STONERIDGE, INC. LONG-TERM CASH
INCENTIVE PLAN
1. Purposes . The purposes of this
Long-Term Cash Incentive Plan (the “Plan”), as
established by Stoneridge, Inc., an Ohio corporation (the
“Company”), are (i) to provide incentive compensation
to officers and other key employees of the Company and its
subsidiaries based on the achievement of performance goals
designated by the Compensation Committee of the Board of Directors
(“Committee”), (ii) to advance the interests of the
Company and its shareholders by attracting and retaining highly
competent officers and key employees, and (iii) to motivate such
persons to act in the long-term best interests of the Company and
its shareholders. It is the intent of the Company that Long-Term
Cash Incentive Awards granted to Covered Employee for Performance
Periods commencing after December 31, 2008, shall constitute
Performance-Based Compensation, if at the time of settlement the
Participant remains a Covered Employee. Accordingly, the Plan shall
be interpreted in a manner consistent with Section 162(m) of the
Internal Revenue Code (the “Code”) and the regulations
thereunder. If any provision of the Plan relating to a Covered
Employee or any award agreement evidencing such an award to a
Covered Employee does not comply with, or is inconsistent with, the
provisions of Section 162(m)(4)(C) of the Code or the regulations
thereunder (including Treasury Regulation § 1.162-27(e) or its
succession provisions) for Performance-Based Compensation, such
provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.
2. Certain Definitions . For purposes of
the Plan, the following capitalized terms shall have the respective
meanings set forth below. Capitalized terms not defined herein
shall have the respective meanings specified in the
Plan.
(a) “Affiliate” means a direct or
indirect subsidiary of the Company.
(b) “Agreement” means a written
agreement between the Company and the recipient of a Long-Term Cash
Incentive Award hereunder setting forth the terms and conditions of
such Long-Term Cash Incentive Award.
(c) “Beneficiary” means the person
appointed by a Participant’s written designation to receive
payment with respect to any Long-Term Cash Incentive Awards held by
such Participant upon the death of the Participant, subject to the
following provisions. A Beneficiary designation shall become
effective only when filed in writing with the Company during the
Participant’s lifetime on a form prescribed by the Company.
The spouse of a married Participant domiciled in a community
property jurisdiction shall join in any designation of a
Beneficiary other than such spouse. The filing with the Company of
a new Beneficiary designation shall cancel all previously filed
Beneficiary designations. If a Participant fails to designate a
Beneficiary, or if the designated Beneficiary dies before the
Participant, then the Participant’s administrator, legal
representative or similar person shall be deemed to be the
Beneficiary of such Participant.
(d) “Cause” means a determination by
the Company of the Participant’s
(1) intentional misappropriation of funds from
the Company;
(2) conviction of a felony;
(3) commission of a crime or act or series of
acts involving moral turpitude;
(4) commission
of an act or series of acts of dishonesty that are materially
inimical to the best interests of the Company;
(5) breach of
any material term of this Employment Agreement, if any;
(6) willful and
repeated failure to perform the duties associated with the
Participant’s position, which failure has not been cured
within thirty (30) days after the Company gives notice thereof to
the Participant; or
(7) failure to
cooperate with any Company investigation or with any investigation,
inquiry, hearing or similar proceedings by any governmental
authority having jurisdiction over the Participant or the
Company;
(e) “Change in Control” means during
Participant’s employment with the Company, at any
time:
(1) the Board
of Directors or shareholders of the Company approve a consolidation
or merger that results in the shareholders of the Company,
immediately prior to the transaction giving rise to the
consolidation or merger, owning less than 50% of the total combined
voting power of all classes of equity securities entitled to vote
of the surviving entity immediately after the consummation of the
transaction giving rise to the merger or consolidation;
(2) the Board
of Directors or shareholders of the Company approve the sale of
substantially all of the assets of the Company or the liquidation
or dissolution of the Company;
(3) any person
or other entity (other than the Company or a subsidiary of the
Company or any the Company employee benefit plan (including any
trustee of any such plan acting in its capacity as trustee))
purchases any common shares (or securities convertible into common
shares) pursuant to a tender or exchange offer without the prior
consent of the Board of Directors or becomes the beneficial owner
of securities of the Company representing 35% or more of the voting
power of the Company’s outstanding securities; provided,
however, any acquisition of 35% or more of the voting power of the
Company’s outstanding securities resulting, directly or
indirectly, from the sale or sales by members of the family of D.M.
Draime, including, but not limited to, the spouse of D.M. Draime
and D.M. Draime’s lineal descendants and their spouses and
trusts for the benefit of any of the foregoing, with the prior
consent of the Company’s Board of Directors shall not be a
Change in Control; or
(4) during any
period of two consecutive calendar years, individuals who at the
beginning of such period constituted the Company’s Board of
Directors (together with any new directors whose (x) election by
the Company’s Board of Directors or (y) nomination for
election by the Company’s shareholders was (prior to the date
of the proxy or consent solicitation relating to such nomination)
approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of such
period or whose election or nomination for election was previously
so approved), cease for any reason to constitute a majority of the
directors then in office.
(f) “Committee” means the
Compensation Committee appointed by the Board for the purpose of
administering the Plan. The Committee shall consist of three
members of the Board of Directors each of whom shall qualify, at
the time of appointment and thereafter, as an “outside
director” within the meaning of Section 162(m) of the Code
(or a successor provision of similar import), as in effect from
time to time.
(g) “Covered Employee” means an
individual who is determined by the Committee to be reasonably
likely to be a “covered employee” under Section 162(m)
of the Code as of the end of the Company’s taxable year for
which an Award to the individual will be deductible and whose Award
would exceed the deductibility limits under Section 162(m) if such
Award is not Performance-Based Compensation.
(h) “Exchange Act” means the
Securities Exchange Act of 1934, as amended, then in effect, or any
successor federal statute of substantially similar
effect.
(i) “Long-Term Cash Incentive Award”
means an award conferring a right, contingent upon the attainment
of specified Performance Measures within a specified Performance
Period, to receive cash, as determined by the Committee or as
evidenced in the Agreement relating to such Long-Term Cash
Incentive Award.
(j) “Participant” means a person
holding an outstanding Long-Term Cash Incentive Award granted under
the Plan.
(k) “Performance Measures” means the
performance measure or measures designated by the Committee
pursuant to the terms of the Plan as a condition to the earning of
a Long-Term Cash Incentive Award granted hereunder.
(l) “Performance Period” means a
period of time covering performance over a three year period as
designated by the Committee with respect to which the Performance
Measures applicable to a Long-Term Cash Incentive Award shall be
measured.
(m) “Permanent Disability” means a
sickness or disability extending for more than three (3)
consecutive months as a result of which the Participant is unable
to perform his or her duties for the Company or an affiliate, as
applicable, in the required and customary manner and that will
continue for not less than an additional three (3) months, as
determined by the Company in its sole discretion.
(n) “Vesting Date” means the date on
which the Long-Term Cash Incentive Award awarded to a Participant,
subject to the achievement of Performance Measures during the
Performance Period, shall be earned and vest, as set forth in the
Agreement.
3. Administration .
(a) The Plan shall be administered by the
Committee. The Committee shall have all the powers vested in it by
the terms of the Plan, such powers to include authority (within the
limitations described herein) to select the persons to be granted
Long-Term Cash Incentive Awards under the Plan, to determine the
time when Long-Term Cash Incentive Awards will be granted, to
determine whether performance objectives and other conditions for
earning such awards have been met, to determine whether such awards
will be paid at the end of the Performance Period, and to determine
whether such an award or payment of an award should be reduced or
eliminated. The Committee is authorized, subject to the remaining
provisions of the Plan, to establish such rules and regulations as
it deems necessary for the proper administration of the Plan and to
make such determinations and interpretations and to take such
action in connection with the Plan and any Awards granted hereunder
as it deems necessary or advisable. All determinations and
interpretations made by the Committee shall be binding and
conclusive on all persons participating in the Plan and their legal
representatives.
(b) The Committee may not delegate to any
individual the authority to make determinations concerning that
individual’s own Long-Term Cash Incentive Awards, or the
Long-Term Cash Awards of any Covered Employee within the meaning of
Section 162(m) of the Code or who, in the Committee’s
judgment, is likely to be a Covered Employee at any time during the
applicable Performance Period, or any executive officer (as defined
pursuant to the Exchange Act). Except as provided in the preceding
sentence, as to the selection of and grant of Long-Term Cash
Incentive Awards to Participants who are not Covered Employees or
executive officers of the Company, the Committee may delegate its
responsibilities to members of the Company’s management in a
manner consistent with applicable law and provided that such
participant’s compensation is not subject to the limitations
of Section 162(m) of the Code. References herein to the
Committ
