EXHIBIT (10)(xxi)
COOPER TIRE & RUBBER COMPANY
1998 NON-EMPLOYEE DIRECTORS COMPENSATION DEFERRAL PLAN
(AS AMENDED AND RESTATED AS OF NOVEMBER 18, 2004)
1. Purpose. The purpose of the Plan is to provide qualified individuals who
are not employees of the Company who serve as members of the Board with
equity compensation in addition to their Director's Fees and with an
opportunity to defer payment of a portion of their Director's Fees in
accordance with the terms and conditions set forth herein.
2. Definitions. For the purposes of the Plan, the following capitalized
words shall have the meanings set forth below:
"Annual Fees" means the cash portion of (i) any annual fee payable to a
Non- Employee Director for service on the Board; (ii) any other fee determined
on an annual basis and payable for service on, or for acting as chairperson of,
any committee of the Board, and (iii) any similar annual fee or fees payable in
respect of service on the board of directors of any Subsidiary or any committee
of any such board of directors.
"Annual Meeting" means an annual meeting of the Company's stockholders.
"Annual Units" means Phantom Stock Units to be awarded to Non-Employee
Directors as additional compensation for service on the Board pursuant to
Section 5(b).
"Beneficiary" or "Beneficiaries" means an individual or entity designated
by a Non-Employee Director on a Beneficiary Designation Form to receive Deferred
Benefits in the event of the Non-Employee Director's death; provided, however,
that, if no such individual or entity is designated or if no such designated
individual is alive at the time of the Non-Employee Director's death,
Beneficiary shall mean the Non-Employee Director's estate.
"Beneficiary Designation Form" means a document, in a form approved by the
Committee to be used by Non-Employee Directors to name their respective
Beneficiaries. No Beneficiary Designation Form shall be effective unless it is
signed by the Non-Employee Director and received by the Committee prior to the
date of death of the Non-Employee Director.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable rules and regulations promulgated thereunder.
"Committee" means the committee of the Board that has been appointed to
administer the Plan or, if no committee has been appointed, the Board.
"Common Stock" means the common stock, par value $1.00 per share, of the
Company.
"Companies" means the Company and each Subsidiary.
"Company" means Cooper Tire & Rubber Company, a Delaware corporation, or
any successor to substantially all of its business.
"Deferral Election Form" means a document, in a form approved by the
Committee, pursuant to which a Non-Employee Director makes a deferral election
under the Plan.
"Deferral Period" means each period commencing on the date of an Annual
Meeting and ending on the date immediately preceding the next Annual Meeting.
The first Deferral Period under the Plan shall commence on the first day of the
first fiscal quarter of the Company to begin after May 5, 1998. If an individual
becomes eligible to participate in the Plan after the commencement of a Deferral
Period, the Deferral Period for the individual shall be the remainder of such
Deferral Period.
"Deferred Benefit" means the sum of (i) any amount that will be paid on a
deferred basis under the Plan to a Non-Employee Director who has made a deferral
election pursuant to Section 5 plus (ii) the amount payable with respect to the
Annual Units.
"Deferred Compensation Account" means the bookkeeping record established
for each Non-Employee Director. A Deferred Compensation Account is established
only for purposes of measuring a Deferred Benefit and not to segregate assets or
to identify assets that may be used to pay a Deferred Benefit.
"Director's Fees" means the aggregate of a Non-Employee Director's Annual
Fees and Per Diem Fees.
"Effective Date" means May 5, 1998.
"Election Date" means the December 31st immediately preceding the
commencement of a Deferral Period. If an individual first becomes eligible to
participate in the Plan on an Annual Meeting date or after the start of a
Deferral Period, the Election Date shall be the thirtieth day following such
Annual Meeting date or initial participation date, as the case may be.
"Fair Market Value" means the average of the highest and the lowest quoted
selling price of a share of Common Stock as reported on the composite tape for
securities listed on the New York Stock Exchange, or such other national
securities exchange as may be designated by the Committee, or, in the event that
the Common Stock is not listed for trading on a national securities exchange but
is quoted on an automated system, on such automated system, in any such case on
the valuation date (or, if there were no sales on the valuation date, the
average of the highest and the lowest quoted selling prices as reported on said
composite tape or automated system for the most recent day during which a sale
occurred).
"Non-Employee Director" means a member of the Board who is not, and has
not been, an employee of the Company or any of its Subsidiaries.
"Per Diem Fees" means a fee paid for attendance at or participation in (i)
each meeting of the Board, (ii) each meeting of a committee of the Board when
such meeting is held on a day other than a day for which a fee is paid for a
meeting of the Board, (iii) each day of services to the Company requested by the
chairman of the Board, and (iv) services similar to those specified in (i),
(ii), or (iii) above, provided to any Subsidiary.
2
"Phantom Stock Unit" means a bookkeeping unit representing one share of
Common Stock credited to a Deferred Compensation Account in accordance with
Section 5(d).
"Plan" means the Cooper Tire & Rubber Company 1998 Non-Employee Director
Compensation Deferral Plan (as Amended and Restated as of November 18, 2004).
"Subsidiary" means a corporation or other entity with respect to which the
Company, directly or indirectly, has the power, whether through the ownership of
voting securities, by contract or otherwise, to elect at least a majority of the
members of such corporation's board of directors or analogous governing body.
3. Administration.
(a) The Plan shall be administered by the Committee.
(b) The Committee shall be authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to
the Plan, to make factual determinations in connection with the
administration or interpretation of the Plan, and to make any other
determinations that it believes are necessary or advisable for the
administration of the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in
any Deferral Election Form to the extent the Committee deems
desirable to carry the Plan into effect. Any decision of the
Committee in the administration of the Plan, as described herein,
shall be final and conclusive. The Committee may act only by a
majority of its members, except that the members thereof may
authorize any one or more of the Committee members to execute and
deliver documents on behalf of the Committee.
(c) The Committee shall be entitled to rely in good faith upon any
report or other information furnished to it by any officer or
employee of the Companies or from the financial, accounting, legal
or other advisers of the Companies. Each member of the Committee,
each individual designated by the Committee to administer the Plan
and each other person acting at the direction of or on behalf of the
Committee shall not be liable for any determination or anything done
or omitted to be done by him or by any other member of the Committee
or any other such individual in connection with the Plan, except for
his own willful misconduct or as expressly provided by statute, and
to the extent permitted by law and the bylaws of the Company, shall
be fully indemnified and protected by the Company with respect to
such determination, act or omission.
4. Shares Available. The Company is authorized to issue up to 200,000
shares of Common Stock under the Plan (the "Plan Limit"). Such shares of
Common Stock may be newly issued shares of Common Stock or reacquired
shares of Common Stock held in the treasury of the Company. The amount of
any Annual Units paid in cash shall not be treated as issued under the
Plan.
3
5. Deferral of Director's Fees and Crediting of Annual Units.
(a) Deferral Elections.
(i) General Provisions. Non-Employee Directors may elect to
defer all or a specified percentage of their Director's Fees
with respect to a Deferral Period in the manner provided in
this Section 5. A Non-Employee Director's Deferred Benefit is
at all times nonforfeitable.
(ii) Deferral Election Forms. Before the Election Date applicable
to a Deferral Period, each Non-Employee Director will be
provided with a Deferral Election Form and a Beneficiary
Designation Form. In order for a Non-Employee Director to
participate in the deferral portion of the Plan for a given
Deferral Period, a Deferral Election Form, completed and
signed by him, must be delivered to the Company on or prior to
the applicable Election Date. A Deferral Election Form
submitted by a Non-Employee Director for a Deferral Period
shall be deemed to be a continuing election for all subsequent
Deferral Periods, unless the Employee Director completes and
files a subsequent Deferral Election Form with the Company
prior to the Election Date applicable to that Deferral Period.
A Non-Employee Director electing to participate in the Plan
for a given Deferral Period shall indicate on his Deferral
Election Form:
(A) the percentage of the Director's Fees for the Deferral
Period to be deferred which shall be in multiples of
10%; and
(B) if the Deferral Election Form is the first such form
filed by the Non-Employee Director, the Non-Employee
Director's election, in accordance with Sections 5(f)
and 5(g), as to the timing and manner of payment of the
Deferred Benefits. A Non-Employee Director's election as
to the timing and manner of payment of Deferred Benefits
in the initial Deferral Election Form shall govern the
timing and manner of payment of all subsequent deferrals
under the Plan and may not be changed or revoked without
the prior written consent of the Committee.
(iii) Effect of No Deferral Election. A Non-Employee Director who
does not have a completed and signed Deferral Election Form on
file with the Company on or prior to the applicable Election
Date for a Deferral Period may not defer his Director's Fees
for such Deferral Period.
(b) Award of Annual Units. Annual Units shall be awarded to each
Non-Employee Director in December of each year (or at such other
time as may be determined by the Committee) commencing December
2004. The number of Annual Units to be so awarded to each
Non-Employee Director shall be 500 per year, unless and until a
greater or lesser number is specified by the Committee.
4
(c) Establishment of Deferred Compensation Accounts. A Non-Employee
Director's deferrals and the Annual Units will be credited to a
Deferred Compensation Account set up for that Non-Employee Director
by the Company in accordance with the provisions of this Section 5.
(d) Crediting of Phantom Stock Units to Deferred Compensation Accounts.
(i) Number of Phantom Stock Units. The portion of the Director's
Fees that a Non-Employee Director elects to defer shall be
credited to the Deferred Compensation Account as of the last
business day of the fiscal quarter in which such portion of
the Director's Fees would otherwise have been payable to the
Non-Employee Director. The number of Phantom Stock Units to be
so credited to the Deferred Compensation Account shall be
determined by dividing (1) the amount of the Director's Fees
over such quarter by (2) the Fair Market share of Common Stock
as of the date of crediting. Any partial Phantom Stock Unit
that results from the application of the previous sentence
shall be rounded to the nearest whole Phantom Stock Unit. The
number of Annual Units awarded to a Non-Employee Director
shall be credited to the Deferred Compensation Account as of
the date of grant.
(ii) Dividend Equivalents. In the event that the Company pays any
cash or other dividend or makes any other distribution in
respect of the Common Stock, the Deferred Compensation Account
of a Non-Employee Director will be credited with additional
Phantom Stock Units determined by dividing (A) the amount of
cash, or the value (as determined by the Committee) of any
securities or other property, paid or distributed in respect
of a corresponding number of shares of Common Stock by (B) the
Fair Market Value of a share of Common Stock as of the date of
such payment or distribution. Any partial Phantom Stock Unit
that results from the application of the previous sentence
shall be rounded up to a whole Phantom Stock Unit. Such credit
shall be made effective as of the date of the dividend or
other distribution in respect of the Common Stock.
(iii) No Rights as Stockholder. The crediting of Phantom Stock
Units to a Non-Employee Director's Deferred Compensation
Account shall not confer on the Non-Employee Director any
rights as a stockholder of the Company.
(e) Written Statements of Account. The Company will furnish each
Non-Employee Director with a statement setting forth the value of
such Non-Employee Director's Deferred Compensation Account as of the
end of each Deferral Period and all credits to and payments from the
Deferred Compensation Account during the Deferral Period. Such
statement shall separately detail the portion of the Deferred
Benefit representing deferred Director's Fees and the portion of the
Deferred Benefit representing Annual Units. Such statement will be
furnished no later than sixty days after the end of the Deferral
Period.
5
(f) Manner of Payment of Deferred Benefit.
(i) Payment of any portion of the Deferred Benefit representing
deferred Director's Fees shall be in shares of Common Stock.
Payment shall be made either in a single lump sum or in a
series of five or fewer annual installments. The amount of
each installment payment to a Non-Employee Director shall be
determined in accordance with the formula B/(N - P), where "B"
is the value of the Deferred Compensation Account representing
deferred Director's Fees as of the installment calculation
date, "N" is the number of installments elected by the
Non-Employee Director and "P" is the number of installments
previously paid to the Non-Employee Director. Any partial unit
resulting in the calculation above will be settled in cash.
(ii) Payment of the portion of the Deferred Benefits representing
Annual Units shall be in cash or in shares of Common Stock at
the Non-Employee Director's election. If the Non-Employee
Director fails to make a timely election prior to
distribution, the Annual Units will be paid in Common Stock.
Payment shall be made either in a single lump sum or in a
series of five or fewer annual installments. The amount of
each installment payment to a Non-Employee Director shall be
determined in accordance with the formula B/(N - P), where "B"
is the value of the Deferred Compensation Account representing
deferred Annual Units as of the installment calculation date,
"N" is the number of installments elected by the Non-Employee
Director and "P" is the number of installments previously paid
to the Non-Employee Director. If the Non-Employee Director
elects to receive payment of the Annual Units in Common Stock,
any partial unit resulting in the calculation above will be
settled in cash.
(g) Commencement of Payment of Deferred Benefit Attributable to
Deferred Director's Fees. Payment of a Non-Employee Director's
Deferred Benefit attributable to any portion of the Deferred Benefit
representing Director's Fees shall commence as soon as practicable
(but in no event more than sixty days) after the earlier to occur
of:
(i) termination of service as a member of the Board; and
(ii) the date specified in the Deferral Election Form executed by
the Non-Employee Director.
(h) Commencement of Payment of Annual Units. Payment of a Non-
Employee Director's Annual Units shall commence as soon as
practicable (but in no event more than sixty days) after termination
of service as a member of the Board.
(i) Death. In the event of a Non-Employee Director's death, the
Non-Employee Director's entire Deferred Benefit (including any
unpaid portion
6
thereof corresponding to installments not yet paid at the time of
death), to the extent not distributed earlier pursuant to Section
5(g), will be distributed in a lump sum to the Non-Employee
Director's Beneficiary as soon as practicable after the date of
death, but in no event more than six months after the Non-Employee
Director's date of death.
(j) Restrictions on Transfer. The Company shall pay all Deferred
Benefits payable under the Plan only to the Non-Employee Director or
Beneficiary designated under the Plan to receive such amounts.
Neither a Non-Employee Director nor his Beneficiary shall have any
right to anticipate, alienate, sell, transfer, assign, pledge,
encumber or change any benefits to which he may become entitled
under the Plan, and any attempt to do so shall be void. A Deferred
Benefit shall not be subject to attachment, execution by levy,
garnishment, or other legal or aquitable process for a Non-Employee
Director's or Beneficiary's debts or other obligations.
6. Designation of Beneficiary.
(a) Beneficiary Designations. Each Non-Employee Director may
designate a Beneficiary to receive any Deferred Benefit due under
the Plan on the Non-Employee Director's death by executing a
Beneficiary Designation Form.
(b) Change of Beneficiary Designation. A Non-Employee Director may
change an earlier Beneficiary designation by executing a later
Beneficiary Designation Form and delivering it to the Committee. The
execution of a Beneficiary Designation Form and its receipt by the
Committee revokes and rescinds any prior Beneficiary Designation
Form.
7. Recapitalization or Reorganization.
(a) Authority of the Company and Stockholders. The existence of the
Plan shall not affect or restrict in any way the right or power of
the Company or the stockholders of the Company to make or authorize
any adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options,
warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks having rights superior to or
affecting the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
(b) Change in Capitalization. Notwithstanding any other provision of
the Plan, in the event of any change in the outstanding Common Stock
by reason of a stock dividend, recapitalization, reorganization,
merger, consolidation, stock split, combination or exchange of
shares (a "Change in Capitalization"): (i) such proportionate
adjustments as may be necessary (in the form determined by the
Committee in its sole discretion) to reflect such change shall be
made to prevent
7
dilution or enlargement of the rights of Non-Employee Directors
under the Plan with respect to the aggregate number of shares of
Common Stock authorized to be awarded under the Plan, the number of
Phantom Stock Units credited to a Non-Employee Director's Deferred
Compensation Account and the number of Annual Units to be awarded
pursuant to Section 5(b), and (ii) the Committee may make such other
adjustments, consistent with the foregoing, as it deems appropriate
in its sole discretion.
(c) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, all Deferred Benefits
credited to the Non-Employee Director's Deferred Compensation
Account as of the date of the consummation of a proposed dissolution
or liquidation shall be paid in cash to the Non-Employee Director
or, in the event of death of the Non-Employee Director prior to
payment, to the Beneficiary thereof on the date of the consummation
of such proposed action. The cash amount paid for each Phantom Stock
Unit shall be the Fair Market Value of a share of Common Stock as of
the date of the consummation of such proposed action.
8. Termination and Amendment of the Plan.
(a) Termination. Unless terminated earlier in accordance with Section
8(b), the Plan shall terminate on the tenth anniversary of the
Effective Date. Following the tenth anniversary of the Effective
Date, no further Director's Fees or Annual Units may be deferred by
a Non-Employee Director but any amounts deferred prior to the date
of such termination shall be paid in accordance with the Deferral
Election Form.
(b) General Power of Board. Notwithstanding anything herein to the
contrary, the Board may at any time and from time to time terminate,
modify, suspend or amend the Plan in whole or in part and settle all
Phantom Stock Units in shares of Common Stock; provided, however,
that no such termination, modification, suspension or amendment
shall be effective without stockholder approval if such approval is
required to comply with any applicable law or stock exchange rule;
and, provided further, that the Board may not, without stockholder
approval, increase the maximum number of shares issuable under the
Plan, except as provided in Section 7(b) above.
9. Miscellaneous.
(a) No Right to Reelection. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any of
its members for reelection by the Company's stockholders, nor confer
upon any Non-Employee Director the right to remain a member of the
Board for any period of time, or at any particular rate of
compensation.
8
(b) Unfunded Plan.
(i) Generally. This Plan is unfunded. Amounts payable under the
Plan will be satisfied solely out of the general assets of the
Company subject to the claims of the Company's creditors.
(ii) Deferred Benefits. A Deferred Benefit represents at all
times an unfunded and unsecured contractual obligation of the
Company and each Non-Employee Director or Beneficiary will be
an unsecured creditor of the Company. No Non-Employee
Director, Beneficiary or any other person shall have any
interest in any fund or in any specific asset of the Company
by reason of any amount credited to him hereunder, nor shall
any Non-Employee Director, Beneficiary or any other person
have any right to receive any distribution under the Plan
except as, and to the extent, expressly provided in the Plan.
The Company will not segregate any funds or assets for
Deferred Benefits or issue any notes or security for the
payment of any Deferred Benefits. Any reserve or other asset
that the Company may establish or acquire to assure itself of
the funds to provide benefits under the Plan shall not serve
in any way as security to any Non-Employee Director,
Beneficiary or other person for the performance of the Company
under the Plan.
(c) Other Compensation Arrangements. Benefits received by a Non-
Employee Director pursuant to the provisions of the Plan shall not
be included in, nor have any effect on, the determination of
benefits under any other arrangement provided by the Company.
(d) Securities Law Restrictions. All certificates for shares of
Common Stock delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements
of the Securities and Exchange Commission or any exchange upon which
the Common Stock is then listed, and any applicable federal or state
securities law, and the Committee may cause a legend or legends to
be put an any such certificates to make appropriate reference to
such restrictions. No shares of Common Stock shall be issued
hereunder unless the Company shall have determined that such
issuance is in compliance with, or pursuant to an exemption from,
all applicable federal and state securities laws.
(e) Expenses. The costs and expenses of administering the Plan shall
be borne by the Company.
(f) Applicable Law. Except as to matters of federal law, the Plan and
all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Delaware without giving
effect to conflicts of law principles.
9
(g) Effective Date. The Plan was effective as of the Effective Date,
subject to the approval thereof by the stockholders of the Company
at the Annual Meeting held on such date. The Plan was amended and
restated, effective November 18, 2004, without further approval by
the stockholders, to provide for Annual Units.
10