EX-10(II)






Exhibit (10) (ii)




EMPLOYMENT AGREEMENT

AMENDED AND RESTATED




     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into
this 22 day of December, 2008, between COOPER TIRE & RUBBER COMPANY, a Delaware corporation (the
“Company”), and Roy V. Armes (the “Executive”).



W I T N E S S E T H:




     WHEREAS, the Executive and the Company entered into an Employment Agreement dated as of
December 19, 2006 (the “Original Agreement”); and



     WHEREAS, the Executive and the Company agree that the substantive provisions of the Original
Agreement shall remain in full force and effect, but also agree that it is desirable to modify the
terms of the Original Agreement in certain respects in order to satisfy the requirements Section
409A of the Code imposes on those payments under the Agreement which can be considered “deferred
compensation” for purposes of Section 409A;



     WHEREAS, the Company desires to continue to retain the services of the Executive as its
President and Chief Executive Officer and the Executive desires to continue to be so employed by
the Company; and



     WHEREAS, the Company and the Executive desire to enter into this Agreement setting forth the
terms and conditions of such continued employment.



     NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements
contained herein and other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, and intending to be legally bound hereby, the Company and the Executive
hereby amend and restate the Original Agreement to read as follows:


1. Certain Defined Terms. In addition to terms defined elsewhere herein, the following
terms have the following meanings when used in this Agreement with initial capital letters:




     (a) “Affiliate” means any corporation, limited liability company, joint venture, partnership,
or other legal entity in which the Company owns, directly or indirectly, or has previously owned,
at least fifty percent (50%) of the capital stock, profits, interest or capital interest.



     (b) “Annual Incentive Compensation” means the amount paid or (but for any deferral) payable to
the Executive for a year under any annual bonus compensation programs or arrangements. Annual
Incentive Compensation shall not include or take into account long-term incentive compensation,
stock option or other equity awards (regardless of whether granted annually), pension or other
retirement benefit contributions or accruals, perquisites or other fringe benefits. For the
avoidance of doubt, “Annual Incentive Compensation” may be zero.



     (c) “Average Annual Incentive Compensation” means:




     (i) the average of the Annual Incentive Compensation earned and certified by the
Compensation Committee of the Board for the Executive for the three (3) fiscal years
preceding the year in which a Termination Date occurs; (provided that, for purposes of this
Section 1(c), if a fiscal year is less than 12 complete months, the bonus will be annualized
by dividing the bonus amount for such year by the fraction the numerator of which is the
number of days constituting such short fiscal year and the denominator of which is 365);




     (ii) if the Executive has been employed by the Company and the Annual Incentive
Compensation that has been earned and certified by the Compensation Committee of the Board
for the Executive for fewer than three (3) fiscal years, the average of the Annual Incentive
Compensation that has been earned and certified by the Compensation Committee of the Board
for the Executive for the number of fiscal years through the Termination Date; or




     (iii) if the Termination Date occurs prior to the date Annual Incentive Compensation is
earned and certified by the Compensation Committee of the Board for the Executive for the
2007 fiscal year, the target Annual Incentive Compensation for fiscal year 2007.



     (d) “Base Pay” means the Executive’s rate of annual base salary payable under this Agreement
(which rate shall not be deemed to be reduced for purposes of Sections 5 or Section 6 hereof by
reason of any elective deferrals of annual base salary) at the



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time a termination of employment
occurs or, if applicable, immediately before any reduction in such amount that serves as a basis
for a termination for Good Reason.



     (e) “Board” means the Board of Directors of the Company.



     (f) “Cause” means:




(X) prior to a Change in Control, termination of the Executive’s employment with the
Company by the Board because of:




     (i) the willful and continued failure by the Executive to perform
substantially the duties of the Executive’s position, and the failure of the
Executive to correct such failure of performance within thirty (30) days after
notification by the Board of any such failure (other than by reason of the
incapacity of the Executive due to physical or mental illness); or




     (ii) any other willful act or omission which is materially injurious to
the financial condition or business reputation of, or is otherwise materially
injurious to, the Company or any Affiliate thereof, and failure of the
Executive to correct such act or omission within thirty (30) days after
notification by the Board of any such act or omission (other than by reason of
the incapacity of the Executive due to physical or mental illness); or




     (iii) the Executive is found guilty of, or pleads guilty or nolo
contendere to, a felony or any criminal act involving fraud, embezzlement,
theft, or moral turpitude; or




     (iv) the Executive is found guilty of, or pleads guilty or nolo contendere
to, any criminal act committed in the course of the Executive’s employment with
the Company or against the Company or any Affiliate, or the Executive is found
liable in a civil action, in which an allegation involves a dishonest act,
fraud, embezzlement or theft committed in the course of the Executive’s
employment with the Company or against the Company or any Affiliate.




(Y) following a Change in Control, termination of the Executive’s employment with the
Company by the Board because of:




     (i) any act or omission constituting a material breach by the Executive of
any of his significant obligations or agreements under this Agreement or the
continued willful failure or refusal of the Executive to adequately perform the
duties reasonably required hereunder which is materially injurious to the
financial condition or business reputation of, or is otherwise materially
injurious to, the Company or any Affiliate thereof, after notification by the
Board of such breach, failure or refusal and the failure of the Executive to
correct such breach, failure or refusal within thirty (30) days of such
notification (other than by reason of the incapacity of the Executive due to
physical or mental illness); or




     (ii) any other willful act or omission which is materially injurious to
the financial condition or business reputation of, or is otherwise materially
injurious to, the Company or any Affiliate thereof, and failure of the
Executive to correct such act or omission within thirty (30) days after
notification by the Board of any such act or omission (other than by reason of
the incapacity of the Executive due to physical or mental illness); or




     (iii) the Executive is found guilty of, or pleads guilty or nolo
contendere to, a felony or any criminal act involving fraud, embezzlement,
theft, or moral turpitude; or




     (iv) the Executive is found guilty of, or pleads guilty or nolo contendere
to, any criminal act committed in the course of the Executive’s employment with
the Company or against the Company or any Affiliate, or the Executive is found
liable in a civil action, in which an allegation involves a dishonest act,
fraud, embezzlement or theft committed in the course of the Executive’s
employment with the Company or against the Company or any Affiliate.




For purposes of this Agreement, no act, or failure to act, on the Executive’s part shall be
deemed “willful” if done, or omitted to be done, by the Executive in good faith and with a
reasonable belief that the Executive’s action or omission was in the best interest of the
Company. Any notification to be given by the Board in accordance with Section 1(f)(X)(i),
1(f)(X)(ii), 1(f)(Y)(i) or 1(f)(Y)(ii) shall be in writing and shall specifically identify
the breach, failure, refusal, act or omission to which



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the notification relates and, in the
case of Section 1(f)(X)(ii), 1(f)(Y)(i) or 1(f)(Y)(ii), shall describe the injury to the
Company, and such notification must be given within twelve (12) months of the Board becoming
aware, or within twelve (12) months of when the Board should have reasonably become aware of
the breach, failure, refusal, act, omission or injury identified in the notification.
Notwithstanding Section 23 hereto, failure to notify the Executive within any such twelve
(12) month period shall be deemed to be a waiver by the Board of any such breach, failure,
refusal, act or omission by the Executive and any such breach, failure, refusal, act or
omission by the Executive shall not then be determined to be a breach of this Agreement. For
the avoidance of doubt and for the purpose of determining Cause, the exercise of business
judgment by the Executive shall not be determined to be Cause, even if such business judgment
materially injures the financial condition or business reputation of, or is otherwise
materially injurious to the Company or any Affiliate thereof, unless such business judgment
by the Executive was not made in good faith, or constitutes willful or wanton misconduct, or
was an intentional violation of state or federal law.



     (g) “Change in Control” means the occurrence during the Term of any of the following events:




     (i) the Company merges into itself, or is merged or consolidated with, another entity
and as a result of such merger or consolidation less than 51% of the voting power of the
then-outstanding voting securities of the surviving or resulting entity immediately after
such transaction are directly or indirectly beneficially owned in the aggregate by the former
stockholders of the Company immediately prior to such transaction;




     (ii) all or substantially all the assets accounted for on the consolidated balance sheet
of the Company are sold or transferred to one or more entities or persons, and as a result of
such sale or transfer less than 51% of the voting power of the then-outstanding voting
securities of such entity or person immediately after such sale or transfer is directly or
indirectly beneficially held in the aggregate by the former stockholders of the Company
immediately prior to such transaction or series of transactions;




     (iii) a person, within the meaning of Section 3(a)(9) or 13(d)(3) (as in effect on the
date of this Agreement) of the Securities Exchange Act of 1934, (the “Exchange Act”) becomes
the beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange Commission
pursuant to the Exchange Act) of 35% or more of the voting power of the then-outstanding
voting securities of the Company; provided, however, that the foregoing does not apply to any
such acquisition that is made by (w) any Affiliate of the Company; (x) any employee benefit
plan of the Company or any Affiliate; or (y) any person or group of which employees of the
Company or of any Affiliate control a greater than 25% interest unless the Board determines
that such person or group is making a “hostile acquisition;” or (z) any person or group that
directly or indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the Executive; or




     (iv) a majority of the members of the Board are not Continuing Directors, where a
“Continuing Director” is any member of the Board who (x) was a member of the Board on the
date of this Agreement or (y) was nominated for election or elected to such Board with the
affirmative vote of a majority of the Continuing Directors who were members of such Board at
the time of such nomination or election, provided that any director appointed or elected to
the Board to avoid or settle a threatened or actual proxy contest shall in no event be deemed
to be a Continuing Director.



     (h) “Code” means the Internal Revenue Code of 1986, as amended.



     (i) “Committee” means the Compensation Committee of the Board.



     (j) “Common Stock” means the Company’s common stock, par value $1.00 per share.



     (k) “Company” means the Company as hereinbefore defined.



     (l) “Disability” or “Disabled” means when the Executive has been totally disabled by bodily
injury or disease so as to prevent him from being physically able to perform the job duties as
required under this Agreement, and such total disability shall have continued for five (5)
consecutive months, and, in the opinion of a qualified physician selected by the Company (and
reasonably acceptable to the Executive), such disability will presumably be permanent and
continuous during the remainder of the Executive’s life. Notwithstanding the preceding sentence,
for any payment or benefit payable under this Agreement which is considered “deferred compensation”
subject to Section 409A of the Code, the payment or benefit shall not be payable to the Executive
solely by reason of a Disability unless such Disability is by reason of a medically determinable
physical or mental impairment that can be
expected to last for a continuous period of not less than twelve (12) months or to result in
death, and such Disability has caused the Executive to be either (i) unable to engage in any
substantial, gainful activity, or (ii) eligible to receive income replacement benefits under an
accident and health plan of the Company for a period of at last three (3) months.



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     (m) “Good Reason” means the occurrence of any of the following conditions, without the
Executive’s express, prior written consent in each case, provided that the Executive has provided
express written notice of the condition to the Company within ninety (90) days of the initial
existence of the condition and the Company has failed to remedy such breach within thirty (30) days
after its receipt of such written notice from the Executive:




     (i) a material (greater than 5%) reduction in the Executive’s Base Pay, other than as
part of a reduction applicable at the same time to executive officers of the Company
generally; provided, any such reduction applicable to other executive officers shall not for
the Executive exceed the percentage of reduction applicable to such other executive officers,
and thereafter such reduction shall cease to apply at the same time and to the same extent
(on a like percentage basis) as the reduction may cease to apply to such other executive
officers;




     (ii) a material breach by the Company of Section 2(a) or Section 4 of this Agreement,
including but not limited to, the assignment to the Executive of any duties inconsistent with
his status as President and Chief Executive Officer of the Company, or his removal from such
position, or a substantial alteration in the nature or status of his responsibilities from
those described herein (except, in each case, in connection with a promotion of the
Executive), or a change in Executive’s reporting relationship such that the Executive no
longer reports directly to the full Board, or the failure of the Executive to be elected or
reelected to the Board;




     (iii) the relocation of the office of the Company where the Executive is employed to a
location at least fifty (50) miles from Findlay, Ohio, except for required travel on the
Company’s business to an extent reasonably required to perform his duties hereunder;




     (iv) except as required by law, the Company directly or indirectly materially reducing
the level of benefits or award opportunities provided to the Executive under the Plans below
the level required by Section 4 of this Agreement, other than a reduction or change in such
benefits or opportunities applicable to executive officers of the Company generally or the
Company failing to provide the Executive with the number of paid vacation days to which he is
entitled on the basis of years of service with the Company in accordance with the Company’s
then current normal vacation policy for the Company’s senior executives;




     (v) the failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as required in Section 19 hereof or, if the
business of the Company for which the Executive’s services are principally performed is sold,
the failure of the purchaser of such business to assume this Agreement or to provide the
Executive with the same or a comparable position, duties, benefits, base salary and incentive
compensation as provided in Sections 2 and 4 of this Agreement; or




     (vi) the failure of the Board to elect the Executive to his existing position or an
equivalent position.


Any notification to be given by the Executive in accordance with Section 1(m) shall specifically
identify the breach or failure to which the notification relates, and such notification must be
given within ninety (90) days of the Executive becoming aware, or within ninety (90) days of when
the Executive should have reasonably become aware of, the breach or failure identified in the
notification. Notwithstanding Section 23 hereto, failure to notify the Company within any such
ninety (90) day period shall be deemed to be a waiver by the Executive of any such breach or
failure and any such breach or failure shall not then be considered “Good Reason.”




     (n) “Incentive Compensation Plan” means the Cooper Tire & Rubber Company 1998, 2001 and 2006
Incentive Compensation Plans, as amended, and any successor to such plans.



     (o) “Long-Term Performance-Based Incentive Compensation” means any cash or equity-based
compensation program in which the amounts paid, earned or vested are based upon achievement of
specified performance goals over a period of more than one year. For the avoidance of doubt, equity
awards that are earned, vest or become exercisable based solely upon continued employment and/or
the passage of time are not “Long-Term Performance-Based Incentive Compensation.”



     (p) “Nonqualified Supplementary Benefit Plan” means the Cooper Tire & Rubber Company
Nonqualified Supplementary Benefit Plan, effective November 8, 1984, as amended.



     (q) “Retirement Plans” means the Spectrum Retirement Plan and the Nonqualified Supplementary
Benefit Plan or any successor plans thereto which provide comparable benefits.



     (r) “Spectrum Retirement Plan” means the Cooper Tire & Rubber Company Spectrum Retirement
Plan, effective January 1, 2002, as amended.



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     (s) “Termination” means:




     (i) the involuntary termination of the Executive’s employment by the Company at any time
for any reason other than retirement, death, disability, Cause or the reason set forth in
subparagraph (iii) of this Section 1(s), or




     (ii) termination of the Executive’s employment by the Executive for Good Reason, or




     (iii) termination of the Executive’s employment at the end of the Term as a result of
the Company delivering a notice of non-extension pursuant to Section 3 prior to the
Executive’s 64th birthday.



     (t) “Termination Date” means the date on which the Executive’s employment with the Company is
terminated by the Company or the Executive for any reason or for no reason. If the Executive’s
employment is terminated by the Company, such date shall be specified in a written notice of
termination (which date shall be no earlier than the date of furnishing such notice), or if no such
date is specified therein, the date of receipt by the Executive of such written notice of
termination. The Executive shall specify such termination date in any written notice of his
resignation.



     (u) “1998 Option Plan” means the Cooper Tire & Rubber Company 1998 Employee Stock Option Plan,
as amended.


2. Employment and Duties.




     (a) General. The Company hereby employs the Executive and the Executive agrees upon the terms
and conditions herein set forth to serve as President and Chief Executive Officer, said employment
to commence on January 1, 2007, and, in such capacity, shall perform such duties as may be
delineated in the Bylaws of the Company, and such other duties, commensurate with the Executive’s
title and position of President and Chief Executive Officer, as may be assigned to the Executive
from time to time by the Board. The Executive shall report directly to the full Board. The Board
shall appoint the Executive as a member of the Board effective January 1, 2007.



     (b) Exclusive Services. Throughout the Term (as defined in Section 3), the Executive shall,
except as may from time to time be otherwise agreed in writing by the Company and during reasonable
vacations and unless prevented by ill health, devote his full-time and undivided attention during
normal business hours to the business and affairs of the Company consistent with his senior
executive position, shall in all respects conform to and comply with the lawful and reasonable
directions and instructions given to him by the Board (provided that such directions and
instructions are not inconsistent with Section 2(a)), and shall use his best efforts to promote and
serve the interests of the Company.



     (c) Restrictions on Other Employment. Throughout the Term and provided that such activities do
not contravene the provisions of Section 2(b) hereof or Section 15 hereof:




     (i) the Executive may engage in charitable and community affairs;




     (ii) the Executive may perform inconsequential services without specific compensation
therefore in connection with the management of personal investments; and




     (iii) the Executive may, directly or indirectly, render services to any other person or
organization (including service as a member of the Board of Directors of any other
unaffiliated company), for which he receives compensation, that is not in competition with
the Company, subject in each case to the prior written approval of the Board which approval
will not be unreasonably withheld. The Executive may retain all fees he receives for such
services, and the Company shall not reduce his compensation by the amount of such fees. For
purposes of this Section 2(c)(iii) competition shall have the same meaning as intended for
the purposes of Section 15.


3. Term of Employment. Subject to the provisions of Section 5 through Section 10 hereof,
the Company shall retain the Executive pursuant to this Agreement and the Executive shall serve in
the employ of the Company for a period (the “Term”) commencing on January 1, 2007 and continuing in
effect through December 31, 2009; provided, however, that on each January 1 after the commencement
of the Term until the year in which the Executive’s 64th birthday occurs, the Term shall
automatically be
extended for one additional year unless, no later than September 30 of the preceding year, the
Company or the Executive shall have given notice to the other that it does not wish to extend this
Agreement.



4. Compensation and Other Benefits. Subject to the provisions of this Agreement, the
Company shall pay and provide the following compensation and other benefits to the Executive during
the Term as compensation for services rendered hereunder:




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     (a) Base Pay. The Company shall pay to the Executive Base Pay at the rate of $700,000
per annum, payable biweekly. The Base Pay will be reviewed not less frequently than annually by the
Board or by the Committee.



     (b) Employee Benefit Plans. At all times during the Term, the Executive shall be
provided the opportunity to participate in the Cooper Tire & Rubber Company Spectrum Retirement
Plan as a Spectrum Participant and the Cooper Tire & Rubber Company Nonqualified Supplementary
Benefit Plan, and such employee pension and retirement benefit plans, whether or not qualified, and
employee welfare benefit or perquisite plans, programs and arrangements (collectively, the “Plans”)
as are, from time to time hereafter, based on the Executive’s date of hire, generally made
available to executives of the Company.



     (c) Annual Incentive Compensation. The Executive shall be eligible to participate in
such Annual Incentive Compensation programs or arrangements established from time to time for
executives of the Company. The Executive shall be eligible for a target award equal to 85% of Base
Pay and a maximum award equal to 170% of Base Pay under such Annual Incentive Compensation programs
or arrangements pursuant to the terms and conditions established therein, from time to time, for
executives of the Company. Notwithstanding the terms and conditions of the Annual Incentive
Compensation programs or arrangements established for the 2007 fiscal year, the Executive shall
receive an award of not less than 85% of Base Pay for Annual Incentive Compensation attributable to
the 2007 fiscal year payable on or before March 15, 2008 or as soon thereafter as practical (but in
no event later than December 31, 2008.



     (d) Long-Term Performance-Based Incentive Compensation. The Executive shall be
eligible to participate in such long-term performance-based incentive compensation plans and
programs as the Company generally provides from time to time to its senior executives.



     (e) Initial Restricted Stock Unit Award.




     (i) Grant. As of commencement of employment or as soon thereafter as may be
practicable, the Executive shall be awarded a grant of such number of restricted stock units
pursuant to the Company’s 2006 Incentive Compensation Plan (“Plan”) as equals the quotient of
(x) $4,000,000 divided by (y) the average closing price of one (1) share of Common Stock for
all trading days during the month of December 2006, each such unit representing a right to
receive one (1) share of Common Stock (the “Initial RSU Award” and each such restricted stock
unit a “Unit”) in accordance with such terms and conditions as may be determined by the
Board, consistent with the provisions of this Section 4(e).




     (ii) Vesting and Deferral. The Initial RSU Award shall vest on December 31, 2009
provided that, except as set forth in Sections 5, 6, 8 and 9, the Executive is continuously
employed by the Company through such date for such Initial RSU Award to so vest. The Initial
RSU Award (including both Units initially awarded under Section 4(e)(i) and dividend
equivalent Units provided under Section 4(e)(iii)) shall be payable in two installments:




     (X) the first such installment of vested Units shall be paid in shares of Common
Stock on the date following the date on which the Initial RSU Award vests (or as soon
thereafter as may be practical) in such number of shares as are equal to 75% of the
sum of the number of Units initially awarded under Section 4(e)(i) and dividend
equivalent Units provided under Section 4(e)(iii); and




     (Y) the second such installment of vested Units shall be paid in such number of shares of Common Stock on the Executive’s Termination Date or, for any termination not
resulting from the Executive’s death or Disability, such delayed payout date six
months and one day later as may be required to comply with Section 409A of the Code
pursuant to Section 24 of this Agreement equal to the Units attributable to the
Initial RSU Award (including Units attributable to dividend equivalents) that have not
been settled in accordance with clause (X) next above;




provided that, to the extent that the Termination Date occurs prior to December 31, 2009 and
the Units become vested by reason of the occurrence of a Termination, such vesting and
distribution will be subject to the applicable requirements of Section 5 or Section 6, as
applies, that the Executive sign a Release. For the avoidance of doubt, it is recited here
that, for purposes of this Agreement, the Initial RSU Award shall be treated as an award that
vests in a single sum; provided that this sentence shall not be construed to exclude other
awards being treated as awards that vest in a single sum.




     (iii) Dividend Equivalents. The Initial RSU Award shall provide for accrual of
dividend equivalents until the date of payment of such award, as follows. As of each dividend
date with respect to shares of Common Stock, a dollar amount equal to the amount of the
dividend that would have been paid on the number of shares of Common Stock equal to the
number of Units awarded under the Initial RSU Award held by the Executive as of the close of
business on the record date for such dividend shall be converted into a number of Units equal
to the number of whole and fractional shares of Common Stock that could have been purchased
at the closing price on the dividend payment date with such dollar amount, which Units shall
be subject to all terms and conditions applicable to Units under the Initial RSU Award. In
the case of any



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dividend declared on shares of Common Stock which is payable in shares of
Common Stock, the Executive shall be credited with an additional number of Units equal to the
product of (x) the number of his Units then held on the related dividend record date
multiplied by the (y) the number of shares of Common Stock (including any fraction thereof)
distributable as a dividend on a share of Common Stock; provided that in the event of a
dividend of stock of a subsidiary of the Company, or other similar event, the Initial RSU
Award shall be adjusted in the same manner and to the same extent as the adjustment to other
restricted stock or restricted stock unit awards held by executives of the Company.



     (f) Vacation. The Executive shall be entitled to paid annual vacation during the Term
in accordance with the Company’s then current vacation policy for the Company’s senior executives.



5. Termination Without Cause or for Good Reason or Non-Renewal of Term Prior to a Change in
Control.



     (a) Severance and Benefits. Upon a Termination prior to, or more than two (2) years
following, a Change in Control, the Company shall pay the Executive the amount set forth in Section
5(a)(i) and, subject to and conditioned upon the provisions of Section 24 and to the Executive’s
delivering to the Company the Release provided for in Section 16 with all periods for revocation
expired, the Company shall pay or provide to the Executive the amounts and benefits set forth in
Section 5(a)(ii) through 5(a)(iv):




     (ii) a single lump sum cash payment within thirty (30) days following the expiration of
such revocation period equal to the Executive’s then current Base Pay, to the extent unpaid,
through the date of the Executive’s Termination;




     (iii) lump sum cash payment within thirty (30) days following the expiration of such
revocation period equal to the pro-rated portion of the benefit payable under each Long-Term
Performance-Based Compensation award or program in which Executive participates (including,
without limitation, any performance-based restricted stock unit award); and




     (iv) a single lump sum in cash within thirty (30) days following the expiration of such
revocation period equal to the sum of (A) $75,000 plus (B)(I) two (2) times (II) the sum of
(x) the Executive’s Base Pay plus (y) the Average Annual Incentive Compensation; provided, if
such Termination occurs at any time on or prior to December 31, 2009 (other than a
Termination occurring at the end of the Term ending on December 31, 2009 as a result of the
Company delivering a notice of non-extension pursuant to Section 3), the amount set forth in
clause (B)(I) shall be equal to three (3); provided that, the portion (if any) of such lump
sum payment which may be paid immediately upon expiration of such revocation period shall be
limited to two (2) times the lesser of (i) the maximum limit on the annual compensation that
may be taken into account by a qualified retirement under Section 401(a)(17) of the Code for
the year which includes the date of Termination or (ii) the Executive’s annualized
compensation from the Company for the calendar year preceding the year of the Termination,
and the remainder of this lump sum payment shall not be paid to the Executive until the
delayed payment date prescribed by Section 24 below; and




     (v) for twenty-four (24) months following the Termination Date, the Company shall
provide the Executive with life, accident and health insurance benefits substantially similar
to those to which the Executive and the Executive’s family were entitled immediately prior to
the Termination, provided that, to the extent such health benefits are determined to be
taxable benefits by reason of Section 105(h) of the Code or otherwise, such health coverage
shall be limited to eighteen (18) months following the Termination Date. Thereafter the
Company shall provide retiree medical and life insurance coverage to the extent the Executive
is eligible for such benefits under the terms of the applicable Plans in effect immediately
prior to the Termination. Benefits otherwise receivable by the Executive pursuant to this
Section 5(a)(iiiiv) shall be reduced to the extent the Executive is eligible to receive
comparable benefits from other employment, and any such benefits eligibility shall be
reported to the Company.



     (b) Time-Vested Restricted Stock Units. Subject to and conditioned upon the
Executive’s delivering to the Company the Release provided for in Section 16 with all periods for
revocation expired, the Initial RSU Award (including dividend equivalents credited thereon pursuant
to Section 4(e)(iii)), if then unvested, shall fully vest immediately upon Termination and shall be
payable in accordance with Section 4(e)(ii). Notwithstanding any provision in any award agreement
between the Company and the Executive or this Section 5, subject to and conditioned upon the
Executive’s delivering to the Company the Release provided for in Section 16
with all periods for revocation expired, (i) all restricted stock units granted to the
Executive, other than the Initial RSU Award, that vest based solely upon the Executive’s continued
employment with the Company and which have not otherwise vested shall vest and shall be payable in
accordance with the terms of the particular award under which they were granted; provided, any
outstanding restricted stock unit award that vests in a single sum determined solely on the basis
of the Executive’s continuous employment through a stated vesting date shall vest as to such number
of restricted stock units on the date of the Executive’s Termination as equals the fraction the
numerator of which is the number of full months (based on the monthly “anniversary” date of the
award) so continuously employed from the first day of such vesting period through the Termination
Date and the denominator of which is the total number of months comprising the vesting period of
such award; and (ii) for all such restricted stock units (other than the Initial RSU Award), within
five (5) days after the Termination Date, the Company shall either (1) pay to the Executive an
amount equal to the fair market value



- 7 -









 







(computed as the average of the high and low trades reported
on the New York Stock Exchange) of the Common Stock represented by such vested restricted stock
units determined as of the Termination Date, or (2) issue Common Stock under such vested awards to
the Executive. Any such cash payment shall be deemed to be in lieu of and in substitution for any
right the Executive may have to such vested restricted stock units under the terms of any award
agreement between the Company and the Executive, and the Executive agrees to surrender all such
vested restricted stock units being cashed out hereunder immediately prior to receiving the cash
payment described above. For purposes hereunder, the term “restricted stock unit” should be read to
include all other similar equity instruments (other than the Initial RSU Award), including, but not
limited to, restricted stock.



     (c) Stock Options. Subject to and conditioned upon the Executive’s delivering to the
Company the Release provided for in Section 16 with all periods for revocation expired and
notwithstanding any provision in the Incentive Compensation Plan, the 1998 Option Plan, other
relevant plan or program or this Section 5:




     (i) for a period of ninety (90) days following the date of the Executive’s Termination
(or such longer period as may be set forth in the applicable stock option plan or award
agreement), but not later than the expiration of the stated option term under the award, all
stock options granted to the Executive by the Company that are both outstanding and vested
immediately prior to Termination (in accordance with their then existing terms and this
Section 5(c)) shall remain outstanding and exercisable, after which all such stock options
that have not been exercised shall immediately terminate; and




     (ii) all stock options granted to the Executive by the Company which have not otherwise
vested shall be forfeited immediately upon Termination; provided, any outstanding unvested
stock option award that vests in a single sum determined solely on the basis of the
Executive’s continuous employment through a stated vesting period of more than one (1) year
shall vest as to such number of stock options stock on the date of the Executive’s
Termination as equals the fraction the numerator of which is the number of full months (based
on the monthly “anniversary” date of the award) so continuously employed from the first day
of such vesting period through the Termination Date and the denominator of which is the total
number of months comprising the vesting period of such award, and such vested options shall
remain outstanding and exercisable thereafter for a period of ninety (90) days following the
date of the Executive’s Termination (or such longer period as may be set forth in the
applicable stock option plan or award agreement), but not later than the expiration of the
stated option term under the award, after which all such stock options that have not been
exercised shall immediately terminate.


For purposes hereunder, the term “stock option” also means all other similar equity instruments,
including, but not limited to, stock appreciation rights.




     (d) Section 409A. Notwithstanding anything herein to the contrary, in no event shall
amounts in respect of any restricted stock units or other stock rights that, as determined by the
Company, provides for the “deferral of compensation” (as such term is defined under Section 409A of
the Code and the regulations and other Treasury Department guidance promulgated thereunder
(collectively, “Section 409A”)), be distributed pursuant to Section 5(b) or Section 5(c) prior to
the occurrence of the earlier of either (i) the Termination Date (or such later date required under
Section 24), (ii) the Executive’s death or “Disability” (as such term is defined under Section 409A
and in Section 1(l) above), (iii) a “change in the ownership or effective control” of the Company
or in the “ownership of a substantial portion of the assets” of the Company (each as defined under
Section 409A), or (iv) the specified time or fixed schedule as may be elected by the Executive in
accordance with the applicable plan or arrangement and Section 409A. This Section 5(d) shall not
apply to any stock options which are not considered deferred compensation subject to Section 409A
pursuant to Treasury Regulation Section 1.409A-1(b)(5).


6. Severance and Other Benefits Upon or Following a Change in Control.




     (a) Severance and Benefits. Upon a Termination that occurs at any time during the
period commencing on the occurrence of a Change in Control and ends on the second anniversary of
such Change in Control, the Company shall pay the Executive the amount set forth in Section 6(a)(i)
and, subject to and conditioned upon the provisions of Section 24 and to the
Executive’s delivering to the Company the Release provided for in Section 16 with all periods
for revocation expired, the Company shall pay or provide to the Executive the amounts and benefits
set forth in Section 6(a)(ii), 6(a)(iii) and 6(a)(iv):




     (i) a single lump sum cash payment within five (5) days following the expiration of such
revocation period equal to the Executive’s then current Base Pay, to the extent unpaid,
through the date of the Executive’s Termination, plus




     (ii) a lump sum cash payment within five (5) days following the expiration of such
revocation period equal to the pro-rated portion of the benefit payable under each Long-Term
Performance-Based Compensation award or program in which Executive participates (including,
without limitation, any performance-based restricted stock unit award); and



- 8 -









 






     (iii) a single lump sum in cash within thirty (30) days following the expiration of such
revocation period equal to the sum of (A) $75,000 plus (B)(I) two (2) times (II) the sum of
(x) the Executive’s Base Pay plus (y) the Average Annual Incentive Compensation; provided, if
such Termination occurs at any time on or prior to December 31, 2009 (other than a
Termination occurring at the end of the Term ending on December 31, 2009 as a result of the
Company delivering a notice of non-extension pursuant to Section 3), the amount set forth in
clause (B)(I) shall be equal to three (3); provided that, the portion (if any) of such lump
sum payment which may be paid immediately upon the expiration of such revocation period shall
be limited to two times the lesser of (i) the maximum limit on the annual compensation that
may be taken into account by a qualified retirement under Section 401(a)(17) of the Code for
the year which includes the date of Termination or (ii) the Executive’s annualized
compensation from the Company for the calendar year preceding the year of the Termination,
and the remainder of this lump sum payment shall not be paid to the Executive until the
delayed payment date prescribed by Section 24 below; and




     (iv) for twenty-four (24) months following the Termination Date, the Company shall
provide the Executive with life, accident and health insurance benefits substantially similar
to those to which the Executive and the Executive’s family were entitled immediately prior to
the Termination, provided that, to the extent such health benefits are determined to be
taxable by reason of Section 105(h) of the Code or otherwise, such health coverage shall be
limited to eighteen (18) months following the Termination Date, and thereafter the Company
shall provide retiree medical and life insurance coverage to the extent the Executive is
eligible for such benefits under the terms of the applicable Plans in effect immediately
prior to the Termination. Benefits otherwise receivable by the Executive pursuant to this
Section 6(a)(iv) shall be reduced to the extent the Executive is eligible to receive
comparable benefits from other employment, and any such benefits eligibility shall be
reported to the Company.


For purposes of Sections 5(a)(ii), 6(a)(ii), 8(a), 9(a) and 10, the “pro-rated portion of the
benefit payable” under a compensation arrangement shall be an amount pro-rated based upon the
number of full months (based on the monthly “anniversary” date of the first day of the performance
period) between the beginning of the year or other performance period and the Termination Date
relative to the total number of months in the year or in the applicable performance period, and the
amount that is so pro-rated shall be, for an amount or benefit that is payable, earned and/or
vested based solely on the achievement of objective performance criteria, based on actual
performance through the end of the most recent fiscal quarter prior to the Termination Date.




     (b) Time-Vested Restricted Stock Units. Notwithstanding any provision in any award
agreement between the Company and the Executive or this Section 6, and subject to and conditioned
upon the Executive’s delivering to the Company the Release provided for in Section 16 with all
periods for revocation expired, (i) upon a Termination that occurs upon the date of the Change in
Control or thereafter on or before the second anniversary of the date of the Change in Control, all
restricted stock units granted to the Executive that vest based solely upon the Executive’s
continuous employment with the Company through a stated vesting date, including, without
limitation, the Initial RSU Award (including dividend equivalents credited thereon pursuant to
Section 4(e)(iii)), if then unvested, shall fully vest immediately upon Termination and shall be
payable in accordance with the terms thereof (the Initial RSU Award shall be payable in accordance
with Section 4(e)(ii)); provided, such restricted stock units shall vest immediately upon the
consummation of a Change in Control if the successor to the Company has not assumed (expressly or
impliedly) the Company’s obligations under the applicable restricted stock unit award or plan
document or issued to the Executive a substitute equity-based award of equivalent value on no less
favorable terms for vesting or payment as provided under the restricted stock unit award so
replaced (including, without limitation, the Initial RSU Award); and (ii) within five (5) days
after the Termination Date, the Company shall either (1) pay to the Executive an amount equal to
the fair market value (computed as the average of the high and low trades reported on the New York
Stock Exchange) of the Common Stock represented by such vested restricted stock units (other than
the Initial RSU Award) determined as of the Termination Date, or (2) issue Common Stock under such
vested awards to the Executive. Any such cash payment shall be deemed to be in lieu of and in
substitution for any right the Executive may have to such vested restricted stock units under the
terms of any award agreement between the Company and the Executive, and the Executive agrees to
surrender all such vested restricted stock units being cashed out hereunder immediately prior to
receiving the cash payment described above. For purposes hereunder, the term “restricted stock
unit” should be read to include all other similar equity instruments s (other than the Initial RSU
Award), including, but not limited to, restricted stock.



     (c) Stock Options. Subject to and conditioned upon the Executive’s delivering to the
Company the Release provided for in Section 16 with all periods for revocation expired and
notwithstanding any provision in the Incentive Compensation Plan, the 1998 Option Plan, other
relevant plan or program or this Section 6, all stock options granted to the Executive by the
Company which have not otherwise vested shall vest immediately upon a Termination that occurs upon
the date of the Change in Control or thereafter on or before the second anniversary of the Change
in Control and such vested stock options shall remain exercisable for a period of ninety (90) days
following the Termination Date (or such longer period as may be set forth in the applicable stock
option plan or award agreement), but not later than the expiration of the stated option term;
provided, however, such stock options shall vest immediately upon the consummation of a Change in
Control if the successor entity has not either assumed (expressly or impliedly) the Company’s
obligations under the applicable option award or plan document or issued to the Executive a
substitute stock option award of equivalent value on no less favorable terms for vesting or payment
as provided under the stock option award so replaced; provided



- 9 -









 







further that, subject to Section
6(d), within five (5) days after all periods for revocation have expired in the Release provided
for in Section 16, the Company may, at its election, pay to the Executive in cash an amount equal
to the aggregate of the difference between the exercise price of each stock option granted to the
Executive prior to the consummation of the Change in Control that remains outstanding and
unexercised at the time of Termination, and the fair market value (computed as the average of the
high and low trades reported on the New York Stock Exchange) of the Common Stock subject to the
option, determined as of the Termination Date. Such cash payment shall be deemed to be in lieu of
and in substitution for any right the Executive may have to exercise such stock option or a related
stock appreciation right under the terms of the relevant stock option plan describing such rights,
and the Executive agrees to surrender all stock options and related stock appreciation rights being
cashed out hereunder prior to receiving the cash payment described above. For purposes hereunder,
the term “stock option” should be read to include all other similar equity instruments, including,
but not limited to, stock appreciation rights.



     (d) Section 409A. Notwithstanding anything herein to the contrary, in no event shall
amounts in respect of any restricted stock units or other stock rights that, as determined by the
Company, provides for the “deferral of compensation” (as such term is defined under Section 409A)
be distributed pursuant to Section 6(b) or Section 6(c) prior to the occurrence of the earlier of
either (i) the Termination Date (or such later date required under Section 24), (ii) the
Executive’s death or “Disability” (as such term is defined under Section 409A or Section 1(l)
above), (iii) a “change in the ownership or effective control” of the Company or in the “ownership
of a substantial portion of the assets” of the Company (each as defined under Section 409A), or
(iv) the specified time or fixed schedule as may be elected by the Executive in accordance with the
applicable plan or arrangement and Section 409A. This Section 6(d) shall not apply to any stock
options which are not considered deferred compensation subject to Section 409A pursuant to Treasury
Regulation Section 1.409A-1(b)(5).


7. Termination for Cause or Without Good Reason. If, prior to the expiration of the Term,
the Executive’s employment is terminated by the Company for Cause, or if the Executive terminates
his employment hereunder without Good Reason, the Executive shall not be eligible to receive Base
Pay under Section 4(a) or to participate in any Plans under Section 4(b) with respect to periods
after the Termination Date, and except as otherwise provided by applicable law, and except for the
right to receive vested benefits under any Plan in accordance with the terms of such Plan.



8. Termination by Death. If the Executive dies prior to the expiration of the Term, the
Executive’s designated beneficiaries (and, with respect to amounts payable under Section 8(a), the
Executive’s estate if he has not designated any beneficiaries) shall be entitled to:





     (a) receive a lump sum cash payment within thirty (30) days following the Termination
Date equal to the Executive’s then current Base Pay, to the extent unpaid, through the
Termination Date;




     (b) receive a lump sum cash payment within thirty (30) days following the Termination
Date equal to the full target bonus for the year in which termination occurs under the Annual
Incentive Compensation program in which the Executive participates and the pro-rated portion
of the benefit payable under each Long-Term Performance-Based Incentive Compensation award or
program in which the Executive participates (including, without limitation, any
performance-based restricted stock unit award);




     (c) for twenty-four (24) months following the Termination Date, receive non-taxable
health insurance benefits substantially similar to those to which the Executive’s family were
entitled immediately prior to the Executive’s death (which coverage shall not be counted
toward the period of coverage that the Company must provide in accordance with COBRA), and
thereafter any continuation coverage the Executive’s covered beneficiaries are entitled to
under COBRA; and




     (d) to the extent not already vested, immediate vesting of the Initial RSU Award
(including dividend equivalents credited thereon pursuant to Section 4(e)(iii)) and payment
of that portion of the initial RSU Award not
previously paid, to be paid to the Executive promptly after the Termination Date,
without regard to the delayed payment prescribed by Section 24 below.


9. Termination by Disability. If, prior to the expiration of the Term, the Executive
becomes Disabled, the Company or the Executive shall be entitled to terminate his employment, and
the Executive shall be entitled to:





     (a) receive a lump sum cash payment within thirty (30) days following the Termination
Date equal to the Executive’s then current Base Pay, to the extent unpaid, through the
Termination Date;




     (b) receive a lump sum cash payment within thirty (30) days following the Termination
Date equal to the full target annual bonus for the year in which termination occurs under the
Annual Incentive Compensation program in which the Executive participates and the pro-rated
portion of the benefit payable under each Long-Term Performance-Based Incentive



- 10 -









 







Compensation
award or program in which the Executive participates (including, without limitation, any
performance-based restricted stock unit award);




     (c) for twenty-four (24) months following the Termination Date, receive life, accident
and health insurance benefits substantially similar to those to which the Executive and the
Executive’s family were entitled immediately prior to the Termination Date (which coverage
shall not be counted toward the period of coverage that the Company must provide in
accordance with COBRA), provided that, to the extent such health benefits are determined to
be taxable by reason of Section 105(h) of the Code or otherwise, such health coverage shall
be limited to eighteen (18) months following the Termination Date unless the Executive has
provided the Company with evidence that he has received a Social Security disability award,
and thereafter any continuation coverage the Executive and/or his covered beneficiaries are
entitled to under COBRA; and




     (d) to the extent not already vested, immediate vesting of the Initial RSU Award
(including dividend equivalents credited thereon pursuant to Section 4(e)(iii)) and payment
of that portion of the initial RSU Award not previously paid, to be paid to the Executive
promptly after the Termination Date, without regard to the delayed payment prescribed by
Section 24 below.


10. Termination by Retirement. If, prior to the expiration of the Term, the Executive
voluntarily elects to retire under Article B-I of the Spectrum Retirement Plan, the Executive’s
employment will be terminated as of the date of such retirement and the Executive shall be entitled
to a single lump sum cash payment within thirty (30) days following the Termination Date equal to
the Executive’s then current Base Pay, to the extent unpaid, through the Termination Date, plus an
additional lump sum cash payment within thirty (30) days following the Termination Date equal to
the pro-rated portion of the benefit payable under each Annual Incentive Compensation program and
Long-Term Performance-Based Incentive Compensation award or program in which the Executive
participates (including, without limitation, any performance-based restricted stock unit award).
All stock options (or similar equity instruments, including, but not limited to stock appreciation
rights) granted to the Executive by the Company that are both outstanding and vested immediately
prior to the Termination Date (in accordance with their then existing terms) shall remain
outstanding and exercisable for such period as set forth in the applicable stock option plan or
award agreement, after which all such stock options that have not been exercised shall immediately
terminate.



11. Funding Upon Potential Change in Control.




     (a) Upon the earlier to occur of (i) a Change in Control or (ii) a declaration by the Board
that a Change in Control is imminent, the Company shall promptly pay to the extent it has not done
so, and in any event within five (5) business days, a sum equal to the present value on the date of
the Change in Control (or on such fifth business day if the Board has declared a Change in Control
to be imminent) of the payments to be made to the Executive under the provisions of Sections 6 and
12 hereof, which shall be transferred to National City Bank (the “Trustee”) and added to any
principal of the Trust under a Master Grantor Trust Agreement, dated November 9, 2001 between the
Company and Trustee (the “Trust Agreement”).



     (b) Any payments of compensation, pension, severance or other benefits by the Trustee pursuant
to the Trust Agreement shall, to the extent thereof, discharge the Company’s obligation to pay
compensation, pension, severance and other benefits hereunder, it being the intent of the Company
that assets in such Trust be held as security for the Company’s obligation to pay compensation,
pension, severance and other benefits under this Agreement.



12. Certain Additional Payments by the Company.



     (a) In the event it shall be determined (as hereafter provided) that any payment, benefit or
distribution or combination thereof (other than the Gross-Up Payments provided for in this Section
12) from the Company, any affiliate, or trusts established by
the Company or by any affiliate thereof to the Executive or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, performance share, performance unit, stock
appreciation right or similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code (or any successor provision thereto), or any similar tax
imposed by state or local law or any interest or penalties with respect to such tax (such tax or
taxes, together with any such interest and penalties, being hereafter collectively referred to as
the “Excise Tax”), then the Executive shall be entitled to receive an additional payment or
payments (collectively, a “Gross-Up Payment”); provided, however, that no Gross-Up Payment shall be
made with respect to the Excise Tax, if any, attributable to (i) any incentive stock option
(“ISO”), as defined by Section 422 of the Code (or any successor provision thereto) granted prior
to the execution of this Agreement where the addition of a Gross-Up Payment would cause the ISO to
lose such status, or (ii) any stock appreciation or similar right, whether or not limited, granted
in tandem with any ISO described in clause (i). The Gross-Up Payment shall be in an amount such
that, after payment by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.



- 11 -









 







Notwithstanding the foregoing, to the extent that amounts are characterized as Payments by reason
of accelerated vesting or payment that results from the Executive’s termination of employment, the
right to the Gross-Up Payment shall be contingent on the Executive entering into a Release as
described in Section 16.



     (b) Subject to the provisions of Section 12(f), all determinations required to be made under
this Section 12, including whether an Excise Tax is payable by the Executive and the amount of such
Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to the Executive
and the amount of such Gross-Up Payment, if any, shall be made by a nationally recognized
accounting firm (the “Accounting Firm”) selected by the Company in its sole discretion. The
Accounting Firm shall submit its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the Termination Date, if applicable, and
any such other time or times as may be requested by the Company or the Executive. If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the Company shall pay the required
Gross-Up Payment to the Executive within five (5) business days after receipt of such determination
and calculations with respect to any Payment to the Executive . If the Accounting Firm determines
that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Company and the Executive a written statement that the Executive has
substantial authority not to report any Excise Tax on his federal, state or local income or other
tax return. As a result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty regarding applicable state
or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have been made (an
“Underpayment”), consistent with the calculations required to be made hereunder. In the event that
the Company exhausts or fails to pursue its remedies pursuant to Section 12(f) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as possible. Any such Underpayment
shall be promptly paid by the Company to, or for the benefit of, the Executive within five (5)
business days after receipt of such determination and calculations.



     (c) The Company and the Executive shall each provide the Accounting Firm access to and copies
of any books, records and documents in the possession of the Company or the Executive, as the case
may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and calculations
contemplated by Section 12(b). Any determination by the Accounting Firm as to the amount of the
Gross-Up Payment shall be binding upon the Company and the Executive.



     (d) The federal, state and local income or other tax returns filed by the Executive shall be
prepared and filed on a consistent basis with the determination of the Accounting Firm with respect
to the Excise Tax payable by the Executive. The Executive shall make proper payment of the amount
of any Excise Payment, and at the request of the Company, provide to the Company true and correct
copies (with any amendments) of his federal income tax return as filed with the Internal Revenue
Service and corresponding state and local tax returns, if relevant, as filed with the applicable
taxing authority, and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive’s federal income tax return, or corresponding
state or local tax return, if relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive shall within five (5) business days pay to the
Company the amount of such reduction.



     (e) The fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by Section 12(b) shall be borne by the Company. If
such fees and expenses are initially paid by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five (5) business days after receipt
from the Executive of a statement therefore and reasonable evidence of his payment thereof.



     (f) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service or any other taxing authority that, if successful, would require the payment by the Company
of a Gross-Up Payment. Such notification shall be given as promptly as practicable but no later
than ten (10) business days after the Executive actually receives notice of such claim and the
Executive shall further apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid (in each case, to the extent known by the Executive). The Executive
shall not pay such claim prior to the earlier of (i) the expiration of the 30-calendar-day period
following the date on which he gives such notice to the Company and (ii) the date that any payment
of amount with respect to such claim is due. If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the Executive shall:




     (i) provide the Company with any written records or documents in his possession relating
to such claim reasonably requested by the Company;




     (ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including without limitation accepting legal
representation with respect to such claim by an attorney competent in respect of the subject
matter and reasonably selected by the Company;



- 12 -









 






     (iii) cooperate with the Company in good faith in order to effectively contest such
claim; and




     (iv) permit the Company to participate in any proceedings relating to such claim;


provided, however, that the Company shall bear and pay directly all costs and expenses (including
interest and penalties) incurred in connection with such contest and shall indemnify and hold
harmless the Executive, on an after-tax basis, for and against any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limiting the foregoing provisions of this Section 12(f),
the Company shall control all proceedings taken in connection with the contest of any claim
contemplated by this Section 12(f) and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in respect
of such claim (provided, however, that the Executive may participate therein at his own cost and
expense) and may, at its option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the Company shall
advance the amount of such payment to the Executive on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income or other tax,
including interest or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which the contested amount is claimed
to be due is limited solely to such contested amount. Furthermore, the Company’s control of any
such contested claim shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority.




     (g) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 12(f), the Executive receives any refund with respect to such claim, the Executive shall
(subject to the Company’s complying with the requirements of Section 12(f)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited thereon after any
taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 12(f), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of thirty (30) calendar days
after such determination, then such advance shall be forgiven and shall not be required to be
repaid and the amount of any such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid by the Company to the Executive pursuant to this Section 12.



     (h) Notwithstanding the foregoing provisions of this Section 12, if the Accounting Firm
determines that, absent this sentence, the Executive is entitled to a Gross-Up Payment, but that
the portion of the Payments that would be treated as “parachute payments” under Code Section 280G
(the “Parachute Payments”) does not exceed 110% of the greatest amount of Parachute Payments that
could be paid to the Executive such that the receipt of such Parachute Payments would not give rise
to any Excise Tax (the “Safe Harbor Amount”), then no Gross-Up Payment shall be paid to the
Executive (unless for any reason the Executive is determined to be subject to the Excise Tax after
application of the balance of this sentence, in which case the full Gross-Up Payment shall be
paid), and the Parachute Payments shall be reduced so that the Parachute Payments, in the
aggregate, are reduced to the Safe Harbor Amount. As soon as practicable, the Company shall notify
the Executive of any intent to reduce the amount of any Payments in accordance with this Section
12(h), and the Executive shall have the right to designate which of the Payments shall be reduced
and to what extent, provided that the Executive may not so elect to the extent that, in the
determination of the Company, such election would cause the Executive to be subject to the Excise
Tax.


13. Mitigation. Nothing in this Agreement shall be construed to require the Executive to
mitigate his damages upon termination of employment without Cause or for Good Reason. The Company
hereby acknowledges that it will be difficult and may be impossible for the Executive to find
reasonably comparable employment following the Termination Date and that the non-competition
covenant contained in Section 15 will further limit the employment opportunities for the Executive.
In addition, the Company acknowledges that its severance pay plans applicable in general to its
salaried employees do not provide for mitigation, offset or reduction of any severance payment
received thereunder. Accordingly, the payment of the severance compensation by the Company to the
Executive in accordance with the terms of this Agreement is hereby acknowledged by the Company to
be reasonable, and the Executive will not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor will any profits,
income, earnings or other benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive hereunder or otherwise, except as
provided in Sections 5(a)(iii) and 6(a)(iv); provided, to the extent that the Executive becomes
entitled to any payments, benefits or other entitlements pursuant to any severance payable in
connection with a severance or change in control severance plan, program or policy made available
to other employees of the Company, any amounts payable by the Company pursuant to any of Sections
5, 6, 7, 8, 9 or 10, shall be offset by such severance payments.



14. Legal Fees and Expenses.




- 13 -









 








     (a) Agreement Negotiation. The Company shall reimburse the Executive for up to $25,000
of reasonable attorneys’ fees incurred by the Executive in connection with the negotiation and
preparation of this Agreement, subject to submission to the Company of appropriate supporting
invoices. If applicable, any such reimbursement shall be grossed up for tax purposes.



     (b) Dispute Related to this Agreement. It is the intent of the Company that the
Executive not be required to incur legal fees and the related expenses associated with the
interpretation, enforcement or defense of the Executive’s rights under this Agreement by litigation
or otherwise because the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder. Accordingly, if it should appear to the
Executive that the Company has failed to comply with any of its obligations under this Agreement or
in the event that the Company or any other person takes or threatens to take any action to declare
this Agreement void or unenforceable, or institutes any litigation or other action or proceeding
designed to deny, or to recover from, the Executive the benefits provided or intended to be
provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to
time to retain counsel of the Executive’s choice, at the expense of the Company as hereafter
provided, to advise and represent the Executive in connection with any such interpretation,
enforcement or defense. Notwithstanding any existing or prior attorney-client relationship between
the Company and such counsel, the Company irrevocably consents to the Executive’s entering into an
attorney-client relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the Executive and such
counsel. The Company will pay and be solely financially responsible for any and all reasonable
attorneys’ and related fees and reasonable expenses incurred by the Executive in connection with
any of the foregoing; provided that, in regard to such matters, the Executive has not failed to
prevail in at least one asserted claim, has not acted frivolously, in bad faith or with no
colorable claim, and has not asserted a claim in violation of the Release.


15. Secrecy and Non-Competition.




     (a) No Competing Employment. For so long as the Executive is employed by the Company
and continuing for two (2) years after the Termination Date for any reason (the “Non-Compete
Period”), the Executive shall not, unless he receives the prior written consent of the 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 in by
the Company or any Affiliate at the time of the termination of the Executive’s employment hereunder
(such businesses are herein after referred to as the “Business”), or assist, become interested in
or be connected with any corporation, firm, partnership, joint venture, sole proprietorship or
other entity which so competes with the Business. The restrictions imposed by this Section 15(a)
shall not apply to any geographic area in which neither the Company nor any Affiliate is engaged in
the Business.



     (b) No Interference. During the Non-Compete Period, the Executive shall not, whether
for his own account or for the account of any other individual, partnership, firm, corporation or
other business organization or entity (other than the Company), intentionally solicit, endeavor to
entice away from the Company or any Affiliate or otherwise interfere with the relationship of the
Company or any Affiliate with, any person who is employed by or associated with the Company or any
Affiliate (including, but not limited to, any independent sales representatives or organizations)
or any person or entity who is, or was within the then most recent 12-month period, a customer or
client of the Company or any Affiliate.



     (c) Secrecy. The Executive recognizes that the services to be performed by him
hereunder are special, unique and extraordinary in that, by reason of his employment hereunder and
his past employment with the Company, he may acquire or has acquired confidential information and
trade secrets concerning the operation of the Company or any Affiliate, the use or disclosure of
which could cause the Company substantial loss and damages which could not be readily calculated
and for which no remedy at law would be adequate. Accordingly, the Executive covenants and agrees
with the Company that he will not at any time, except in performance of the Executive’s obligations
to the Company hereunder or with the prior written consent of the Board, directly or indirectly,
disclose any secret or confidential information that he may learn or has learned by reason of his
association with the Company or any Affiliate, or use any such information to the detriment of the
Company or any Affiliate. The term “confidential information”, includes, without limitation,
information not previously disclosed to the public or to the trade by the Company’s management with
respect to the Company’s or any Affiliate’s products, manufacturing processes, facilities and
methods, research and development, trade secrets, know-how and other intellectual property,
systems, procedures, manuals, confidential reports, product price lists, customer lists, marketing
plans or strategies, financial information (including the revenues, costs or profits associated
with the Company’s or any Affiliate’s products), business plans, prospects or opportunities. The
Executive understands and agrees that the rights and obligations set forth in this Section 15(c)
are perpetual and, in any case, shall extend beyond the Non-Compete Period and the Executive’s
employment hereunder.



     (d) Exclusive Property. The Executive confirms that all confidential information is
and shall remain the exclusive property of the Company. All business records, papers and documents
kept or made by the Executive relating to the business of the Company shall be and remain the
property of the Company. Upon the termination of his employment with the Company or upon the



- 14 -









 







request of the Company at anytime, the Executive shall promptly deliver to the Company, and shall
not, without the consent of the Board (which consent shall not be unreasonably withheld), retain
copies of, any written materials not previously made available to the public, records and documents
made by the Executive or coming into his possession concerning the business or affairs of the
Company excluding records relating exclusively to the terms and conditions of his employment
relationship with the Company; provided, however, that the Executive shall be entitled to retain a
copy of any rolodex or other compilation maintained by him of the names of business contacts with
their addresses, telephone numbers and similar information. The Executive understands and agrees
that the rights and obligations set forth in this Section 15(d) are perpetual and, in any case,
shall extend beyond the Non-Compete Period and the Executive’s employment hereunder.



     (e) Stock Ownership. Other than as specified in Section 2(c) or 15(a) hereof, nothing
in this Agreement shall prohibit the Executive from acquiring or holding any issue of stock or
securities of any company or other business entity.



     (f) Injunctive Relief. Without intending to limit the remedies available to the
Company, executive acknowledges that a breach of any of the covenants contained in this Section 15
may result in material irreparable injury to the Company for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining the Executive from
engaging in activities prohibited by this Section 15 or such other relief as may be required to
specifically enforce any of the covenants in this Section 15.



     (g) Extension of Non-Compete Period. In addition to the remedies the Company may seek
and obtain pursuant to Section 15(f), the Non-Compete Period shall be extended by any and all
periods during which the Executive shall be found by a court possessing personal jurisdiction over
him to have been in violation of the covenants contained in this Section 15.


16. Release. The receipt of payments provided for in Section 5, Section 6 and Section 12 is
conditioned upon the Executive executing and delivering a release substantially in the form of
Annex A hereto, and upon the expiration of the revocation period provided for in Annex A; provided
that payments under Section 12 shall be subject to this Section 16 only to the extent required by
Section 12(a).



17. Breach; Reimbursement.




     (a) In addition to the remedies provided for in Section 15(f), in the case of a breach of any
of Section 15(a), Section 15(b) or Section 15(c) of this Agreement, the Company may immediately
suspend payment or provision of all remaining payments and benefits described in Section 5, Section
6 or Section 12 of this Agreement, and terminate all remaining payments and benefits described in
Section 5, Section 6 or Section 12 of this Agreement and obtain reimbursement from the Executive of
all payments by the Company already provided pursuant to Section 5, Section 6 or Section 12 of this
Agreement, plus any expenses, fees and damages incurred as a result of the breach; provided, the
Board shall give the Executive a written notice (that provides detail as to the contractual and
factual basis for the alleged breach of Section 15(a), 15(b) or 15(c)) (the “Notice”) and, within
thirty (30) days after the date of the Notice, an opportunity for the Executive to appear before
the Board with counsel to respond and/or, at the Executive’s option, to present to the Board a
written response to the Notice (the opportunity to appear with counsel and/or provide a written
response within thirty (30) days of the date of the Notice is hereafter referred to as a
“Hearing”), and after due consideration
of the Executive’s appearance and/or written response, a majority of the Board specifically
determines that the acts or omissions that gave rise to the alleged breach actually occurred as
described in the Notice and that such acts or omissions constitute a breach of Section 15(a), 15(b)
or 15(c), as applicable.



     (b) In the event that the Company issues restated or reclassified annual financial statements
after the Termination Date that reflect a reduction in previously published financial results and
such restatement or reclassification is attributable, in whole or in material part, directly or
indirectly, to the malfeasance or gross negligence of the Executive, the Company may, at its sole
option, immediately suspend payment or provision of all remaining payments and benefits described
in Section 5, Section 6 or Section 12 of this Agreement, and terminate all remaining payments and
benefits described in Section 5, Section 6 or Section 12 of this Agreement and obtain reimbursement
from the Executive of all payments by the Company already provided pursuant to Section 5, Section 6
or Section 12 of this Agreement; provided that the Board provides the Executive Notice (that
provides detail as to the contractual and factual basis for the suspension of payments and benefits
by the Company and, if applicable, for the claim for reimbursement of previously paid amounts) and
a Hearing, and that a majority of the Board (excluding any directors who have been recused from
such determination due to a conflict of interest) specifically determines, after due consideration
of the Executive’s appearance and/or written response to the Notice, that the acts or omissions
specified in the Notice occurred and that such acts or omissions constitute malfeasance or gross
negligence of the Executive with respect to which the issuance of such restated or reclassified
annual financial statements is attributable, in whole or material part, which determination shall
not be unreasonably delayed. In the event that the Company issues restated or reclassified annual
financial statements, regardless of whether before or after the Termination Date, that reflect a
reduction in previously published financial results as a result of misconduct and the previously
published financial results provided the basis for any previously paid incentive compensation, the
Company may, at its sole option, obtain reimbursement from



- 15 -









 







the Executive of all payments by the
Company to the extent such payments would not have been made based upon the restated or
reclassified financial statements.



     (c) If the Company suspends or terminates the Executive’s payments or benefits or seeks
reimbursement under this Section 17, the remainder of this Agreement, and all promises and
covenants herein, will nonetheless remain in full force and effect. Notwithstanding anything herein
to the contrary, any payments or benefits suspended will immediately be reinstated, no benefits or
payments will be terminated and any effort to obtain reimbursement will be halted within five (5)
days of the applicable Board determination described in this Section 17 under which the Board
determines that there is no basis for the suspension, termination or repayment of such benefits or
payments pursuant hereto. Nothing herein shall be interpreted to deny Executive his rights to a de
novo review in arbitration pursuant to Section 26 of this Agreement of the Board’s determination
under this Section 17.


18. Continued Availability and Cooperation.




     (a) Following any Termination Date, the Executive shall cooperate fully with the Company and
with the Company’s counsel in connection with any present and future actual or threatened
litigation or administrative proceeding involving the Company that relates to events, occurrences
or conduct occurring (or claimed to have occurred) during the period of the Executive’s employment
by the Company. This cooperation by the Executive shall include, but not be limited to:




     (i) making himself reasonably available for interviews and discussions with the
Company’s counsel as well as for depositions and trial testimony;




     (ii) if depositions or trial testimony are to occur, making himself reasonably available
and cooperating in the preparation therefore as and to the extent that the Company or the
Company’s counsel reasonably requests;




     (iii) refraining from impeding in any way the Company’s prosecution or defense of such
litigation or administrative proceeding; and




     (iv) cooperating fully in the development and presentation of the Company’s prosecution
or defense of such litigation or administrative proceeding.



     (b) In addition to the Executive’s obligations under this Section 18, during the Non-Compete
Period, the Executive shall make himself available for consultation with and advice to the Company
at times and for periods of time which are mutually agreeable to the Company and the Executive.



     (c) Notwithstanding the foregoing, the Executive’s obligation under this Section 18 shall be
subject to the following: (i) The Company will consult with the Executive, and make reasonable
efforts to schedule any assistance otherwise required so as not to materially disrupt the
Executive’s other full-time business endeavors. (ii) The Executive shall not be required to take
any action, or fail to take any action, that would otherwise be required under this Section 18, if
the Executive or the Executive’s counsel determines that compliance with this Section 18 would
require him to violate any law or otherwise compromise or interfere with his
legal rights. (iii) This Section 18 shall not prevent the Executive from honestly testifying
at a legal proceeding in response to a lawful and properly served subpoena in a proceeding
involving the Company or its Affiliates or from cooperating with any governmental investigation.


19. Successors; Assignability.




     (a) By the Executive. Neither this Agreement nor any right, duty, obligation or
interest hereunder shall be assignable or delegable by the Executive without the Company’s prior
written consent; provided, however, that nothing in this Section 19(a) shall preclude the Executive
from designating any of his beneficiaries to receive any benefits payable hereunder upon his death,
or the executors, administrators, or other legal representatives, from assigning any rights
hereunder to the person or persons entitled thereto.



     (b) By the Company. The Company will require 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 Agreement in
the same manner and to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive had terminated his employment for Good
Reason subsequent to a Change in Control, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Termination Date.


20. Employment Rights. Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Company or the Executive to have the Executive remain in the
employment of the Company at any time prior to a Change in Control;


- 16 -









 






provided, however, that any
Termination of the Executive or the removal of the Executive from the office or position in the
Company following the commencement of any discussion with a third person that ultimately results in
a Change in Control shall be deemed to be a Termination of the Executive after a Change in Control
for purposes of this Agreement. The Executive expressly acknowledges that he is an employee at
will, and that the Company may terminate him at any time during the Term for any reason if the
Company makes the payments and provides the benefits provided for under Section 5 or 6 of this
Agreement, and otherwise comply with its other continuing covenants in this Agreement, including
without limitation, Sections 4, 12 and 14(b).



21. Withholding of Taxes. The Company may withhold from any amounts payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant to any law or
government regulation or ruling.



22. Severability. If the final determination of a court of competent jurisdiction declares,
after the expiration of the time within which judicial review (if permitted) of such determination
may be perfected, that any term or provision hereof is invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) the invalid or unenforceable term or
provision shall be replaced by a term or provision that is mutually agreeable to the parties hereto
and is valid and enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision. Notwithstanding the foregoing, the invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall nevertheless remain in full force and effect.



23. Amendment; Waiver. This Agreement may not be modified, amended or waived in any manner
except by an instrument in writing signed by both parties hereto. The waiver by either party of
compliance with any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such
party of a provision of this Agreement.



24. Effect of Section 409A of the Code. Notwithstanding anything to the contrary in this
Agreement, if the Company determines that any payments or taxable benefits to be provided to the
Executive pursuant to Sections 5 through 12 of this Agreement are or may become subject to the
additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed
under Section 409A (the “409A Taxes”) as applicable at the time such payments and benefits are
otherwise required under this Agreement unless payment is delayed for at least six (6) months
following the date of the Executive’s “separation from service” (as such term is defined under
Section 409A) with the Company, then:





     (a) (i) such payments shall be delayed until the date that is six months after the date
of the Executive’s “separation from service” (as such term is defined under Section 409A)
with the Company, or for shorter period of time that the Company determines is sufficient to
avoid the imposition of the 409A Taxes (the “Payments Delay Period”), and (ii) such payments
shall be increased by an amount equal to interest on such payments for the Payments Delay
Period at a rate equal to the prime rate in effect as of the date the payment was first due
(for this purpose, the prime rate will be based on the rate published from time to time in
the Wall Street Journal) (the “Interest Rate”); and




     (b) (i) with respect to the provision of such taxable benefits, for a period of six
months following the date of the Executive’s “separation from service” (as such term is
defined under Section 409A) with the Company, or for shorter period of time that the Company
determines is sufficient to avoid the imposition of the 409A Taxes (the “Benefits Delay
Period”), the Executive shall be responsible for the full cost of providing such taxable
benefits, and (ii) on the first day following the Benefits Delay Period, the Company shall
reimburse the Executive for the costs of providing such benefits imposed on the Executive
during the Benefits Delay Period, plus interest accrued at the Interest Rate.


25. Governing Law. All matters affecting this Agreement, including the validity thereof,
are to be governed by, interpreted and construed in accordance with the substantive laws of the
State of Ohio, without giving effect to the principles of conflict of laws of such State.



26. Arbitration. The parties hereto shall endeavor to settle all disputes by amicable
negotiations. Any claim, dispute, disagreement or controversy that arises among the parties
relating to this Agreement (excluding enforcement by the Company of its rights under the Section
15) that is not amicably settled shall be resolved by arbitration with respect to any claims as to
which arbitration is not prohibited by applicable federal or state law. Such arbitration shall be
conducted, as follows:





(a) An arbitration may be commenced by any party to this Agreement by the service of a
written request for arbitration upon the other affected party(ies). Such request for
arbitration shall summarize the controversy or claim to be arbitrated.




(b) Any such arbitration shall be heard in the State of Ohio, and except as the parties may
otherwise agree, before a panel consisting of three (3) arbitrators, each of whom shall be
independent and impartial. One of the arbitrators shall be appointed by the Company, one
shall be appointed by the Executive, and the third shall be appointed by the first two
arbitrators. If the first two arbitrators cannot agree on the third arbitrator within 30 days
of the appointment of the second



- 17 -









 







arbitrator, then the third arbitrator shall be named by the
appropriate official in the Cincinnati, Ohio office of the American Arbitration Association
or, in the event of his or her unavailability by reason of disqualification or otherwise, by
the appropriate official in the New York City office of the American Arbitration Association.
In determining the appropriate background of the third arbitrator, the appointing authority
shall give due consideration to the issues to be resolved, but his or her decision as to the
identity of the arbitrator shall be final. Any arbitrator shall be an individual who is an
attorney licensed to practice law in the State of Ohio. Such arbitrator shall be neutral
within the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration
Association; provided, however, that the arbitration shall not be administered by the
American Arbitration Association. Any challenge to the neutrality of an arbitrator shall be
resolved by the arbitrator whose decision shall be final and conclusive. The arbitration
shall be administered and conducted by the arbitrator(s) pursuant to the then-current
employment dispute resolution rules of the American Arbitration Association.




(c) The parties hereby expressly waive punitive damages, and under no circumstances shall an
award contain any amount that in any way reflects punitive damages.




(d) The decision of the arbitrator on the issue(s) presented for arbitration shall be final
and conclusive and may be enforced in any court of competent jurisdiction.




(e) It is intended that controversies or claims submitted to arbitration under this Section
26 shall remain confidential, and to that end it is agreed by the parties that neither the
facts disclosed in the arbitration, the issues arbitrated, nor the views or opinions of any
persons concerning them, shall be disclosed to third persons at any time, except to the
extent necessary to enforce an award or judgment or as required by law or regulation,
including the federal securities laws and the regulations thereunder, in response to legal
process or in connection with such arbitration.


27. Notices. Any notice hereunder by either party to the other shall be given in writing by
personal delivery or certified mail, return receipt requested. If addressed to the Executive, the
notice shall be delivered or mailed to the Executive at his principal residence, or to such other
address as the Executive shall give notice in writing in accordance herewith. If addressed to the
Company, the notice shall be delivered or mailed to the Company at its executive offices at 701
Lima Avenue, Findlay, Ohio 45840 to the attention of the Board. A notice shall be deemed given, if
by personal delivery, on the date of such delivery or, if by certified mail, on the date shown on
the applicable return receipt.



28. Representations; Entire Agreement.




     (a) The Executive represents and warrants that he is free to enter into and perform each of
the terms and conditions of this Agreement and is not subject to any agreement, judgment, order or
restriction that would be violated by being employed by the Company or that in any way restricts
the services that may be rendered to the Company.



     (b) This agreement embodies the entire representations, warranties, covenants and agreements
in relation to the subject matter hereof. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by either party that
are not expressly set forth in this Agreement.


29. Counterparts. This Agreement may be executed by either of the parties hereto in
counterpart, each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.



30. Headings. The headings of sections herein are included solely for convenience of
reference and shall not control the meaning or interpretation of any of the provisions of this
Agreement.




     IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by an officer pursuant
to the authority of its Board, and the Executive has executed this Agreement, as of the day and
year first written above.



	 	 	 	 	 
	COOPER TIRE & RUBBER COMPANY	 	 
	 
	 	 	 	 
	By:

	 	Roy V. Armes	 	 
	 

	 	 

	 	 
	Title:

	 	Chairman, CEO, & President	 	 






	 	 	 	 	 
	EXECUTIVE:

	 	/s/ Roy V. Armes
 

	 	 
	 

	 	Roy V. Armes	 	 






- 18 -









 





ANNEX A

Form of Release




     WHEREAS, there has been a Termination (as such term is defined in the Employment Agreement
(the “Agreement”) made and entered into on , 20___ between the undersigned (the “Executive”) and
COOPER TIRE & RUBBER COMPANY (“Cooper”), of the Executive’s employment from Cooper; and



     WHEREAS, the Executive is required to sign this Release in order to receive the severance
benefits as described in Section 5, Section 6 and Section 12 (to the extent provided in Section 12)
of the Agreement.



     NOW THEREFORE, in consideration of the promises and agreements contained herein and other good
and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and
intending to be legally bound, the Executive agrees as follows:



     1. This Release is effective on the date hereof and will continue in effect as provided
herein.



     2. In consideration of the payments to be made and the benefits to be received by the
Executive pursuant to Section 5, Section 6 and Section 12 of the Agreement, which the Executive
acknowledges are in addition to payments and benefits which the Executive would be entitled to
receive absent the Agreement, the Executive, for himself and his dependents, successors, assigns,
heirs, executors and administrators (and his and their legal representatives of every kind), hereby
releases, dismisses, remises and forever discharges its predecessors, parents, subsidiaries,
divisions, related or affiliated companies, officers, directors, stockholders, members, employees,
heirs, successors, assigns, representatives, agents and counsel (the “Company”) from any and all
arbitrations, claims, including claims for attorney’s fees, demands, damages, suits, proceedings,
actions and/or causes of action of any kind and every description, whether known or unknown, which
the Executive now has or may have had for, upon, or by reason of any cause whatsoever (“claims”),
against the Company, including but not limited to:




     (a) any and all claims arising out of or relating to the Executive’s employment by or
service with the Company and his termination from the Company;




     (b) any and all claims of discrimination, including but not limited to claims of
discrimination on the basis of sex, race, age, national origin, marital status, religion or
handicap, including, specifically, but without limiting the generality of the foregoing, any
claims under the Age Discrimination in Employment Act, as amended, Title VII of the Civil
Rights Act of 1964, as amended, the Americans with Disabilities Act, Ohio Revised Code
Section 4101.17 and Ohio Revised Code Chapter 4112, including Sections 4112.02 and 4112.99
thereof, and any other applicable state statutes and regulations, and




     (c) any and all claims of wrongful or unjust discharge or breach of any contract or
promise, express or implied;


provided, however, that the foregoing shall not apply to claims to enforce rights
that the Executive may have as of the date hereof or in the future under any of Cooper’s health,
welfare, retirement, pension or incentive plans, under any indemnification agreement between the
Executive and Cooper, under Cooper’s indemnification by-laws, under the directors’ and officers’
liability coverage maintained by Cooper, under the applicable provisions of the Delaware General
Corporation Law, or that the Executive may have in the future under the Agreement or under this
Release.




     3. The Executive understands and acknowledges that the Company does not admit any violation of
law, liability or invasion of any of his rights and that any such violation, liability or invasion
is expressly denied. The consideration provided for this Release is made for the purpose of
settling and extinguishing all claims and rights (and every other similar or dissimilar matter)
that the Executive ever had or now may have against the Company to the extent provided in this
Release. The Executive further agrees and acknowledges that no representations, promises or
inducements have been made by the Company other than as appear in the Agreement.



     4. The Executive further agrees and acknowledges that:




     (a) The release provided for herein releases claims to and including the date of this
Release;




     (b) The Executive has been advised by the Company to consult with legal counsel prior to
executing this Release, has had an opportunity to consult with and to be advised by legal
counsel of his choice, fully understands the terms of this Release, and enters into this
Release freely, voluntarily and intending to be bound;



- 19 -









 






     (c) The Executive has been given a period of twenty-one (21) days to review and consider
the terms of this Release, prior to its execution and that he may use as much of the
twenty-one (21) day period as he desires; and




     (d) The Executive may, within 7 days after execution, revoke this Release. Revocation
shall be made by delivering a written notice of revocation to the General Counsel at Cooper.
For such revocation to be effective, written notice must be actually received by the General
Counsel at Cooper no later than the close of business on the 7th day after the Executive
executes this Release. If the Executive does exercise his right to revoke this Release, all
of the terms and conditions of the Release shall be of no force and effect and Cooper shall
not have any obligation to make further payments or provide benefits to the Executive as set
forth in Section 5, Section 6, and Section 12 of the Agreement.



     5. The Executive agrees that he will never file a lawsuit or other complaint asserting any
claim that is released in this Release.



     6. The Executive waives and releases any claim that he has or may have to reemployment after
the Termination Date as defined in the Agreement.



     IN WITNESS WHEREOF, the Executive has executed and delivered this Release on the date set
forth below.



	 	 	 	 	 
	Dated:                                          ,                     

	 	 
	 	 
	 

	 	Roy V. Armes	 	 







- 20 -