Mr. Philip
G. Weaver
1400 Sawgrass Court
Bowling Green, OH 43402
Re:
Employment Transition Agreement (the
“Agreement”)
When we learned
you were contemplating retiring from Cooper Tire & Rubber
Company (“Cooper”), we discussed with you the
continuation of your services during the period of transition of
your duties as Vice President and Chief Financial Officer to your
successor. This letter confirms the agreement between you and
Cooper with regard to this period of transition and your subsequent
retirement:
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1.
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PERIOD OF TRANSITION
— Beginning as of
the date of this letter and continuing until December 31,
2009, you shall remain an employee of Cooper pursuant to the terms
of this Agreement. You will continue to fulfill, to the best of
your abilities, the duties and obligations of the position of Vice
President and Chief Financial Officer until the earlier to occur of
(a) the naming by Cooper of your successor; or
(b) December 31, 2009. Upon the earlier to occur of
(a) the naming by Cooper of your successor; or
(b) December 31, 2009, you will relinquish your position
as Vice President and Chief Financial Officer. Should the
relinquishment of your position occur prior to December 31,
2009, you will continue to work until December 31, 2009 on an
orderly transition of your former duties and obligations to your
successor. During the period from the date of this Agreement until
December 31, 2009 you shall continue to receive your current
annual base salary in accordance with Cooper’s normal payroll
practices and continue to be entitled to those employee benefits
currently being received by you.
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2.
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RETIREMENT — You will retire from Cooper
as of December 31, 2009. You shall receive the following
benefits upon your retirement:
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(a)
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Your pension benefit under the
Spectrum Retirement Plan and any nonqualified deferred compensation
plan will be calculated based upon your retirement date
of
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Philip G.
Weaver
May 27, 2009
Page 2
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December 31, 2009 except as provided for in
Subparagraph (i) below. You will receive payment of your
retirement benefits pursuant to the terms of the applicable Plan
documents provided, however, that the Spectrum Retirement Plan and
Non-Qualified Supplementary Benefit Plan, when considered as a
whole, will provide benefits to you no less favorable than what
would have been provided to you had the provisions of the Spectrum
Retirement Plan and Non-Qualified Supplementary Benefit Plan in
effect as of June 6, 2000 remained in effect, except that
service credits under the Spectrum Retirement Plan and
Non-Qualified Supplementary Benefit Plan cease to accrue after
June 30, 2009. Pursuant to the terms of the Non-Qualified
Supplementary Benefit Plan, your non-qualified benefit shall be
payable in a lump sum cash payment equal to the actuarial
equivalent of the retirement pension you have accrued under the
Non-Qualified Supplementary Benefit Plan.
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For
purposes of this Section 2(a), “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 the aforementioned table
will be for the month of August 2009 and will be truncated to
the lower 0.25% increment (e.g. 6.00%, 6.25%, 6.50%,
etc).
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(b)
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All
stock options, restricted stock units (“RSU’s”)
and, if earned, performance based stock units (“PSU’s)
will continue to be governed by applicable Plan provisions except,
however, one-third of the number of stock options granted to you as
of April 6, 2009, shall vest on December 31, 2009. All
shares of stock representing RSU or PSU distributions will be made
within 5 business days following the later of the final
determination and approval of the related number of shares to be
issued or the vesting date applicable to each pursuant to the terms
of the plans and your elections thereunder.
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(c)
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You
will receive, no later than January 15, 2010, a lump sum
payment of $545,800, less applicable tax withholding.
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(d)
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You
will receive a minimum payment at the 100% level (50% of your
current base salary) for your 2009 Annual Incentive Plan
(“AIP”) up to a maximum payment at the 200% level,
should such payment be determined payable pursuant to the AIP.
Payment of the AIP amount shall be on the same date that payments
under the AIP are paid to others but in no event later than
March 15, 2010. The metrics and measurement formulas of the
AIP have been provided to you previously by Mark Krivoruchka,
Senior Vice President of Human Resources, in a note titled
“Clarification items” dated May 4, 2009 and, for
purposes of this Agreement, the AIP and AIP’s metrics and
measurement formulas, are not subject to further
changes.
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Philip G.
Weaver
May 27, 2009
Page 3
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(e)
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Except as provided for in
Subparagraph (i) below, for purposes of calculating your
payment under the Long-Term Incentive Plan (“LTIP”),
you shall be considered to have remained an employee until
December 31, 2009. LTIP distributions, if any, will be paid
pursuant to LTIP terms. The metrics and measurement formulas of the
2009 performance under the LTIP in effect for 2009 have been
provided to you previously by Mark Krivoruchka, Senior Vice
President of Human Resources, i) in your “2009 Executive
Compensation Plan” letter dated April 17, 2009 and ii)
in a note titled “Clarification items” dated
May 4, 2009 and, for purposes of this Agreement, the LTIP in
effect for 2009 and the LTIP’s metrics and measurement
formulas, are not subject to further changes.
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(f)
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Cooper shall provide you with a
vehicle, pursuant to Cooper’s vehicle program provisions
currently in effect, until the earlier of: (a) your death; or
(b) December 31, 2011.
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(g)
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Cooper shall pay the premiums for
your retiree medical insurance and your Cooper provided life
insurance plan for a period of two years following your retirement
date.
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(h)
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For
purposes of Section 409A, Cooper agrees that you will have
incurred a separation from service as defined in Treasury
Regulations §1.409A-1(n) as of the date of your
retirement.
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(i)
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Notwithstanding the foregoing,
should you die prior to your retirement date of December 31,
2009, the compensation and benefits provided hereunder shall cease
as of the date of your death and your legal beneficiaries shall be
eligible for survivorship benefits, if any, in accordance with the
terms and conditions of the applicable plans, except, however, your
legal beneficiaries shall be entitled to receive, upon your death,
if it were to occur prior to December 31, 2009, (a) a
continuation of your base salary pursuant to the provisions of
Section 1 herein; (b) vesting of unvested stock options
and distribution of shares equal to the number of RSU’s or
PSU’s earned pursuant to the provisions of Section 2(b)
herein; (c) any unpaid lump sum amount pursuant to the
provisions of Section 2(c) herein; (d) distribution of AIP
amounts pursuant to the provisions of Section 2(d) herein;
(e) prorata amounts earned under LTIP Programs pursuant to
provisions of Section 2(e) herein; and (f) provision of
retiree medical insurance pursuant to the provisions of
Section 2 (g) herein.
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3.
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MUTUAL AGREEMENT AND
RELEASE -
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Upon execution of this Agreement
and, in consideration of entering into this Agreement, the Amended
and Restated 2009 Employment Agreement entered into as of
December
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Philip G.
Weaver
May 27, 2009
Page 4
22, 2008 by you
and Cooper (“Employment Agreement”) shall be superseded
and of no further force and effect and the parties hereto release
and forever discharge each other, their affiliates, officers,
directors, stockholders, employees, successors, assigns,
representatives, agents, heirs and counsel from all claims, losses,
liabilities, responsibilities, obligations, damages, causes of
actions and suits, including attorney fees, against each other
arising out of the Employment Agreement.
In
consideration of you entering into this Agreement, Cooper agrees to
pay all amounts and benefits due or earned under this Agreement if
your employment is terminated by Cooper for any reason prior to
December 31, 2009, conditioned upon your full compliance with
the provisions in Section 4 herein and your execution and
delivery of the release, as described in the paragraph
below.
The receipt of
benefits and payments set forth in Sections 2 (b); 2 (c); 2
(d); 2(f); and 2(g) herein are conditioned upon you, or, in the
event of your death prior to December 31, 2009, for receipt of
those benefits which may be payable to your legal beneficiaries,
pursuant to Section 2 (i) herein, your legal beneficiary
and the authorized representative of your estate, executing and
delivering a release in substantially the form of Exhibit A,
attached hereto.
The parties
hereto understand and agree that the rights and obligations set
forth in this Section 3 are perpetual and, in any case, extend
beyond the term of this Agreement.
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4.
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SECRECY AND
NON-COMPETITION —
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(A)
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No Competing Employment
. For so long as you are
employed by Cooper to provide services and continuing for one
(1) year after the termination of your employment for any
reason (the “Non-Compete Period”), you shall not,
unless you receive the prior written consent of Cooper’s
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
by Cooper or any of Cooper’s affiliates at the time of the
termination of your retainer hereunder (such businesses are
hereinafter referred to as the “Business”), or assist,
become interested in or be connected with any corporation, firm,
partnership, joint venture, sol
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