Document:

BOARD ADVISORY AGREEMENT

This Board Advisory Agreement (“Agreement”) is made and entered into as of the 6th day of May, 2011 by and between First China Pharmaceutical Group, Inc., a Nevada corporation (the “Company”), and Jack Zwick, an individual (“Advisor”).  In consideration of the mutual promises contained herein, the parties agree as follows:

1.           Services and Compensation.

(a) Advisor does hereby consent to act as a Director of the Company and to perform for the Company the services (“Services”) described in Exhibit A attached hereto.

(b) In consideration for the Services, the Company will: (i) issue Advisor two hundred thousand (200,000) shares of Company common stock (the “Restricted Stock”) subject to the conditions hereinafter provided; (ii) pay Advisor $2,000 per month commencing June 1, 2011; and (iii) provide Advisor with one (1) round trip business class airline ticket per year to China to attend Company meetings.

(c) Other than as set forth in Section 1(b) above, any and all additional compensation paid to Advisor shall be as approved by the Company’s Board of Directors and shall be consistent with compensation provided to other independent members of the Company’s Board of Directors and in accordance with Company policy.

2.           Provisions Regarding Restricted Stock.

(a)  Vesting of Restricted Stock and Stock Certificates.

(i)  Vesting.  The right to unrestricted ownership in the Restricted Stock under this Agreement shall vest with respect to 1/24th of the total number of shares of Restricted Stock per month from the Vesting Commencement Date (as defined below), subject to Advisor’s continuous service, as described in Section 2(a)(ii) below.  As used herein, the “Vesting Commencement Date” shall be May 1, 2011.

(ii)  Permitted Forfeiture of Unvested Restricted Stock.  Advisor acknowledges that if the Restricted Stock has not vested in accordance with Section 2(a)(i) at such time as Advisor is no longer serving as either a non-employee director of, an employee of, or active consultant providing services to the Company or any of its subsidiaries, the Restricted Stock shall immediately be forfeited and all rights of the Advisor to such Restricted Stock shall terminate without further obligation on the part of the Company. Upon the forfeiture of any Restricted Stock, such forfeited Restricted Stock shall be immediately transferred to the Company without further action by the Company. The Restricted Stock may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of to the extent that the Restricted Stock is subject to vesting and in the event of termination of employment with or services to the Company or any subsidiary for any reason.

(iii)  Deliveries by the Company.  A certificate evidencing the Restricted Stock shall be issued by the Company in Advisor’s name, pursuant to which Advisor shall have voting rights and shall be entitled to receive all dividends unless and until the shares of Restricted Stock are forfeited pursuant to this Agreement. The certificate shall bear a legend evidencing the nature of the Restricted Stock, and the Company may cause the certificate to be delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Company for safekeeping until all vesting and forfeiture restrictions lapse pursuant to the terms of this Agreement. Upon the lapse of the vesting and forfeiture restrictions, the Company shall cause a new certificate or certificates to be issued without legend in the name of Advisor.

 

  

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Notwithstanding any other provisions of this Agreement, the issuance or delivery of the Restricted Stock under this Agreement (whether vested or unvested) may be postponed for such period as may be required to comply with applicable requirements of any national securities exchange or any requirements under any federal or state securities law or regulation.  The Company shall not be obligated to (a) issue or deliver any Restricted Stock if the issuance or delivery thereof shall constitute a violation of any provision of any law or regulation of any governmental authority or any national securities exchange, (b) qualify the issuance of the Restricted Stock in any jurisdiction, or (c) register the shares of Restricted Stock with the SEC.

(b)  Reservation of Shares.  The Company agrees that prior to the issuance of the Restricted Stock represented by this Agreement, there shall be reserved for issuance such number of the Company’s authorized and unissued shares as shall be necessary to allow for the issuance of the Restricted Stock issuable hereunder.

(c)  Suspension and Cancellation of Stock.

(i)  In the event the Company reasonably believes Advisor has committed an act of misconduct including, but limited to acts specified below, the Company may suspend Advisor’s right in his unvested Restricted Stock granted hereunder pending final determination by the Board of the Company (the “Board”).  If Advisor is determined by the Board to have:

(1) committed an act of embezzlement, fraud, dishonesty, breach of fiduciary duty to the Company or a subsidiary;

(2) deliberately disregarded the rules or policies of the Company or a subsidiary which resulted in loss, damage or injury to the Company  or a subsidiary;

(3) made any unauthorized disclosure of any trade secret or confidential information of the Company  or a subsidiary;

(4) induced any partner, collaborator, client or customer of the Company or a subsidiary to break any contract with the Company or a subsidiary or induced any principal for whom the Company or a subsidiary acts as agent to terminate such agency relations;

(5) engaged in any substantial conduct which constitutes unfair competition with the Company or a subsidiary; or

(6) violated any requirement of the Foreign Corrupt Practices Act or any analogous foreign regulations,

neither Advisor nor Advisor’s estate shall be entitled to shares of unvested Restricted Stock. The determination of the Board shall be final and conclusive. In making its determination, the Board shall give the Advisor an opportunity to appear and be heard at a hearing before the full Board and present evidence on Advisor’s behalf.

(d)  Advisor Representations.

(i)  Purchase for Own Account. Advisor represents that he is acquiring the Restricted Stock solely for his own account and beneficial interest for investment and not for sale or with a view to distribution of the Restricted Stock or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.

(ii) Information and Sophistication.  Advisor hereby: (x) acknowledges that he has received all the information he has requested from the Company and he considers necessary or appropriate for deciding whether to acquire the Restricted Stock, (y) represents that he has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Restricted Stock and to obtain any additional information necessary to verify the accuracy of such information and (z) further represents that he has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risk of this investment.

 

  

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(iii)  Ability to Bear Economic Risk.  Advisor acknowledges that investment in the Restricted Stock involves a high degree of risk, and represents that he is able, without materially impairing his financial condition, to hold the Restricted Stock for an indefinite period of time and to suffer a complete loss of his investment.

(iv)  Further Assurances.  Advisor agrees and covenants that at any time and from time to time he will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to carry out the full intent and purpose of this Agreement and to comply with state or federal laws or other regulatory approvals.

(e)  Restricted Securities.  Advisor understands that the Restricted Stock are characterized as “restricted securities” under the Securities Act of 1933, as amended (“Securities Act”) inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Securities Act and applicable regulations thereunder such securities may be resold without registration under the Securities Act only in certain limited circumstances. Accordingly, the Restricted Stock, absent an effective registration statement, can only be sold pursuant to an exemption from registration, such as Rule 701 or Rule 144 of the Securities Act. Advisor understands that the Company is under no obligation to register any of the securities sold hereunder.

(f)  Restrictive Legends and Stop-Transfer Orders.

(i)  Legends. Advisor understands and agrees that the Company will place the legend set forth below, as applicable, or similar legends on any stock certificate(s) evidencing the Restricted Stock, together with any other legends that may be required by state or federal securities laws, the Company’s Articles of Incorporation or Bylaws, any other agreement between Advisor and the Company or any agreement between Advisor and any third party:

THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT.

  

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VESTING AND FORFEITURE RESTRICTIONS AS SET FORTH IN THAT CERTAIN BOARD ADVISORY AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.  SUCH RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES.

(ii) Stop Transfer Instructions.  Advisor agrees that, to ensure compliance with the restrictions imposed by this Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

 

  

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(iii) Refusal to Transfer.  The Company will not be required (i) to transfer on its books any Restricted Stock that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such Restricted Stock, or to accord the right to vote or pay dividends, to any purchaser or other transferee to whom such Restricted Stock have been so transferred.

 

3.           Confidentiality.

(a) “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, services, current and prospective clients, client lists, markets, processes, financial information, marketing, or other business information developed by the Advisor pursuant to this Agreement or disclosed by the Company either directly or indirectly in writing, orally or by drawings.

(b) Advisor will not, during or subsequent to the term of this Agreement, use the Company’s Confidential Information for any purpose whatsoever other than the performance of the Services on behalf of the Company or disclose the Company’s Confidential Information to any third party.  It is understood that said Confidential Information shall remain the sole property of the Company. Advisor further agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.  Confidential Information does not include information which (i) is known to Advisor at the time of disclosure to Advisor by the Company as evidenced by written records of Advisor, (ii) has become publicly known and made generally available through no wrongful act of Advisor, or (iii) has been rightfully received by Advisor from a third party who is authorized to make such disclosure.  Without the Company’s prior written approval, Advisor will not directly or indirectly disclose to anyone the contents of this Agreement.

(c) Advisor recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. Advisor agrees that Advisor owes the Company and such third parties, during the term of this Agreement and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out the Services for the Company consistent with the Company’s agreement with such third party.

(d) Upon the termination of this Agreement, or upon the Company’s earlier request, Advisor will deliver to the Company all of the Company’s property or Confidential Information that Advisor may have in Advisor’s possession or control.

4.           Ownership. Advisor agrees that all copyrightable material, notes, records, drawings, designs, inventions, improvements, developments, discoveries and trade secrets conceived, made or discovered by Advisor, solely or in collaboration with others, during the period of this Agreement which relate in any manner to the business of the Company that Advisor may be directed to undertake, investigate or experiment with, or which Advisor may become associated with in work, investigation or experimentation in the line of business of Company in performing the Services hereunder are the sole property of the Company.

5.           Term and Termination.

(a) Either party may terminate this Agreement immediately for breach or upon thirty (30) days prior written notice for no reason. In addition, this Agreement shall terminate in the event of the resignation or removal of Advisor from the Company’s Board of Directors in accordance with the Company’s Bylaws, as amended.

(b) Upon such termination all rights and duties of the parties toward each other shall cease except: Sections 3  (Confidentiality) and 6 (Independent Contractor) shall survive termination of this Agreement.

 

  

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6.           Independent Contractor. Advisor shall perform the Services hereunder as an independent contractor. Advisor acknowledges and agrees that Advisor is obligated to report as income all compensation received by Advisor pursuant to this Agreement, and Advisor agrees to and acknowledges the obligation to pay all self-employment and other taxes thereon. Advisor further agrees to indemnify the Company and hold it harmless to the extent of any obligation imposed on Company (i) to pay in withholding taxes or similar items or (ii) resulting from Advisor’s being determined not to be an independent contractor.

7.           Miscellaneous.

(a) Entire Agreement.  This Agreement is the entire agreement of the parties and supersedes any prior or contemporaneous agreements whether oral or written between them with respect to the subject matter hereof.  This Agreement may be changed only if agreed to in writing by both parties.

(b) Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

(c) Severability; Conflicts.  If any provision of this Agreement is held to be unenforceable for any reason, such provision shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the maximum extent possible.  In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

(d) Waiver.  The waiver of any term or condition contained in this Agreement by any party to this Agreement shall not be construed as a waiver of a subsequent breach or failure of the same term or condition or a waiver of any other term or condition contained in this Agreement.

(e) Assignment.  Neither this Agreement nor any right hereunder or interest herein may be assigned or transferred by Advisor without the express written consent of the Company.

(f) Governing Law.  This Agreement shall be governed by the laws of the State of Nevada, excluding its conflicts of laws provisions.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

	
COMPANY:

	  
	
FIRST CHINA PHARMACEUTICAL

GROUP, INC., a Nevada corporation

	  	  
	
By:

	
/s/ Zhen Jiang Wang

	  	  
	
Name:

	
Zhen Jiang Wang

	  	
Chief Executive Officer

	  	  
	
ADVISOR:

	  	  
	
JACK ZWICK

	  	  
	
By:

	
/s/ Jack Zwick

  

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EXHIBIT A

SERVICES

	
Services.

	
  

	
Advisor will render to the Company the following Services:

	
  

	
·

	
Serve on the Board of Directors of the Company

 

  

Page 7 of 7Unassociated Document

EXHIBIT 10.1

STONERIDGE, INC.

AMENDED AND RESTATED

LONG-TERM INCENTIVE PLAN

2011 RESTRICTED SHARES GRANT AGREEMENT

 

Stoneridge, Inc., an Ohio corporation (the “Company”), pursuant to the terms and conditions hereof, hereby grants to ___________ (“Grantee”) _______ Common Shares, without par value, of the Company (the “Restricted Shares”).  As set forth below, the grant of Restricted Shares is comprised of three separate mutually exclusive parts, Award I, Award II and Award III.

 

1.           The Restricted Shares are in all respects subject to the terms, conditions and provisions of this Agreement and the Company’s Amended and Restated Long-Term Incentive Plan (the “Plan”).

 

2.           Until no longer subject to substantial risk of forfeiture in accordance with the schedule and/or performance criteria set forth below, the Restricted Shares may not be sold, transferred, pledged, assigned or otherwise encumbered, whether voluntarily, involuntarily or by operation of law, and will be forfeited to the Company if the Grantee’s employment with the Company is terminated prior to February 14, 2014, except in the case of (i) retirement, (ii) death, (iii) Permanent Disability, (iv) Change in Control or (v) termination without cause, each as provided below.  A certificate or certificates, which may be in uncertificated form (electronic or book entry) at the Company’s discretion, representing the Restricted Shares may bear a legend evidencing the restrictions contained herein, as applicable.

 

If the employment of the Grantee is not terminated prior to February 14, 2014, the Restricted Shares shall, subject to satisfaction of the performance criteria applicable to Award II and Award III and as provided in the 2012 and 2013 Addenda to this Agreement (which are incorporated herein by reference), vest and no longer be subject to a substantial risk of forfeiture on February 14, 2014.

 

Special Provisions Applicable to Retirement.

 

Subject to the conditions below, in the case of retirement the Restricted Shares granted with respect to:

 

	
  

	
(1)

	
Award I shall not be forfeited and will vest and no longer be subject to a substantial risk of forfeiture on the date of retirement and a certificate or certificates representing Award I Restricted Shares shall promptly be delivered to the Grantee; and

 

	
  

	
(2)

	
Award II and Award III shall not be forfeited and will vest and no longer be subject to a substantial risk of forfeiture upon satisfaction of the performance criteria applicable to Award II and Award III, and a certificate or certificates representing Award II and Award III Restricted Shares shall be delivered to the Grantee as promptly as practical after completion of the Peer Group Performance Period but in no event later than February 14, 2014.

 

  

  

  

 

Only a Grantee who (i) is 63 or older on the date of retirement, (ii) has provided written notice to the Compensation Committee of the Board of Directors (the “Committee”) of the intent to retire at least one year prior to the retirement date, and (iii) has executed prior to retirement a customary one year non-competition agreement shall be permitted to have his or her Restricted Shares vest upon retirement.

 

If the employment of the Grantee is not terminated prior thereto the Restricted Shares shall vest and will no longer be subject to a substantial risk of forfeiture in the amounts set forth below on February 14, 2014:

 

	 	
Award I

	
Time-Based Vesting

 

Number of Shares That May Vest              ______

 

	 	
Award II

	
Company Performance Versus Peer Group Performance and Time-Based Vesting

 

Depending on the achievement of the Company’s total shareholder return (“TSR”) (as defined below) as compared the Peer Group’s TSR for the Company’s fiscal years 2011, 2012, and 2013 (the “Peer Group Performance Period”):

 

	
Quartile

	  	
Percentile

	  	
Shares that may vest

	
1st

	  	
≥75% -100%

	  	
______

	
2nd

	  	
≥50% - <75%

	  	
______

	
3rd

	  	
≥25% -< 50%

	  	
______

	
4th

	
  

	
<25%

	
  

	
0

 

If the Company’s TSR for the Peer Group Performance Period is between the upper and lower percentiles within a quartile, per the above table, the number of shares that vest shall be determined by interpolation between the corresponding percentiles as follows: the difference between the actual percentile performance and the lower percentile in the applicable quartile shall be divided by 0.25, the resulting fraction shall be multiplied by 50 and the resulting product, rounded to the nearest whole share, shall be added to the corresponding number of shares in the above table for the immediately lower quartile, with the sum being the total shares that shall vest and be no longer subject to substantial risk of forfeiture.  If the Company’s TSR for the Peer Group Performance Period is exactly 50%, 75% or 100% of the Peer Group Performance then the number of shares that shall vest and be no longer subject to a substantial risk of forfeiture shall be the maximum amount for the respective quartile in the above table, as applicable.  All Award II shares that do not vest pursuant to the above table shall be forfeited.

 

The Peer Group companies are: AVX, Commercial Vehicle Group, CTS, Esterline Technologies, Gentex, Graco, Methode Electronics, Modine Manufacturing, Nu Horizons Electronics, Shiloh Industries, Standard Motor Products, Superior Industries, Technitrol, Thomas & Betts, and Titan International.  The Peer Group shall be subject to modification at the discretion of the Committee from time to time, when events warrant.  The performance of the Peer Group companies shall not be weighted based on the size of the respective company.

 

  

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Total shareholder return for both the Company and the Peer Group companies shall be calculated by dividing: (i) the sum of (A) the cumulative amount of dividends for the Peer Group Performance Period, and (B) the difference between the respective company’s share price at the end of and the beginning of the Peer Group Performance Period; by (ii) the shares price at the beginning of the Peer Group Performance Period.

 

	 	
Award III

	
Company Performance and Time-Based Vesting

 

Depending on the Company’s earnings per share (“EPS”) (as defined below) for the Company’s annual fiscal years of 2011, 2012, and 2013 (the “EPS Performance Period”) and subject to the 2012 and 2013 Addenda to this Agreement:

 

	
2011

EPS

	  	
Shares that may

vest

	  	
2012 EPS

per

Addendum

	  	
Shares that may

vest

	  	
2013 EPS

per

Addendum

	  	
Shares that may

vest

	
≥$0.93

	  	
______

	  	
TBD

	  	
______

	  	
TBD

	  	
______

	
≥$0.72

	  	
______

	  	
TBD

	  	
______

	  	
TBD

	  	
______

	
≥$0.50

	  	
______

	  	
TBD

	  	
______

	  	
TBD

	  	
______

	
< $0.50

	
  

	
0

	
  

	
TBD

	
  

	
0

	
  

	
TBD

	
  

	
0

TBD – To be provided in the 2012 and 2013 Addenda

If the Company’s EPS for any fiscal year is between two EPS data points, per the above table for that fiscal year, the number of shares that vest shall be determined by interpolation between those data points as follows: the difference between the actual EPS and the lower data point shall be divided by the difference between the two data points, the resulting fraction shall be multiplied by the difference between the two corresponding numbers of shares in the above table and the resulting product, rounded to the nearest whole share, shall be added to the corresponding number of shares for the lower data point in the above table, with the sum being the total shares that shall vest and be no longer subject to substantial risk of forfeiture.  All Award III shares that do not vest pursuant to the above table shall be forfeited.

 

The Company’s EPS for any fiscal year in the performance period shall mean the Company’s aggregate fully diluted earnings per Common Share for that fiscal year calculated in accordance with generally accepted accounting principles, before extraordinary items, cumulative effects of changes in accounting principles, adjustments for goodwill impairments and the tax effect thereof, if any, as set forth on the audited consolidated financial statements of the Company for that fiscal year.

 

  

3

  

 

The 2012 and 2013 Addenda to this Agreement shall be appended to this Agreement and incorporated herein by reference, effective upon their respective adoption by the Committee.

 

3.           The Restricted Shares will be issued in the name of the Grantee.  The Company’s transfer agent and/or share transfer records will show the Grantee as the owner of record of the Restricted Shares.  Except as otherwise provided in this Agreement, the Grantee will have all the rights of a shareholder of the Company, including the right to vote and receive dividends.

 

4.           The Company or the Company’s agent will hold (either physical or uncertificated form) the Restricted Shares for the period of time that the Restricted Shares are subject to forfeiture and the certificate or certificates representing the Restricted Shares will be delivered to the Grantee after the Restricted Shares are no longer subject to substantial risk of forfeiture.  Such delivery may take the form of an electronic transfer of the vested Restricted Shares to the Grantee’s brokerage or other financial account.  The Grantee shall execute and deliver to the Company a blank stock power so that the Restricted Shares that may be forfeited can be canceled.

 

5.           Notwithstanding the foregoing, in addition to the vesting of the Restricted Shares as set forth above, the Restricted Shares shall no longer be subject to a substantial risk of forfeiture and shall vest upon the occurrence of an event and in the amounts as described below.

 

Award I shall vest and not be forfeited in the event of:

 

(a)           the Grantee’s death or Permanent Disability (as defined in the Plan) in proportion to the number of months, including any partial month, elapsed in the vesting period divided by 36;

 

(b)           a Change in Control or Potential Change in Control of the Company (both as defined in the Plan); or

 

(c)           the termination “without cause” (defined below) of the Grantee’s employment by the Company; provided, however only in proportion to the number of months, including any partial month, elapsed in the vesting period divided by 36.

 

A certificate or certificates representing the vested Restricted Shares granted under Award I shall be delivered to the Grantee or the Grantee’s estate after the occurrence of an event described above as soon as practical.

 

Awards II  and Award III shall vest and not be forfeited in the event of:

 

(a)           the Grantee’s death or Permanent Disability in proportion to the number of months, including any partial month, elapsed in the vesting period divided by 36;

 

(b)           a Change in Control or Potential Change in Control of the Company; or

 

  

4

  

 

(c)           the termination “without cause” of the Grantee’s employment by the Company; provided, however only in proportion to the number of months, including any partial month, elapsed in the vesting period divided by 36.

 

In the event of the Grantee’s death, Permanent Disability or termination without cause the shares granted in Award II and Award III shall vest in amounts (and subject to the 36 month pro rata vesting provisions for death, Permanent Disability and termination without cause) in accordance with the Company’s TSR during the Peer Group Performance Period and the Company’s EPS during the EPS Performance Period, respectively, as determined under the metrics of Section 2 above.  A certificate or certificates representing the vested Restricted Shares under Award II and Award III shall be delivered to the Grantee or the Grantee’s estate as promptly as practical after completion of the Peer Group and EPS Performance Periods but no in event later than February 14, 2014.  In the event of a Change in Control or Potential Change in Control of the Company Award II and Award III shall vest in amounts which assume the Company’s TSR during the Peer Group Performance Period is equal to the 50th percentile of the Peer Group companies’ performance in that period and the Company’s EPS equals the respective 2011, 2012 and 2013 target thresholds during the EPS Performance Period, respectively.  A certificate or certificates representing the vested Restricted Shares under Award II and Award III shall be delivered to the Grantee as promptly as practical after the Change in Control or Potential Change in Control.

 

Termination shall be deemed to be “without cause” unless the Board of Directors of the Company, or its designee, in good faith determines that termination is because of any one or more of the following, in which case such termination shall be deemed to be for “cause”:

 

The Grantee’s:

 

	
  

	
(a)

	
fraud;

 

	
  

	
(b)

	
misappropriation of funds from the Company;

 

	
  

	
(c)

	
commission of a felony or of an act or series of acts which result in material injury to the business reputation of the Company;

 

	
  

	
(d)

	
commission of a crime or act or series of acts involving moral turpitude;

 

	
  

	
(e)

	
commission of an act or series of repeated acts of dishonesty that are materially inimical to the best interests of the Company;

 

	
  

	
(f)

	
willful and repeated failure to perform his duties, which failure has not been cured within fifteen (15) days after the Company gives notice thereof to the Grantee;

 

	
  

	
(g)

	
material breach of any material provision of an employment agreement, if any, which breach has not been cured in all substantial respects within ten (10) days after the Company gives notice thereof to the Grantee; or

 

	
  

	
(h)

	
failure to carry out the reasonable directions or instructions of the Grantee’s superiors, provided the directions or instructions are consistent with the duties of the Grantee’s office, which failure has not been cured in all substantial respects within ten (10) days after the Company gives notice thereof to the Grantee.

 

  

5

  

 

Provided, however, the Company’s obligation to provide notice and an opportunity to cure, pursuant to subsections 5(f)-(h) above, shall only apply to the Grantee’s first breach, first failure to perform or first failure to follow directions, as the case may be, of the nature giving rise to the right of the Company to provide notice thereof.  In addition, the Grantee may terminate his employment with the Company, and such termination shall be deemed a termination by the Company “without cause” if:

 

	
  

	
(a)

	
the Company reduces the Grantee’s title, responsibilities, power or authority in comparison with his title, responsibilities, power or authority on the date hereof;

 

	
  

	
(b)

	
the Company assigns the Grantee duties which are inconsistent with the duties assigned to the Grantee on the date hereof and which duties the Company persists in assigning to the Grantee despite the prior written objection of the Grantee; or

 

	
  

	
(c)

	
the Company reduces the Grantee’s annual base compensation (unless such decrease is proportionate with a decrease in the base compensation of the officers of the Company as a group), or materially reduces his group health, life, disability or other insurance programs, his pension, retirement or profit-sharing benefits or any benefits provided by the Company, or excludes him from any plan, program or arrangement, including but not limited to bonus or incentive plans.

 

6.           On any change in the number or kind of outstanding common shares of the Company by reason of a recapitalization, merger, consolidation, reorganization, separation, liquidation, share split, share dividend, combination of shares or any other change in the corporate structure or Common Shares of the Company, the Company, by action of the Committee, is empowered to make such adjustment, if any, in the number and kind of Restricted Shares subject to this Agreement as it considers appropriate for the protection of the Company and of the Grantee.

 

7.           No later than the date as of which an amount first becomes includable in the gross income of the Grantee for federal income tax purposes with respect to the Restricted Shares granted hereunder, the Grantee shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state or local taxes of any kind required by law to be withheld with respect to that amount.  Unless otherwise determined by the Committee, minimum statutory withholding obligations may be settled with previously owned Common Shares or Restricted Shares that have vested.  The making of that payment or those arrangements is a condition to the obligations of the Company under the Plan, and the Company and its subsidiaries and affiliates may, to the extent permitted by law, deduct any taxes from any payment of any kind otherwise payable to the Grantee.

 

8.           Nothing in this Agreement shall affect in any manner any conflicting or other provision of any other agreement between the Grantee and the Company.  Nothing contained in this Agreement shall limit whatever right the Company might otherwise have to terminate the employment of the Grantee.

 

  

6

  

 

9.           The laws of the State of Ohio govern this Agreement, the Plan and the Restricted Shares granted hereby.

 

IN WITNESS WHEREOF, the Company has caused its corporate name to be subscribed by its duly authorized officer as of the 14th day of February 2011.

 

	 	 	
STONERIDGE, INC.

	 	 	  	 
	 	 	
By

	 
	 	 	
 

	John Corey
	 	 	  	 
	The foregoing is hereby accepted.	 	
 

	 
	 	 	  	 
	 	 	  	 
	(Signature)	 	
 

	 

  

7

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