EX-10.25
Change of Control Severance Pay Plan
EXHIBIT 10.25
COOPER-STANDARD AUTOMOTIVE INC.
CHANGE OF CONTROL SEVERANCE PAY PLAN
COOPER-STANDARD AUTOMOTIVE INC.
CHANGE OF CONTROL SEVERANCE PAY PLAN
Table of Contents
PAGE
----
1. General Statement of
Purpose............................................1
2. Effective and Termination
Dates.........................................1
3.
Definitions.............................................................1
4. Eligibility; Termination Following a Change of
Control..................5
5. Severance
Compensation..................................................6
6. Funding Upon Potential Change of
Control................................6
7. Certain Additional Payments by the
Company..............................7
8. No Mitigation
Obligation...............................................10
9. Certain Payments not Considered for Other Benefits,
etc................10
10. Confidentiality; Confidential Information;
Non-competition.............11
11.
Release................................................................11
12. Legal Fees and
Expenses................................................11
13. Employment
Rights......................................................11
14. Withholding of
Taxes...................................................11
15. Successors and Binding
Effect..........................................12
16. Governing
Law..........................................................12
17.
Validity...............................................................12
18.
Headings...............................................................12
19.
Construction...........................................................13
20. Administration of the
Plan.............................................13
21. Amendment and
Termination..............................................14
22. Other Plans,
etc.......................................................14
Exhibit A -- Chief Executive Officer and Members of the Operations
Committee
Exhibit B -- Members of the Management Group
Exhibit C -- Severance Compensation
Exhibit D -- Form of Confidentiality and Non-Compete Agreement
Exhibit E -- Form of Release
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COOPER-STANDARD AUTOMOTIVE INC.
CHANGE OF CONTROL SEVERANCE PAY PLAN
1. General Statement of Purpose The Board of Directors
(the "BOARD")
of Cooper-Standard Automotive Inc. (the "COMPANY") has considered
the effect a
change of control of the Company may have on certain executives of
the Company
and its Related 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 the possibility of a change of 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 of control, and wishes to ensure that its
executives are
not practically disabled from discharging their duties in respect
of a proposed
or actual transaction involving a change of control.
As a result, the Board believes that the Cooper-Standard
Automotive
Inc. Change of Control Severance Pay Plan (the "PLAN") will assist
the Company
in attracting and retaining qualified executives.
2. Effective and Termination Dates The Plan shall be
effective
immediately after the occurrence of the "Closing Date" as defined
in the Stock
Purchase Agreement among Cooper Tire & Rubber Company, Cooper
Tyre & Rubber
Company UK Limited and CSA Acquisition Corp. ("CSA") dated as of
September 16,
2004 (the "EFFECTIVE DATE"). The Plan will automatically terminate
on the later
of (i) December 31, 2006 or (ii) the second anniversary of a Change
of Control
(the "TERMINATION DATE"); provided, however, that on each December
31,
commencing with the year 2004, the Termination Date set forth in
Subsection (i)
of this Section will automatically be extended for an additional
year unless,
not later than 120 calendar days prior to such date, the Company
shall have
given written notice to the Executives that the Termination Date is
not to be so
extended.
3. 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) "AFFILIATE" shall mean, with respect to an
entity, any entity
directly or indirectly controlling, controlled by, or
under common
control with such first entity.
(b) "BASE PAY" means, with respect to each
Executive, the rate of
annual base salary, as in effect from time to time.
(c) "BOARD" means the Board of Directors of the
Company.
(d) "CAUSE" means that, prior to any termination of
employment
pursuant to Section 4(b), the Executive shall have
committed:
(i) any act or omission constituting a material
breach by
the Executive of any of his significant obligations
to or
agreements with the Company, its Affiliate or a
Related Employer
or the continued failure or refusal of the Executive
to
adequately perform the duties reasonably required by
the Company
or a Related Employer which is materially injurious
to the
financial condition or business reputation of, or is
otherwise
materially injurious to, the Company, its Affiliate
or any
Related 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) the commission by and conviction of the
Executive of a
felony, or the perpetration by and criminal
conviction of or
civil verdict finding the Executive committed a
dishonest act or
common law fraud against the Company, its Affiliate
or any
Related Employer thereof (for the avoidance of
doubt, conviction
and civil verdict, in each case, shall mean when no
further
appeals may be taken by the Executive from such
conviction or
civil verdict and such conviction or civil verdict
becomes final
and binding upon the Executive with no further right
of appeal);
or
(iii) 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, its
Affiliate or any Related Employer thereof, and
failure of the
Executive to correct such act or omission after
notification by
the Board of any such act or omission; or
(iv) any notification to be given by the Board
in accordance
with Section 3(d)(i) or 3(d)(iii) shall specifically
identify the
breach, failure, refusal, act or omission to which
the
notification relates and, in the case of Section
3(d)(i) or
3(d)(iii) shall describe the injury to the Company,
its Affiliate
or a Related Employer, and such notification must be
given within
twelve (12) months of the Board's becoming aware, or
within
twelve (12) months of when the Board should have
reasonably
become aware of the breach, failure, refusal, act,
or omission
identified in the notification. Notwithstanding
Section 20,
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.
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 Related Employer 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.
(e) "CHANGE OF CONTROL" means the occurrence of any
of the
following events after the Effective Date (i) the sale or
disposition,
in one or a series of related transactions, of all or
substantially
all of the assets of CSA to any "person" or "group" (as
such terms are
defined in Sections 13(d)(3) and 14(d)(2) of the
Securities Exchange
Act
2
of 1934 (the "EXCHANGE ACT")) other than Permitted
Holders or (ii) any
person or group, other than Permitted Holders, is or
becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the
Exchange Act), directly or indirectly, of greater than or
equal to 50%
of the total voting power of the voting stock of CSA,
including by way
of merger, consolidation or otherwise, except where one
or more of the
Sponsors and/or their respective Affiliates, immediately
following
such merger, consolidation or other transaction, continue
to have the
ability to designate or elect a majority of the Board of
Directors of
CSA (or the board of directors of the resulting entity or
its parent
company). Notwithstanding that a transaction or series of
transactions
does not constitute a Change of Control, with respect to
any Executive
it shall be deemed a Change of Control for purposes of
the Executive's
entitlement's hereunder if clause (i), above, is
satisfied in respect
of the business or division in which such Executive is
principally
engaged. For the avoidance of doubt, a Change of Control
pursuant to
the immediately preceding sentence shall not apply to any
Executive
whose employment is not primarily with and for the
business or
division that is sold.
(f) "CHIEF EXECUTIVE OFFICER" means the Executive
who is
identified on Exhibit A as being the Chief Executive
Officer.
(g) "CODE" means the Internal Revenue Code of 1986,
as amended,
or any successor thereto.
(h) "COMMITTEE" means the Compensation Committee of
the Board.
(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 CSA's common stock.
(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 Related 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, its
Affiliate or a Related Employer.
(m) "EMPLOYER" means the Company and any Related
Employer to
which the Plan has been extended by the Board and which
has adopted
the Plan.
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(n) "EXECUTIVE" means those employees of the Company
or a Related
Employer listed on Exhibits A or B, as the same may be
amended from
time to time by a Committee Action.
(o) "MANAGEMENT GROUP" means the Executives who are
identified on
Exhibit B as being members of such Management Group.
(p) "NONQUALIFIED SUPPLEMENTARY BENEFIT PLAN" means
any plan
which provides for the payment of pension benefits which
would be
payable under the terms of a Retirement Plan but for
government-imposed limitations on the amount that is
permitted to be
paid from such Retirement Plan.
(q) "OPERATIONS COMMITTEE" means the Executives who
are
identified on Exhibit A as being members of such
Operations Committee.
(r) "PERMITTED HOLDERS" means, as of the date of
determination,
any and all of (i) an employee benefit plan (or trust
forming a part
thereof) maintained by (A) the Company, its Affiliate or
a Related
Employer or (B) any corporation or other person of which
a majority of
its voting power of its voting securities or equity
interest is owned,
directly or indirectly, by the Company, its Affiliate or
a Related
Employer and (ii) Cypress Merchant Banking Partners II
L.P., Cypress
Merchant Banking II C.V., 55th Street Partners II L.P.,
Cypress
Side-By-Side LLC, GS Capital Partners 2000, L.P., GS
Capital Partners
2000 Offshore, L.P., GS Capital Partners 2000 GmbH &
Co. Beteiligungs
KG, GS Capital Partners 2000 Employee Fund, L.P. and
Goldman Sachs
Direct Investment Fund 2000, L.P. (collectively, the
"SPONSORS") and
any of their respective Affiliates.
(s) "PLAN" means this Cooper-Standard Automotive
Inc. Change of
Control Severance Pay Plan.
(t) "RELATED 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.
(u) "RETIREMENT PLAN" means any tax-qualified
defined benefit
plan or scheme sponsored by the Company or a Related
Employer which
provides pension benefits to individuals who meet the
age, service and
other criteria for such benefits described in such plan.
(v) "SEVERANCE COMPENSATION" means Severance Pay and
other
benefits provided by Section 5(a).
(w) "SEVERANCE PAY" means the amounts payable as set
forth in
Section 5(a).
(x) "SEVERANCE PERIOD" means the period of time
commencing on the
date of the first occurrence of a Change of Control and
continuing
until the earlier of (i) the second anniversary of the
occurrence of
the Change of Control or (ii) the Executive's death.
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(y) "TERMINATION DATE" means the date of termination
of the Plan
as specified in Section 2.
4. Eligibility; Termination Following a Change of
Control.
(a) Subject to the limitations described below, the Plan
applies to
Executives who are employed on the date that a Change of Control
occurs;
provided, however, that in the event of a Change of Control
described in the
second to last sentence of Section 3(e), the Plan shall only apply
to: (i)
Executives who are employed on the date that the Change of Control
occurs with
the group whose assets are being sold as a result of the Change of
Control; and
(ii) Executives who are employed by the corporate headquarters of
the Company on
the date that such Change of Control occurs and (A) whose positions
are
transferred to the successor of the group whose assets are being
sold, or (B)
whose employment is terminated as a result of the Change of
Control.
(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):
(i) (A) if the Executive is the Chief Executive
Officer or a
member of the Operations Committee, 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 reduction in the Executive's Base Pay, or a
reduction in the
Executive's opportunities for incentive compensation
pursuant to any
long-term incentive compensation plan or program
established by the
Company, or (C) the termination or denial of the
Executive's rights to
Employee Benefits or a reduction in the scope or
aggregate value
thereof, any of which is not remedied by the Company
within ten (10)
calendar days after receipt by the Company of written
notice from the
Executive of such change, reduction or termination, as
the case may
be;
(ii) if the Executive is the Chief Executive Officer
or a member
of the Operations Committee, the Company requires the
Executive to
have his principal location of work changed to any
location that is in
excess of 50 miles from the location thereof immediately
prior to or
after the Change in Control;
(iii) any material breach of its obligations under
the Plan by
the Company or any successor thereto which is not
remedied by the
Company within ten (10) calendar days after receipt by
the Company of
written notice from the Executive of such breach; or
(iv) if the Executive is the individual who is the
Chief
Executive Officer as of the Effective Date, voluntary
termination for
any reason or without reason during the thirty-day period
immediately
following the date that is six-months after a Change of
5
Control has occurred (for the avoidance of doubt, this
subsection (iv)
would not be applicable upon a Change of Control related
to an initial
public offering).
(d) A termination by an Employer pursuant to Subsection
(b) of this
Section or by an Executive pursuant to Subsection (c) of this
Section will not
affect any rights that the Executive may have pursuant to any
agreement, policy,
plan, program or arrangement of the Company or a Related Employer
providing
Employee Benefits (other than as expressly provided in such
agreement, policy,
plan, program or arrangements), which rights shall be governed by
the terms
thereof, except that the Executive shall be considered to be an
employee of the
Employer for the period for which Severance Pay is calculated.
(e) Notwithstanding the preceding provisions of this
Section, an
Executive will not be entitled to Severance Compensation if his
employment with
an Employer is terminated during the Severance Period because:
(i) of the Executive's death; or
(ii) the Executive becomes permanently disabled
within the
meaning of, and begins actually to receive disability
benefits
pursuant to, the long-term disability plan in effect for,
or
applicable to, the Executive immediately prior to the
Change of
Control.
5. Severance Compensation.
(a) If an Executive's employment is terminated pursuant
to Section
4(b) or if an Executive terminates his employment pursuant to
Section 4(c), the
Company will pay to the Executive as Severance Pay the amounts
described on
Exhibit C within the time periods specified therein, or, if later,
upon the
expiration of the revocation period provided for in Exhibit E, and
will continue
to provide to the Executive the other Severance Compensation
described on
Exhibit C for the periods described therein.
(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 will pay
interest on
the amount or 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 Midwest Edition of The Wall Street Journal plus the
lesser of 5%
or the maximum rate of interest allowed by law. Such interest will
be payable as
it accrues on demand. Any change of such prime rate or maximum 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 and under Sections 7 and
12 will
survive any termination or expiration of the Plan or the
termination of an
Executive's employment following a Change of Control for any reason
whatsoever.
6. Funding Upon Potential Change of Control.
(a) Upon the earlier to occur of (i) a Change of Control
or (ii) a
declaration by the Board of Directors of CSA that a Change of
Control is
imminent, the Company shall promptly pay to
6
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 of Control
(or on such
fifth business day if the Board of Directors of CSA has declared a
Change of
Control to be imminent) of the payments to be made to the
Executives under the
provisions of Sections 5 and 7 (to the extent calculable at such
time) hereof,
which shall be transferred to the Trustee and added to the
principal of a
grantor trust to be established between the Company and an
independent, third
party, Trustee (the "TRUST AGREEMENT"); provided that in the event
of the Change
of Control with respect to one or more Executives described in the
second to
last sentence of the definition of Change of Control (i.e., a sale
of all or
substantially all of the assets of the business or division in
which such
Executive was principally engaged), the Company's funding
obligation shall be
limited to the payments to be made to the affected Executives.
(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.
7. Certain Additional Payments by the Company.
(a) Anything in the Plan to the contrary notwithstanding,
in the event
that it shall be determined (as hereafter provided) that following,
and as a
result of, a Change of Control, any payment or distribution by the
Company or
any of its Related Employers to or for the benefit of an Executive,
whether paid
or payable or distributed or distributable pursuant to the terms of
the Plan 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) by
reason of being
considered "contingent on a change of ownership or control" of the
Company,
within the meaning of Section 280G of the Code (or any successor
provision
thereto) or to 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 the Plan 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.
(b) Subject to the provisions of Subsection (f) of this
Section, all
determinations required to be made under this Section, including
whether an
Excise Tax is payable by the Executive and
7
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 the accounting firm serving as the Company's
independent
public accountants immediately prior to the Change of Control (the
"ACCOUNTING
FIRM"). The Company shall direct the Accounting Firm to submit its
determination
and detailed supporting calculations to both the Company and the
Executive
within thirty (30) calendar days after the date of the Executive's
termination,
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 an opinion 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 Subsection
(f) of this Section and the Executive thereafter is required to
make a payment
of any Excise Tax, the Executive shall direct the Accounting Firm
to determine
the amount of the Underpayment that has occurred and to 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, reasonabl
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