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Goodyear Continuity Plan for Salaried Employees (2007)

Table of Contents

1.01.

History of the Plan

1.02.

Effective Date

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2.01.

Definitions.

(a)

“ Affiliate ” shall have the meaning set forth in Rule 12b-2 under Section 12 of the Exchange Act.

(b)

“ Beneficial Owner ” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

(c)

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

(d)

“ Cause ” means (1) the continued failure by the Eligible Employee to substantially perform the Eligible Employee’s duties with the Employer (other than any such failure resulting from the Eligible Employee’s incapacity due to physical or mental illness), (2) the engaging by the Eligible Employee in conduct which is demonstrably injurious to the Company, monetarily or otherwise, (3) the Eligible Employee committing any felony or any crime involving fraud, breach of trust or misappropriation or (4) any breach or violation of any agreement relating to the Eligible Employee’s employment with the Employer where the Employer, in its discretion, determines that such breach or violation materially and adversely affects the Company.

(e)

A “ Change in Control ” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

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appointment, election or nomination for election was previously so approved or recommended; or

(3)

there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation pursuant to which (A) the voting securities of the Company outstanding immediately prior to such merger or consolidation will continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) more than 50% of the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, (B) no Person will become the Beneficial Owner, directly or indirectly, of securities of the Company or such surviving entity or any parent thereof representing 20% or more of the outstanding shares of common stock or the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to such merger or consolidation) and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation (or any parent thereof) resulting from such merger or consolidation; or

(4)

the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, (A) more than 50% of the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of which (or of any parent of such entity) is owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale, (B) in which (or in any parent of such entity) no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the outstanding shares of common stock resulting from such sale or disposition or the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to such sale or disposition) and (C) in which (or in any parent of such entity) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors.

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(h)

“ Effective Date ” means the date set forth in Section 1.02.

(i)

“Eligible Employee” means any employee who is a Tier 1, Tier 2, or Tier 3 Employee or who is designated by the Chief Human Resources Officer of the Employer as eligible to participate in the Plan.

(j)

“Employer” means the Company or any of its Affiliates that is an employer of an Eligible Employee.

(k)

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

(l)

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(m)

“ Good Reason ” means the occurrence without the affected Eligible Employee’s written consent, of any of the following:

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(4)

a material increase in the amount of business travel required of the Eligible Employee when compared to the amount of business travel required immediately before a Potential Change in Control, or in the absence thereof, a Change in Control or a Hostile Change in Control; and

(5)

the failure by 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 Plan in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place.

(1)

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

(2)

the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(3)

any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company other than securities acquired by virtue of the exercise of a conversion or similar privilege or right unless the security being so converted or pursuant to which such right was exercised was itself acquired directly

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from the Company) representing 20% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

(4)

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

(1)

from the date of a Potential Change in Control or in the absence thereof, a Change in Control or a Hostile Change in Control, until the second anniversary of the Change in Control or Hostile Change in Control, the termination of an Eligible Employee’s employment with the Employer (a) by the Employer, other than for Cause or pursuant to mandatory retirement policies of the Employer that existed prior to the Potential Change in Control or in the absence thereof, a Change in Control or Hostile Change in Control or (b) by the Eligible Employee for Good Reason; and

(2)

from the first day following the first anniversary of the Change in Control or a Hostile Change in Control until the 30th day following the first anniversary of such Change in Control or Hostile Change in Control, the termination of the employment with the Employer for any reason by an Eligible Employee who is employed in the position of Chief Executive Officer; Chief Financial Officer; Senior Vice President, General Counsel and Secretary, or Senior Vice President Human Resources.

(t)

“ Severance Agreement and Release ” means the written separation agreement and release substantially in the form attached hereto as Appendix I, as may be amended from time to time.

(u)

“ Severance Date ” means the date on which an Eligible Employee incurs a Severance as specified in a prior written notice by the Company or the Eligible Employee, as the case may be, delivered to the other pursuant to Section 6.08.

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(v)

“Severance Payment” means the payment determined pursuant to Article 3.

(w)

“Severed Employee” is an Eligible Employee once he or she incurs a Severance.

(x)

“Tier 1 Employee” means any elected officer of the Employer, any employee who is eligible to participate in the Employer’s Executive Performance Plan (or any successor to such plan) and any other employee of the Employer designated as such by the Plan Administrator.

(y)

“Tier 2 Employee” means any employee of the Employer who is not a Tier 1 Employee and who is either eligible to participate in the Employer’s Performance Recognition Plan (or any successor to such plan) or otherwise designated as a Tier 2 Employee by the Plan Administrator.

(z)

“Tier 3 Employee” means any full-time salaried employee of the Employer who is (1) eligible to participate in The Goodyear Tire & Rubber Employee Savings Plan for Salaried Employees and (2) neither a Tier 1 Employee nor a Tier 2 Employee.

(a)

the use of the masculine gender shall include the feminine gender, and vice versa, and

(b)

the words “include” or “including” shall mean include or including “without limitation.”

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3.01.

In General

3.02.

Severance Following Hostile Change in Control

(a)

Severance Payment

Each Eligible Employee who incurs a Severance following a Hostile Change in Control shall be entitled to receive a Severance Payment equal to twice the sum of (1) such Eligible Employee’s annual base salary as in effect immediately prior to such Severance, (2) the target annual cash incentive opportunity for the year in which a Severance occurs, or, if higher, in the year a Hostile Change in Control occurs, and (3) if the Eligible Employee is a Tier 1 Employee, the target long-term cash incentive opportunity under the Employer’s Executive Performance Plan (or any successor to such plan) for all performance periods outstanding at the time the Severance occurs. For purposes of clause (1) above, annual base salary shall be determined immediately prior to the Severance without regard to any reductions therein that constitute Good Reason.

(b)

Retirement Benefits

Each Eligible Employee who is a Tier 1 Employee, who incurs a Severance following a Hostile Change in Control, and who is a participant in the Goodyear Supplementary Pension Plan shall be credited with two additional years of Continuous Service (as defined in the Supplementary Pension Plan) for all purposes under such plan.

(c)

Health and Welfare Benefits

Each Eligible Employee who is a Tier 1 Employee or a Tier 2 Employee and who incurs a Severance following a Hostile Change in Control shall, as of the Severance Date, be entitled to receive continued medical, dental, vision, and life insurance coverage (excluding accident, death, and disability insurance) for the Eligible Employee and the Eligible Employee’s eligible dependents or, to the extent such coverage is not commercially available, such other arrangements reasonably acceptable to the Eligible Employee, on the same basis as in effect prior to the Hostile Change in Control, the Potential Hostile Change in Control, or the Executive’s Termination, whichever is deemed to provide for more substantial benefits, for a period ending on the earlier of (1) two years or (2) the

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commencement of comparable coverage by the Eligible Employee with a subsequent employer.

The continued benefits described in this Section 3.02(c) that are taxable benefits (and that are not disability pay or death benefit plans within the meaning of Section 409A of the Code) are intended to comply, to the maximum extent possible, with the exception to Section 409A of the Code set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations. To the extent that any of those benefits either do not qualify for that exception, or are provided beyond the applicable time periods set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations, then they shall be subject to the following additional rules: (i) any reimbursement of eligible expenses shall be paid within 30 days following the Eligible Employee’s written request for reimbursement; provided that the Eligible Employee provides written notice no later than 60 days prior to the last day of the calendar year following the calendar year in which the expense was incurred; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, during any other calendar year; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

(d)

Outplacement

Each Eligible Employee who is a Tier 1 Employee or a Tier 2 Employee and who incurs a Severance following a Hostile Change in Control shall, as of the Severance Date, be entitled to outplacement services to be provided by a professional outplacement provider selected by the Eligible Employee; provided, however, that (i) the cost of such outplacement services shall not exceed twenty five thousand dollars ($25,000), and (ii) in no event shall the outplacement services be provided beyond the end of the second calendar year after the calendar year in which the Severance occurs.

(e)

Legal Fees

Each Eligible Employee who is a Tier 1 Employee and who incurs a Severance following a Hostile Change in Control shall, as of the Severance Date, be entitled to be paid or reimbursed (within 30 days following the Employer’s receipt of an invoice from the Eligible Employee) for reasonable legal fees (including without limitation, any and all court costs and reasonable attorneys’ fees and expenses) incurred by the Eligible Employee at any time from the Effective Date through the Eligible Employee’s remaining lifetime or, if longer, through the 20th anniversary of the Effective Date, in connection with or as a result of any claim, action or proceeding brought by the Company, any other Employer or the Eligible Employee with respect to or arising out of this Plan; provided, however, that the Company shall have no obligation to pay any such legal fees, if (1) in the case of an action brought by the Eligible Employee, the Company or any other Employer is successful in establishing with the court that the Eligible Employee’s action was frivolous or otherwise without any reasonable legal or factual basis; or (2) in connection with any such claim, action or proceeding arising out of Section 3.06. In order to comply with Section 409A of the Code, in no event shall the payments by the Employer under this Section be made later than the end of the calendar

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year next following the calendar year in which such fees and expenses were incurred, provided, that the Eligible Employee shall have submitted an invoice for such fees and expenses at least 60 days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. The amount of such legal fees and expenses that the Employer is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Employer is obligated to pay in any other calendar year, and the Eligible Employee’s right to have the Employer pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

(a)

Tier 1 Employees

Each Eligible Employee who is a Tier 1 Employee and who incurs a Severance following a Change in Control or a Potential Change in Control shall be entitled to receive the same benefits as would be provided pursuant to Section 3.02 had such Severance occurred following a Hostile Change in Control.

(b)

Tier 2 Employees

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(c)

Tier 3 Employees

Each Eligible Employee who is a Tier 3 Employee and who incurs a Severance following a Change in Control or a Potential Change in Control shall not be entitled to receive any severance benefits under the Plan.

(a)

In General