CASH INCENTIVE AWARD
AGREEMENT
This Cash
Incentive Award Agreement (this “Agreement”), is
entered into and made effective as of February 26, 2009 (the
“Effective Date”), by and between TRW Automotive Inc.,
a Delaware corporation (the “Company”), and _________
(the “Executive”). This Award is granted by the
Compensation Committee of the Company’s Board of Directors
(the “Committee”).
(a)
“ Act ” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder, or any successor statute thereto.
(b)
“ Affiliate ” shall mean, with respect to any
Person, any other Person directly or indirectly controlling,
controlled by or under common control with such Person or any other
Person designated by the Committee in which any Person has an
interest.
(c)
“ Award ” shall mean the cash incentive award
granted pursuant to this Agreement and calculated pursuant to
Section 2(b).
(d)
“ Cause ” shall have the meaning given to such
term in the Closing Date Employment Agreement or, if not defined
therein or if there is no such agreement, “Cause” means
(i) such Executive’s continued failure substantially to
perform such Executive’s duties (other than as a result of
total or partial incapacity due to physical or mental illness) for
a period of 10 days following written notice by the Company or
any of its Subsidiaries or Affiliates to the Executive of such
failure, (ii) dishonesty in the performance of the
Executive’s duties, (iii) such Executive’s
conviction of, or plea of nolo contendere to, a crime constituting
(A) a felony under the laws of the United States or any state
thereof or (B) a misdemeanor involving moral turpitude,
(iv) such Executive’s willful malfeasance or willful
misconduct in connection with such Executive’s duties or any
act or omission which is injurious to the financial condition or
business reputation of the Company or any of its Subsidiaries or
Affiliates or (v) such Executive’s breach of any
non-competition, non-solicitation or confidentiality provisions to
which the Executive is subject.
(e)
“ Change in Control ” shall mean (A) the
sale or disposition, in one or a series of related transactions, of
all or substantially all of the assets of Holdings or the Company
to any “person” or “group” (as such terms
are defined in Sections 13(d)(3) and 14(d)(2) of the Act)
other than Automotive Investors L.L.C. (“AI”) or any of
its Affiliates, (B) any person or group, other than AI or any
of its Affiliates, is or becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Act), directly
or indirectly, of more than 50% of the total voting power of the
voting stock of Holdings or the Company, including by way of
merger, consolidation or otherwise and AI or any of its Affiliates
cease to control the Board of Directors
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of Holdings
(the “Holdings Board”) or the Board of Directors of the
Company, (C) any “person” or “group”
(as defined above) other than AI or its Affiliates acquires (or has
acquired during the 12-month period ending on the date of the most
recent acquisition of such person or group) ownership of stock of
Holdings or the Company possessing 30 percent or more of the
total voting power of the stock of Holdings or the Company, as
applicable, or (D) a majority of the members of the Holdings
Board is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Holdings Board, as it was constituted at the
beginning of such 12-month period.
(f)
“ Closing Date ” shall mean February 28,
2003.
(g)
“ Closing Date Employment Agreement ” shall mean
a written employment agreement between the Company or any of its
Subsidiaries and the Executive which is or was entered into as of
or after the Closing Date (as the same may be amended, modified or
supplemented in accordance with the terms thereof).
(h)
“ Code ” shall mean the Internal Revenue Code of
1986, as amended, or any successor thereto.
(i)
“ Disability ” shall have the meaning given such
term in the Closing Date Employment Agreement or, if not defined
therein or if there shall be no such agreement,
“disability” of the Executive shall have the meaning
ascribed to such term in the long-term disability plan or policy
maintained by the Company or one or more members of the
Company’s controlled group of corporations (as defined in
Section 1563 of the Code), as in effect from time to
time.
(j)
“ Fair Market Value ” of a Share on a given date
shall mean the closing price of a Share as reported on the NYSE
composite tape on such date, or, if there is no such reported sale
price of a Share on the NYSE composite tape on such date, then the
closing price of a Share as reported on the NYSE composite tape on
the last previous day on which sale price was reported on the NYSE
composite tape. If at any time the Shares are no longer listed or
traded on the NYSE, the Fair Market Value of a Share shall be
determined by the Committee in its sole but reasonable discretion
from time to time.
(k)
“ Good Reason ” shall have the meaning given to
such term in the Closing Date Employment Agreement.
(l)
“ Holdings ” shall mean TRW Automotive Holdings
Corp., a Delaware corporation.
(m)
“ NYSE ” shall mean the New York Stock
Exchange.
(n)
“ Person ” shall mean any individual, firm,
corporation, partnership, limited liability company, trust,
incorporated or unincorporated association, joint venture, joint
stock company, governmental body or other entity of any
kind.
(o)
“ Retirement ” shall mean the Executive’s
voluntary Termination of Employment on or after the date that such
Executive becomes Retirement Eligible.
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(p)
“ Retirement Eligible ” shall mean satisfaction
of the requirements for early or normal retirement under a defined
benefit pension plan maintained by the Company or one or more
members of the Company’s controlled group of corporations (as
defined by Section 1563 of the Code) and receipt of pension
benefits in accordance with such requirements as soon as
administratively practicable following the last date of active
employment with the Company or its controlled group of
corporations.
(q)
“ Share Price ” shall mean the average Fair
Market Value of a Share during the portion of the month of February
immediately preceding the first, second, or third year anniversary
of the Effective Date, as applicable.
(r)
“ Shares ” shall mean shares of the common
stock, par value $0.01 per share, of Holdings.
(s)
“ Subsidiary ” shall mean a subsidiary
corporation, as defined in Section 424(f) of the Code.
(t)
“ Target Value ” shall mean the initial value of
the Award, as set forth in Section 2(a).
(u)
“ Target Value Adjustment ” shall mean the
percentage by which the Target Value is increased or decreased
under Section 2(b), based on the applicable Share Price
pursuant to the formula attached hereto as Exhibit A, provided
that the percentage to be used for such adjustment shall be the
nearest tenth of a percentage determined pursuant to
Exhibit A.
(v)
“ Termination of Employment ” shall mean a
separation from service from the Company and all of its controlled
group members (as defined by Section 1563 of the
Code).
Section 2. Grant of Cash Incentive Award. The Company
hereby grants to the Executive an Award subject to the terms and
conditions stated in this Agreement. The amount of the Award shall
be equal to the Target Value specified under Section 2(a) as
adjusted pursuant to Section 2(b).
(a)
Target Value. The Target Value of the Award is $
, which is subject to the terms and conditions stated in this
Agreement.
(b)
Adjustment to the Target Value . The Target Value of the
Award shall be increased or decreased, as applicable, on the first,
second, and third anniversary of the Effective Date by multiplying
one-third of the Target Value (referred to respectively as Tranche
A, Tranche B, and Tranche C) by the Target Value Adjustment
percentage on each such anniversary date, as determined under
Exhibit A with reference to the calculated Share Price as of
that date, to establish the adjusted value of each such tranche
(referred to respectively as Tranche A Adjusted Value, Tranche B
Adjusted Value, and Tranche C Adjusted Value), as
follows:
(i)
Tranche A. On the first anniversary of the Effective Date, $
(“Tranche A”), shall be multiplied by the Target Value
Adjustment percentage under Exhibit A, determined with
reference to the calculated Share Price on such anniversary date to
establish the adjusted value of Tranche A (“Tranche A
Adjusted Value”); plus
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(ii)
Tranche B . On the second anniversary of the Effective Date,
$
(“Tranche B”) shall be multiplied by the Target Value
Adjustment percentage under Exhibit A, determined with
reference to the calculated Share Price on such anniversary date to
establish the adjusted value of Tranche B (“Tranche B
Adjusted Value”); plus
(iii)
Tranche C . On the third anniversary of the Effective Date,
$
(“Tranche C”) shall be multiplied by the Target Value
Adjustment percentage under Exhibit A, determined with
reference to the calculated Share Price on such anniversary date to
establish the adjusted value of Tranche C (“Tranche C
Adjusted Value”).
The adjusted
values so determined shall accumulate (without interest) over the
period ending on the third anniversary of the Effective Date and
shall be payable to the Executive in one cash payment in accordance
with Section 3, provided the vesting requirements under
Section 4 have been satisfied at that time.
Section 3. Payment of the Awards. Subject to the
vesting requirements of Section 4 and Section 5, the
Award determined in accordance with Section 2(b) shall be payable
to the Executive in one cash payment as soon as administratively
practicable on or after the third anniversary of the Effective
Date, but in no event later than 90 days
thereafter.
Section 4. Service-Vesting Requirement. Except as
otherwise provided in Section 5, the Award amount determined
under Section 2(b) shall become vested on the third anniversary of
the Effective Date, provided the Executive remains continuously
employed with the Company or one of its Subsidiaries or Affiliates
through that date. Once this requirement has been satisfied the
Award shall thereafter be payable in accordance with
Section 3.
Section 5. Vesting Upon Certain Events.
(a)
Death . In the event of the Executive’s death prior to
satisfying the vesting requirements under Section 4, a pro
rata portion of the Award, determined as set forth below, is
immediately vested and shall be paid as soon as administratively
practicable following the date of death, but in no event later than
90 days thereafter. All other amounts hereunder are
immediately forfeited and shall not be payable. The pro rata
portion of the Award shall be determined as follows:
(i) In
the event of the Executive’s death prior to the first
anniversary of the Effective Date, the pro rata portion of the
Award shall be equal to Tranche A, without regard to any adjustment
under Section 2(b)(i), multiplied by a fraction, the numerator
of which is the number of completed calendar months from the
Effective Date to the date of death and the denominator of which is
12.
(ii) In
the event of the Executive’s death after the first
anniversary of the Effective Date, but prior to the second
anniversary of the Effective Date, the pro rata portion of the
Award shall be the sum of (1) and (2):
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(1)
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Tranche A Adjusted Value, as
determined by Section 2(b)(i); plus
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(2)
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Tranche B, without regard to any
adjustment under Section 2(b)(ii), multiplied by a fraction,
the numerator of which is the number of completed calendar months
from the first anniversary of the Effective Date to the
da
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