TRW AUTOMOTIVE INC. DIRECTOR CASH INCENTIVE AWARD AGREEMENT
Exhibit 10.4
TRW AUTOMOTIVE INC.
DIRECTOR
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 “Director”). This Award is granted by the
Compensation Committee of the Company’s Board of Directors (the “Committee”).
Section 1. Definitions.
(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) “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 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.
(e) “Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor
thereto.
(f) “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 calculated in such manner as may be
determined by the Committee in its good faith judgment from time to time.
(g) “Holdings” shall mean TRW Automotive Holdings Corp., a Delaware corporation.
(h) “NYSE” shall mean the New York Stock Exchange.
(i) “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.
(j) “Share Price” shall mean the average Fair Market Value of a Share during the
portion of the month of February immediately preceding the first anniversary of the Effective
Date.
(k) “Shares” shall mean shares of the common stock, par value $0.01 per share, of
Holdings.
(l) “Subsidiary” shall mean a subsidiary corporation, as defined in Section 424(f) of
the Code.
(m) “Target Value” shall mean the initial value of the Award, as set forth in Section
2(a).
(n) “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
table 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.
Section 2. Grant of Cash Incentive Award. The Company hereby grants to the Director an Award
subject to the terms and conditions stated in this Agreement. The amount of the Award shall be
equal to the Target Value determined 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 Amount of the Target Value. The Target Value of the Award shall
be increased or decreased, as applicable, on the first anniversary of the Effective Date by
multiplying the Target Value by the Target Value Adjustment percentage as determined under Exhibit
A with reference to the calculated Share Price as of that date.
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Section 3. Payment of the Awards. Subject to the vesting requirements of Section 4 and
Section 5, the Award amount determined under Section 2(b) shall be payable to the Director in cash
as soon as administratively practicable on or after the first 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
determined in accordance with Section 2(b) shall become vested on the first anniversary of the
Effective Date, provided the Director remains continuously on the Board of Directors of the Company
or Holdings through that date. Once this vesting 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 Director’s death prior to satisfying the vesting
requirements under Section 4, a pro rata portion of the Award (determined by multiplying the amount
of the Award, without any adjustment under Section 2(b), 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) 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.
(b) Change in Control. In the event the Director’s service with the Company is
involuntarily terminated following or in connection with a Change in Control prior to the
satisfaction of the vesting requirements of Section 4, the Award, without regard to any adjustment
under Section 2(b), shall be immediately 100 percent vested and shall be paid as soon as
administratively practicable following the date of termination of service following or in
connection with the Change in Control event, but in no event later than 90 days thereafter.
(c) Termination of Service. In the event of the Director’s termination of service on
the Board of Directors of the Company or Holdings for any reason other than an event specified
above, prior to satisfying the vesting requirements of Section 4 or 5, the Award is immediately
forfeited in its entirety and shall not be payable.
(d) Rules of Construction. In the event that more than one event occurs under this
Section 5, the first event to occur shall be controlling and shall determine the timing and amount
of the Award payable. Under no circumstances shall any provision of this Agreement be construed so
as to require payment to the Director in excess of the Award amount calculated under Section 2(b).
Section 6. Miscellaneous.
(a) Binding Agreement. This Agreement is binding on and enforceable by and against
the parties, their successors, legal representatives and assigns.
(b) Entire Agreement. This Agreement constitutes the whole agreement between the
parties relating to the subject matter hereof and supersedes any prior agreements or understandings
related to such subject matter.
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(c) Amendment of this Agreement. This Agreement may not be amended, modified, or
supplemented except by a written instrument executed by each of the parties hereto.
(d) Restrictions on Transfer. The Award may not be sold, assigned, transferred,
encumbered, hypothecated or pledged in any manner (whether by operation of law or otherwise) other
than by will or applicable laws of decent and distribution.
(e) No Right to Continued Service. The Director’s right, if any, to continue to serve
the Company or Holdings as a director will not be enlarged or otherwise affected by this Agreement.
(f) Changes in Capitalization. In the event of any change in the outstanding Shares
by reason of any stock split, stock dividend, split-up, split-off, spin-off, recapitalization,
merger, consolidation, rights offering, reorganization, combination, subdivision or exchange of
shares, or any distribution to stockholders other than a normal cash dividend the Committee shall
make an appropriate adjustment to the Share Price as may be determined in the sole but reasonable
discretion of the Committee, and such adjustments shall be final, conclusive and binding for all
purposes.
(g) Severability. If any provision of this Agreement shall be held unlawful or
otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction, such
provision shall (i) be deemed limited to the extent that such court of competent jurisdiction deems
it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and
(ii) not affect any other provision of this Agreement or part thereof, each of which shall remain
in full force and effect. If the making of any payment or the provision of any other benefit
required under this Agreement shall be held unlawful or otherwise invalid or unenforceable by a
court of competent jurisdiction, such unlawfulness, invalidity or unenforceability shall not
prevent any other payment or benefit from being made or provided under this Agreement, and if the
making of any payment in full or the provision of any other benefit required under this Agreement
in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity
or unenforceability shall not prevent such payment or benefit from being made or provided in part,
to the extent that it would not be unlawful, invalid or unenforceable, and the maximum payment or
benefit that would not be unlawful, invalid or unenforceable shall be made or provided under this
Agreement.
(h) Waiver. Any party’s failure to insist on compliance with or enforcement of any
provision of this Agreement shall not affect its validity or enforceability or constitute a waiver
of future enforcement of that provision or of any other provision of this Agreement.
(i) Rules of Construction. The headings given to the Sections of this Agreement are
solely as a convenience to facilitate reference, and are not intended to narrow, limit or affect
the substance or interpretation of the provisions contained herein. The reference to any statute,
regulation or other provision of law shall be construed to include any amendment thereto or refer
to any successor thereof .
(j) Section 409A. To the extent required by law, this Agreement and the grant of the
Award hereunder are intended to comply with the requirements of Section 409A of
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the Code and the Treasury Regulations promulgated and other official guidance issued
thereunder (collectively, “Section 409A”), and this Agreement and the Award shall be administered
and interpreted in a manner that is consistent with such intention. Notwithstanding the terms of
Sections 3 and 5, to the extent that payment to the Director is required to be delayed by six
months pursuant to Section 409A, such payment shall be made as soon as administratively practicable
following the first day of the seventh month following the Director’s Termination of Employment,
but in no event later than 90 days thereafter.
(k) Rabbi Trust. In the event of a delay in payment upon a Change in Control beyond
the date of completion of such Change in Control, amounts payable under Section 5(b) shall be
contributed by the Company to a grantor trust established by the Company with an independent
trustee immediately prior to the completion of the Change in Control giving rise to Director’s
entitlement to such amounts. The costs and fees associated with establishing and maintaining such
grantor trust shall be borne by the Company. The amounts held in trust shall be invested in a
stable value fund or other similar investment vehicle, which seeks to preserve principal while
earning interest income. The investment vehicle shall be selected by an independent investment
manager appointed by the Company. The interest income realized shall be included in and paid to
Executive as and when Executive’s payment under this Section is made.
(l) Governing Law. This Agreement, to the extent not otherwise governed by the Code or
the laws of the United States, shall be governed by the laws of the State of New York, without
reference to principles of conflict of laws, and construed accordingly.
(m) Counterpart Execution. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which together shall be deemed
one and the same instrument.
| TRW AUTOMOTIVE INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| DIRECTOR | ||||||
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EXHIBIT A
No payout if Share Price is less than $1.00
| Share Price | Target Value Adjustment* | |
| Share Price less than $1.00 |
0.0% | |
| Share Price less than Share Price on Effective Date, but at least $1.00 |
50.0% | |
| Share Price equals Share Price on Effective Date [$2.50] |
100.0% | |
| [$5.00] | 125.0% | |
| [$12.50] or greater | 250.0% |
| * | If the Share Price is between price levels set forth above, the Company shall use linear extrapolation to determine the resultant Target Value Adjustment. |
