in the Plan) as described in Exhibit A of the Plan and the other benefits described in the Plan.

          NOW THEREFORE, in consideration of the promises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and intending to be legally bound, the Executive agrees as follows:

1.

 

This Release is effective on the date set forth below and will continue in effect as provided herein.

 

2.

 

In consideration of the payments to be made and the benefits to be received by the Executive pursuant to the Plan, which the Executive acknowledges are in addition to payments and benefits which the Executive would be entitled to receive absent the Plan, the Executive, for himself and his dependents, successors, assigns, heirs, executors and administrators (and his and their legal representatives of every kind), hereby releases, dismisses, remises and forever discharges Cooper Tire & Rubber Company (“Cooper”), its predecessors, parents, subsidiaries, divisions, related or affiliated companies, officers, directors, stockholders, members, employees, heirs, successors, assigns, representatives, agents and counsel (the “Company”) from any and all arbitrations, claims, including claims for attorney’s fees, demands, damages, suits, proceedings, actions and/or causes of action of any kind and every description, whether known or unknown, which Executive now has or may have had for, upon, or by reason of any cause whatsoever (“claims”), against the Company, including but not limited to:

 

(a)

 

any and all claims arising out of or relating to Executive’s employment by or service with the Company and his termination from the Company;

 

 

(b)

 

any and all claims of discrimination, including but not limited to claims of discrimination on the basis of sex, race, age, national origin, marital status, religion or handicap, including, specifically, but without limiting the generality of the foregoing, any claims under the Age Discrimination in Employment Act, as amended, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, Ohio Revised Code Section 4101.17 and Ohio Revised Code Chapter 4112, including Sections 4112.02 and 4112.99 thereof, and any other applicable state statutes and regulations; and (c) any and all claims of

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wrongful or unjust discharge or breach of any contract or promise, express or implied.

provided, however, that the foregoing shall not apply to claims to enforce rights that Executive may have as of the date hereof or in the future under any of Cooper’s health, welfare, retirement, pension or incentive plans, under any indemnification agreement between the Executive and Cooper, under Cooper’s indemnification by-laws, under the directors’ and officers’ liability coverage maintained by Cooper, under the applicable provisions of the Delaware General Corporation Law, or that Executive may have in the future under the Plan or under this Release.

3.

 

Executive understands and acknowledges that the Company does not admit any violation of law, liability or invasion of any of his rights and that any such violation, liability or invasion is expressly denied. The consideration provided for this Release is made for the purpose of settling and extinguishing all claims and rights (and every other similar or dissimilar matter) that Executive ever had or now may have against the Company to the extent provided in this Release. Executive further agrees and acknowledges that no representations, promises or inducements have been made by the Company other than as appear in the Plan.

 

4.

 

Executive further agrees and acknowledges that:

 

(a)

 

The release provided for herein releases claims to and including the date of this Release;

 

 

(b)

 

Executive has been advised by the Company to consult with legal counsel prior to executing this Release, has had an opportunity to consult with and to be advised by legal counsel of his choice, fully understands the terms of this Release, and enters into this Release freely, voluntarily and intending to be bound;

 

 

(c)

 

Executive has been given a period of twenty-one (21) days to review and consider the terms of this Release, prior to its execution and that he may use as much of the twenty-one (21) day period as he desires; and

 

 

(d)

 

Executive may, within seven (7) days after execution, revoke this Release. Revocation shall be made by delivering a written notice of revocation to the General Counsel at Cooper. For such revocation to be effective, written notice must be actually received by the General Counsel at Cooper no later than the close of business on the 7th day after Executive executes this Release. If Executive does exercise his right to revoke this Release, all of the terms and conditions of the Release shall be of no force and effect and Cooper shall not have any obligation to make payments or provide benefits to Executive as set forth in Section 5 of the Plan.

 

5.

 

Executive agrees that he will never file a lawsuit or other complaint asserting any claim that is released in this Release.

 

6.

 

Executive waives and releases any claim that he has or may have to reemployment after ____________.

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     IN WITNESS WHEREOF, the Executive has executed and delivered this Release on the date set forth below.

 

 

 

 

 

 

 

Dated:

 

 

 

 

 

 

 

 

 

 

 

[           ]
Executive

 

 

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