Exhibit 10.1

 

    

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

 

ANNUAL INCENTIVE PERFORMANCE PLAN

 

 

 

ARTICLE 1.

 

PURPOSE AND DURATION

 

Section 1.1. Purpose . The purpose of the Superior Industries International, Inc. Annual Incentive Performance Plan is to motivate U.S. employees of the Company and its Affiliates, other than the Chief Executive Officer, to achieve performance objectives measured on an annual basis, which is intended to result in increased value to the shareholders of the Company.

Section 1.2. Duration . The Plan is effective December 27, 2010. . The Plan will remain in effect through December 27, 2015, unless terminated earlier pursuant to Article 10.

 

ARTICLE 2.

 

DEFINITIONS AND CONSTRUCTION

 

Section 2.1. Definitions . Wherever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:

(a) “Administrator” means, with respect to the named executive officers of the Company, the Committee, and with respect to all other key employees, the Chief Executive Officer of the Company.

(b) “Affiliate” has the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act, or any successor rule or regulation thereto.

(c) “Annual Performance Award” means an opportunity granted to a Participant to receive a payment of cash based in whole or part on the extent to which one or more Performance Goals for one or more Performance Measures are achieved for the Performance Period, subject to the conditions described in the Plan and that the Administrator otherwise imposes.

(d) “Base Salary” of a Participant means the annual rate of base pay in effect for such Participant during the Performance Period (or such other period as the Administrator may specify by action taken at the time of grant of an Annual Performance Award) and after any changes to the annual rate of base pay as a result of the annual performance appraisal process. In the event that the annual rate of base pay has changed during the Performance Period and after the annual performance appraisal process, then Base Salary will be calculated by weighting the different annual rates of base pay by the number of days such rates were in effect. For purposes of this calculation, the pre-change annual rate of base pay is treated as in effect from the beginning of the Performance Period to the date of change.

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

(f) “Beneficiary” means the person or persons entitled to receive any amounts due to a Participant in the event of the Participant's death as provided in Article 7.

(g) “Cause” means: (1) if the Participant is subject to an employment agreement that contains a definition of “cause”, such definition, or (2) otherwise, any of the following as determined by the Administrator: (A) violation of the provisions of any employment agreement, non-competition agreement, confidentiality agreement, or similar agreement with the Company or an Affiliate, or the Company's or an Affiliate's code of ethics, as then in effect, (B) conduct rising to the level of gross negligence or willful misconduct in the course of employment with the Company or an Affiliate, (C) violation of any federal, state or local law in connection with the Participant's employment, or (D) breach of any fiduciary duty to the Company or an Affiliate.

(h) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a particular provision of the Code shall be deemed to include the regulations thereunder and any successor provision or regulation thereto.

(i) “Company” means Superior Industries International, Inc., a California corporation, and any successor thereto as provided in Article 13.

(j) “Committee” means the Compensation and Benefits Committee of the Board, which shall consist of not less than three (3) members of the Board each of whom is a “non-employee director” as defined in Securities and Exchange Commission Rule 16b-3(b)(3), or as such term may be defined in any successor regulation under Section 16 of the Securities Exchange Act of 1934, as amended. In addition, each member of the Committee shall be an outside director within the meaning of Code Section 162(m).

(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a particular provision

of the Exchange Act shall be deemed to include the regulations thereunder and any successor provision or regulation thereto.

(l) “Excluded Items” means any gains or losses from the sale of assets outside the ordinary course of business, any gains or losses from discontinued operations, any extraordinary gains or losses, the effects of accounting changes, any unusual, nonrecurring, transition, one-time or similar items or charges, the diluted impact of goodwill on acquisitions, and any other items specified by the Administrator; provided that, for Annual Performance Awards intended to qualify as performance-based compensation under Code Section 162(m), the Administrator shall specify the Excluded Items in writing at the time the Annual Performance Award is made unless, after application of the Excluded Items, the amount payable under the Annual Performance Award is reduced.

(m) “Inimical Conduct” means any act or omission that is inimical to the best interests of the Company or any Affiliate, as determined by the Administrator in its sole discretion, including but not limited to: (1) violation of any employment, noncompete, confidentiality or other agreement in effect with the Company or any Affiliate, (2) taking any steps or doing anything which would damage or negatively reflect on the reputation of the Company or an Affiliate, or (3) failure to comply with applicable laws relating to trade secrets, confidential information or unfair competition.

(n) “Participant” means a key employee of the Company or an Affiliate who has been selected by the Administrator to participate in the Plan, other than the Chief Executive Officer.

(p) “Performance Goal” means the level(s) of performance for a Performance Measure that must be attained in order for a payment to be made under an Annual Performance Award, and/or to determine the amount of such payment based on the Performance Scale.

(o) “Performance Measures” means the following categories (in all cases after taking into account any Excluded Items, as applicable), including in each case any measure based on such category:

 

 

 

 

The Performance Measures described in items (4) through (18) may be measured (A) for the Company on a consolidated basis, (B) for any one or more Affiliates or divisions of the Company and/or (C) for any other business unit or units of the Company or an Affiliate as defined by the Administrator at the time of selection. Further, the Performance Measures shall be determined under U.S. generally accepted accounting principles, unless the Administrator sets forth an alternate definition in the Annual Performance Award. In addition, with respect to Annual Performance Awards that are not intended to comply with Code section 162(m), the Administrator may designate other categories, including categories involving individual performance and subjective targets, not listed above.

(q) “Performance Period” means a period of one fiscal year or less of the Company or an Affiliate as selected by the Administrator.

(r) “Performance Scale” means, with respect to a Performance Measure, a scale from which the level of achievement may be calculated for any given level of actual performance for such Performance Measure. The Performance Scale may be a linear function, a step function, a combination of the two, or any other manner of measurement as determined by the Administrator.

(s) “Plan” means the arrangement described herein, as from time to time amended and in effect.

(t) “Retirement” means termination of employment from the Company and its Affiliates (without Cause) on or after attainment of age sixty-two (62) with at least five (5) consecutive years of service.

(u) “Total and Permanent Disability” means the Participant's inability to perform the material duties of his or her occupation as a result of a medically-determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a period of at least twelve (12) consecutive months, as determined by the Administrator. The Participant will be required to submit such medical evidence or to undergo a medical examination by a doctor selected by the Administrator as the Administrator determines is necessary in order to make a determination hereunder.

Section 2.2. Gender and Number . Except where otherwise indicated by the context, any masculine term used herein includes the feminine, the plural includes the singular, and the singular the plural.

Section 2.3. Severability . In the event any provision of the Plan is held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the said illegal or invalid provision had not been included.

 

ARTICLE 3.

 

ELIGIBILITY

 

Section 3.1. Selection of Participants . The Administrator shall select the key employees of the Company or an Affiliate for participation in the Plan, but the Chief Executive Officer is not eligible to participate in this Plan. No employee shall have any right to receive an Annual Performance Award in any year even if an Annual Performance Award has been previously granted in prior years. In general, it is expected that the Administrator will determine which key employees are to receive an Annual Performance Award prior to, or within the first ninety (90) days of, the first day of the applicable Performance Period.

Section 3.2. Termination of Approval . Until the earlier of the end of a Performance Period or a Participant's termination of employment, the Administrator may at any time withdraw its approval for a Participant's participation in the Plan. In the event of the Administrator's withdrawal of approval, the employee concerned shall cease to be a Participant as of the date selected by the Administrator, the employee's Annual Performance Awards shall be cancelled, and the employee shall not be entitled to any payment under those Annual Performance Awards unless the Administrator determines otherwise. If payment is approved by the Administrator notwithstanding the withdrawal of approval, the payment shall be made in accordance with Section 5.2, subject to Section 5.3, after the end of the Performance Period, and the payment amount shall equal the award amount calculated under Section 5.1, reduced in such manner or by such amount (if at all) as determined in the sole discretion of the Administrator. A Participant shall be notified of the Administrator's withdrawal of its approval for the Participant's participation in the Plan as soon as practicable following such action.

Section 3.3. Transfers In, Out and Between Eligible Positions .

(a) Notwithstanding Section 3.1, if a key employee is hired or promoted into a position that is eligible for an Annual Performance Award, the Administrator may (1) select such key employee as a Participant at any time during the course of a Performance Period, (2) take action resulting in a key employee's receipt of an additional Annual Performance Award, where, with respect to a particular Performance Period already in progress, the key employee is currently a Participant in the Plan and already has an Annual Performance Award for that Performance Period, or (3) change the Performance Goals, Performance

Measures, Performance Scale or potential award amount under an Annual Performance Award that is already in effect; provided that the Administrator may not apply the discretion described in clause (3) with regard to any Annual Performance Award that is intended to qualify as performance-based compensation under Code Section 162(m). The Administrator shall prorate the Annual Performance Award to reflect the Participant's actual period of employment during the Performance Period.

(b) If a Participant is demoted during a Performance Period, the Administrator may decrease the potential award amount of any Annual Performance Award the Participant may be eligible to receive, or revise the Performance Goals, Performance Measures or Performance Scale applicable to the Participant (provided that any such revision as applied to an individual who is a covered employee under Code Section 162(m) may result only in a reduction of the amount that would have otherwise been payable absent such revision), as the Administrator determines is necessary to reflect the Participant's demotion, or the Administrator may withdraw its approval for the Participant's participation in the Plan in accordance with Section 3.2.

(c) If a Participant is transferred from employment by the Company to the employment of an Affiliate, or vice versa, the Administrator may revise the Participant's Annual Performance Award to reflect the transfer, including but not limited to, changing the potential award amount, Performance Measures, Performance Goals and Performance Scale applicable to the Participant (provided that any such revision as applied to an individual who is a covered employee under Code Section 162(m) may result only in a reduction of the amount that would have otherwise been payable absent such revision).

Section 3.4. Termination of Employment .

(a) No Participant shall earn an incentive award for a Performance Period unless the Participant is employed by the Company or an Affiliate (or is on an approved leave of absence) on the last day of such Performance Period, unless the Participant's employment was terminated during the year as a result of Retirement, Total and Permanent Disability or death at a time when the Participant could not have been terminated for Cause, or unless payment is approved by the Administrator after considering the cause of the Participant's termination. If payment is approved by the Administrator, the payment shall be made in accordance with Section 5.2, subject to Section 5.3, after the end of the Performance Period, and the payment amount shall equal the award amount calculated under Section 5.1, reduced in such manner or by such amount (if at all) as determined in the sole discretion of the Administrator.

(b) If a Participant's employment is terminated as a result of death, Total and Permanent Disability or Retirement, at a time when the Participant could not have been terminated for Cause, then the Participant (or the Participant's Beneficiary or estate in the event of his or her death) shall be entitled to receive an amount equal to the product of (x) the award amount calculated under Section 5.1 and (y) a fraction, the numerator of which is the number of the Participant's calendar months of employment during the Performance Period for such award and the denominator of which is the number of calendar months in the Performance Period for such award. In calculating the Participant's calendar months, any fractional month shall be rounded up to the nearest whole month. Notwithstanding the above, the Administrator may determine not to prorate the award. Payment shall be made in accordance with Section 5.2, subject to Section 5.3.

 

ARTICLE 4.

 

CONTINGENT ANNUAL PERFORMANCE AWARDS

 

The Administrator shall determine, at the time an Annual Performance Award is granted, the Performance Period, the Performance Measure(s), the Performance Goal(s) for such Performance Measure, the Performance Scale (which may vary for different Performance Measures), and the amount payable to the Participant if and to the extent the Performance Goals are met (as measured under the Performance Scale). The amount payable to a Participant for meeting the Performance Goal(s) may be designated as a flat dollar amount or as a percentage of the Participant's Base Salary, or may be determined by any other means specified by the Administrator at the time the Annual Performance Award is granted.

 

ARTICLE 5.

 

PAYMENT

 

Section 5.1. Evaluating Performance and Computing Awards .

(a) As soon as practicable following the close of a Performance Period, the Administrator shall determine and certify whether and to what extent the Performance Goals and other material terms of the Annual Performance Award for that Performance Period were satisfied, and shall determine whether any discretionary adjustments under Subsection (b) shall be made. Based on such certification, the Administrator (or its delegate) shall determine the award amount payable to a Participant under the Annual Performance Award for that Performance Period, provided that the maximum award amount for any Participant shall be, with respect to any and all Annual Performance Awards of such Participant with Performance Periods covering (or ending within) the same fiscal year of the Company, no more than one million seven hundred thousand dollars ($1,700,000).

(b) The Administrator may adjust each Participant's potential award amount under any Annual Performance Award, based upon overall individual performance and attainment of goals, as follows:

 

 

Section 5.2. Timing and Form of Payment . When the payment due to the Participant has been determined, unless otherwise deferred pursuant to a Participant's election under the Company's deferred compensation plan, payment shall be made in a cash lump sum by the 74 ^th day following the close of the Performance Period.

Section 5.3. Inimical Conduct . Notwithstanding the foregoing, after the end of the Performance Period for which a payment for an Annual Performance Award has accrued, but before payment or deferral of such amount actually occurs, if the Participant engages in Inimical Conduct, or if the Company determines after a Participant's termination of employment that the Participant could have been terminated for Cause, the Annual Performance Award shall be automatically cancelled and no payment or deferral shall be made. The Administrator may suspend payment or deferral (without liability for interest thereon) pending the Administrator's determination of whether the Participant was or should have been terminated for Cause or whether the Participant has engaged in Inimical Conduct.

Section 5.4. Compliance with Executive Compensation Clawback Laws . Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act), every public company will be required to adopt a policy whereby, in the event of a restatement, the company will recover from current and former executives any incentive-based compensation, for the three years preceding the restatement, that would not have been awarded under the restated financial statements. Notwithstanding anything contained herein to the contrary, when this provision of the Act becomes effective, all executive officers of the Company shall be subject to the executive compensation recoupment policy to be adopted by the Committee.

 

ARTICLE 6.

 

ADJUSTMENTS

 

In the event of any change in the outstanding shares of Company Common Stock by reason of any stock dividend or split, recapitalization, reclassification, merger, consolidation or exchange of shares or other similar corporate change, then if the Administrator shall determine, in its sole discretion, that such change necessarily or equitably requires an adjustment in the Performance Goals established under an Annual Performance Award, such adjustments shall be made by the Administrator and shall be conclusive and binding for all purposes of this Plan. No adjustment shall be made in connection with the issuance by the Company of any warrants, rights, or options to acquire additional shares of Common Stock or of securities convertible into Common Stock.

 

ARTICLE 7.

 

BENEFICIARY

 

If permitted by the Company, a Participant may designate a Beneficiary by filing a beneficiary designation on the form provided by the Administrator. In such event, if the Participant dies prior to receiving any payment due hereunder, such payment shall be made to the Participant's Beneficiary. A Participant entitled to file a beneficiary designation may change his beneficiary designation at any time, provided that each beneficiary designation form filed with the Company shall revoke the most recent form on file, and the last form received by the Company while the Participant was alive shall be given effect. In the event there is no valid beneficiary designation form on file, or in the event the Participant's designated Beneficiary is not alive at the time payment is to be made, or in the event a Participant is not entitled to file a beneficiary designation, the Participant's estate will be deemed the Beneficiary and will be entitled to receive payment. If a Participant designates his spouse as a beneficiary, such beneficiary designation automatically shall become null and void on the date of the Participant's divorce or legal separation from such spouse; provided the Administrator has notice of such divorce or legal separation prior to payment.

 

 

 

 

 

 

ARTICLE 8.

 

RIGHTS OF PARTICIPANTS

 

Section 8.1. No Funding . No Participant or Beneficiary shall have any interest in any fund or in any specific asset or assets of the Company (or any Affiliate) by reason of any Annual Performance Award under the Plan. It is intended that the Company has merely a contractual obligation to make payments when due hereunder and it is not intended that the Company (or any Affiliate) hold any funds in reserve or trust to secure payments hereunder.

Section 8.2. No Transfer . No Participant may assign, pledge, or encumber his interest under the Plan, or any part thereof, except that a Participant may designate a Beneficiary as provided herein.

Section 8.3. No Implied Rights; Employment . Nothing contained in this Plan shall be construed to:

(a) Give any employee or Participant any right to receive any award other than in the sole discretion of the Administrator;

(b) Limit in any way the right of the Company or an Affiliate to terminate a Participant's employment at any time; or

(c) Be evidence of any agreement or understanding, express or implied, that a Participant will be retained in any particular position or at any particular rate of remuneration.

 

ARTICLE 9.

 

ADMINISTRATION

 

Section 9.1. General . The Plan shall be administered by the Administrator. If at any time the Committee shall not be in existence, the Board shall assume the Committee's functions and each reference to the Committee herein shall be deemed to include the Board.

Section 9.2. Authority . In addition to the authority specifically provided herein, the Administrator shall have full power and discretionary authority to: (a) administer the Plan, including but not limited to the power and authority to construe and interpret the Plan; (b) correct errors, supply omissions or reconcile inconsistencies in the terms of the Plan or any Annual Performance Award; (c) establish, amend or waive rules and regulations, and appoint such agents, as it deems appropriate for the Plan's administration; and (d) make any other determinations, including factual determinations, and take any other action as it determines is necessary or desirable for the Plan's administration.

Section 9.3. Delegation of Authority . The Administrator may delegate to one or more officers of the Company any or all of the authority and responsibility of the Administrator, except that the Committee may not delegate any authority with respect to Annual Performance Awards that are intended to comply with Code Section 162(m). If the Administrator has made such a delegation, then all references to the Administrator in this Plan include such officer(s) to the extent of such delegation.

Section 9.4. Decision Binding . The Administrator's determinations and decisions made pursuant to the provisions of the Plan and all related orders or resolutions of the Board shall be final, conclusive and binding on all persons who have an interest in the Plan or an Annual Performance Award, and such determinations and decisions shall not be reviewable.

Section 9.5. Procedures of the Committee . The Committee's determinations must be made by not less than a majority of its members present at the meeting (in person or otherwise) at which a quorum is present, or by written majority consent, which sets forth the action, is signed by each member of the Committee and filed with the minutes for proceedings of the Committee. A majority of the entire Committee shall constitute a quorum for the transaction of business. Service on the Committee shall constitute service as a director of the Company so that the Committee members shall be entitled to indemnification, limitation of liability and reimbursement of expenses with respect to their Committee services to the same extent that they are entitled under the Company's Bylaws and California law for their services as directors of the Company.

 

ARTICLE 10.

 

AMENDMENT AND TERMINATION

Section 10.1. Amendment . The Committee may modify or amend, in whole or in part, any or all of the provisions of the Plan, and may suspend the Plan, and the General Counsel of the Company may modify or amend the Plan for ministerial or administrative changes or to conform the terms of the Plan to the requirements of applicable law; provided that, any such amendment or modification shall be approved by the Company's shareholders to the extent required by Code Section 162(m) or other applicable law; provided, however, that no such modification, amendment, or suspension may, without the consent of the Participant or his or her Beneficiary in the case of the Participant's death, reduce the right of a Participant, or his or her Beneficiary, as the case may be, to any payment due under the Plan except as specifically provided herein.

Section 10.2. Termination During Performance Period . The Committee may terminate the Plan during a Performance Period in accordance with the provisions of this Section 10.2. In order for the provisions of this Section 10.2 to apply, the Committee must designate in writing that the Plan is being terminated in accordance with this Section. Upon termination of the Plan, the Committee may provide that all amounts accrued under the Plan to the date of the Plan termination (as determined by

the Committee in its sole discretion) be paid in a lump sum no later than the 74 ^th day after such Plan termination, provided that to the extent any amount hereunder is not exempt from Section 409A of the Code, any accelerated distribution of such non-exempt amount shall be made only if and to the extent permissible under Treas. Reg. §1.409A-3(j)(4).

Section 10.3. Termination After Performance Period . After December 25, 2011, the Committee may terminate this Plan at anytime that there are no outstanding Annual Performance Awards with Performance Periods that are not completed. In order for the provisions of this Section 10.3 to apply, the Committee must designate in writing that the Plan is being terminated in accordance with this Section and deliver such notice to the Office of the General Counsel.

 

ARTICLE 11.

 

TAX WITHHOLDING

 

The Company shall have the right to deduct from all cash payments made hereunder (or from any other payments due a Participant) any foreign, federal, state, or local taxes required by law to be withheld with respect to such cash payments.

 

ARTICLE 12.

 

OFFSET

 

The Company shall have the right to offset from any amount payable hereunder any amount that the Participant owes to the Company or to any Affiliate without the consent of the Participant (or his Beneficiary, in the event of the Participant's death).

 

ARTICLE 13.

 

SUCCESSORS

 

All obligations of the Company under the Plan with respect to Annual Performance Awards granted hereunder shall be binding on any successor or assign of the Company, whether the existence of such successor or assign is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company. The Plan shall be binding upon and inure to the benefit of the Participants, Beneficiaries, and their heirs, executors, administrators and legal representatives.

 

ARTICLE 14.

 

DISPUTE RESOLUTION

 

Section 14.1. Governing Law . This Plan and the rights and obligations hereunder shall be governed by and construed in accordance with the internal laws of the State of California (excluding any choice of law rules that may direct the application of the laws of another jurisdiction), except as provided in Section 14.2 hereof.

Section 14.2. Arbitration .

(a) Application . Notwithstanding any employee agreement in effect between a Participant and the Company or any Affiliate employer, if a Participant or Beneficiary (the “claimant”) brings a claim that relates to benefits under this Plan, regardless of the basis of the claim (including but not limited to, actions under Title VII, wrongful discharge, breach of employment agreement, etc.), such claim shall be settled by final binding arbitration in accordance with the rules of the American Arbitration Association (“AAA”) and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(b) Initiation of Action . Arbitration must be initiated by serving or mailing a written notice of the complaint to the other party. Normally, such written notice should be provided the other party within one year (365 days) after the day the complaining party first knew or should have known of the events giving rise to the complaint. However, this time frame may be extended if the applicable statute of limitation provides for a longer period of time. If the complaint is not properly submitted within the appropriate time frame, all rights and claims that the complaining party has or may have against the other party shall be waived and void. Any notice sent to the Company shall be delivered to:

 

Office of General Counsel

Superior Industries International, Inc.

7800 Woodley Avenue

Van Nuys, California 91406

 

The notice must identify and describe the nature of all complaints asserted and the facts upon which such complaints are based. Notice will be deemed given according to the date of any postmark or the date of time of any personal delivery.

(c) Compliance with Personnel Policies . Before proceeding to arbitration on a complaint, the claimant must initiate and participate in any complaint resolution procedure identified in the Company's or Affiliate's personnel policies. If the claimant has not initiated the complaint resolution procedure before initiating arbitration on a complaint, the initiation of the arbitration shall be deemed to begin the complaint resolution procedure. No arbitration hearing shall be held on a complaint until any applicable Company or Affiliate complaint resolution procedure has been completed.

(d) Rules of Arbitration . All arbitration will be conducted by a single arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The arbitrator will have authority to award any remedy or relief that a court of competent jurisdiction could order or grant including, without limitation, specific performance of any obligation created under policy, the awarding of punitive damages, the issuance of any injunction, costs and attorney's fees to the extent permitted by law, or the imposition of sanctions for abuse of the arbitration process. The arbitrator's award must be rendered in a writing that sets forth the essential findings and conclusions on which the arbitrator's award is based.

(e) Representation and Costs . Each party may be represented in the arbitration by an attorney or other representative selected by the party. The Company or Affiliate shall be responsible for its own costs, the AAA filing fee and all other fees, costs and expenses of the arbitrator and AAA for administering the arbitration. The claimant shall be responsible for his attorney's or representative's fees, if any. However, if any party prevails on a statutory claim which allows the prevailing party costs and/or attorneys' fees, the arbitrator may award costs and reasonable attorneys' fees as provided by such statute.

(f) Discovery; Location; Rules of Evidence . Discovery will be allowed to the same extent afforded under the Federal Rules of Civil Procedure. Arbitration will be held at a location selected by the Company. AAA rules notwithstanding, the admissibility of evidence offered at the arbitration shall be determined by the arbitrator who shall be the judge of its materiality and relevance. Legal rules of evidence will not be controlling, and the standard for admissibility of evidence will generally be whether it is the type of information that responsible people rely upon in making important decisions.

(g) Confidentiality . The existence, content or results of any arbitration may not be disclosed by a party or arbitrator without the prior written consent of both parties. Witnesses who are not a party to the arbitration shall be excluded from the hearing except to testify.

 

Exhibit 10.2

 

        

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

 

CEO ANNUAL INCENTIVE PERFORMANCE PLAN

 

 

 

ARTICLE 1.

 

PURPOSE AND DURATION

 

Section 1.1. Purpose . The purpose of the Superior Industries International, Inc. CEO Annual Incentive Performance Plan is to motivate the Chief Executive Officer (“CEO”) to achieve performance objectives of the Company measured on an annual basis, which is intended to result in increased value to the shareholders of the Company.

Section 1.2. Duration . Conditioned upon shareholder approval at the 2010 annual meeting, the Plan is effective December 27, 2010. The Plan will remain in effect through the date of the 2016 annual meeting of the Company's shareholders, unless terminated earlier pursuant to Article 10.

 

ARTICLE 2.

 

DEFINITIONS AND CONSTRUCTION

 

Section 2.1. Definitions . Wherever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:

(a) “Administrator” means the Committee.

(b) “Affiliate” has the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act, or any successor rule or regulation thereto.

(c) “Annual Performance Award” means an opportunity granted to the Participant to receive a payment of cash based in whole or part on the extent to which one or more Performance Goals for one or more Performance Measures are achieved for the Performance Period, subject to the conditions described in the Plan and that the Administrator otherwise imposes.

(d) “Base Salary” of the Participant means the annual rate of base pay in effect for the Participant during the Performance Period (or such other period as the Administrator may specify by action taken at the time of grant of an Annual Performance Award) and after any changes to the annual rate of base pay as a result of the annual performance appraisal process. In the event that the annual rate of base pay has changed during the Performance Period and after the annual performance appraisal process, then Base Salary will be calculated by weighting the different annual rates of base pay by the number of days such rates were in effect. For purposes of this calculation, the pre-change annual rate of base pay is treated as in effect from the beginning of the Performance Period to the date of change.

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

(f) “Beneficiary” means the person or persons entitled to receive any amounts due to the Participant in the event of the Participant's death as provided in Article 7.

(g) “Cause” means: (1) if the Participant is subject to an employment agreement that contains a definition of “cause”, such definition, or (2) otherwise, any of the following as determined by the Administrator: (A) violation of the provisions of any employment agreement, non-competition agreement, confidentiality agreement, or similar agreement with the Company or an Affiliate, or the Company's or an Affiliate's code of ethics, as then in effect, (B) conduct rising to the level of gross negligence or willful misconduct in the course of employment with the Company or an Affiliate, (C) violation of any federal, state or local law in connection with the Participant's employment, or (D) breach of any fiduciary duty to the Company or an Affiliate.

(h) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a particular provision of the Code shall be deemed to include the regulations thereunder and any successor provision or regulation thereto.

(i) “Company” means Superior Industries International, Inc., a California corporation, and any successor thereto as provided in Article 13.

(j) “Committee” means the Compensation and Benefits Committee of the Board, which shall consist of not less than three (3) members of the Board each of whom is a “non-employee director” as defined in Securities and Exchange Commission Rule 16b-3(b)(3), or as such term may be defined in any successor regulation under Section 16 of the Securities Exchange Act of 1934, as amended. In addition, each member of the Committee shall be an outside director within the meaning of Code Section 162(m).

(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a particular provision

of the Exchange Act shall be deemed to include the regulations thereunder and any successor provision or regulation thereto.

(l) “Excluded Items” means any gains or losses from the sale of assets outside the ordinary course of business, any gains or losses from discontinued operations, any extraordinary gains or losses, the effects of accounting changes, any unusual, nonrecurring, transition, one-time or similar items or charges, the diluted impact of goodwill on acquisitions, and any other items specified by the Administrator; provided that, for Annual Performance Awards intended to qualify as performance-based compensation under Code Section 162(m), the Administrator shall specify the Excluded Items in writing at the time the Annual Performance Award is made unless, after application of the Excluded Items, the amount payable under the Annual Performance Award is reduced.

(m) “Inimical Conduct” means any act or omission that is inimical to the best interests of the Company or any Affiliate, as determined by the Administrator in its sole discretion, including but not limited to: (1) violation of any employment, noncompete, confidentiality or other agreement in effect with the Company or any Affiliate, (2) taking any steps or doing anything which would damage or negatively reflect on the reputation of the Company or an Affiliate, or (3) failure to comply with applicable laws relating to trade secrets, confidential information or unfair competition.

(n) “Participant” means the CEO of the Company who has been selected by the Administrator to participate in the Plan.

(o) “Performance Goal” means the level(s) of performance for a Performance Measure that must be attained in order for a payment to be made under an Annual Performance Award, and/or to determine the amount of such payment based on the Performance Scale.

(p) “Performance Measures” means the following categories (in all cases after taking into account any Excluded Items, as applicable), including in each case any measure based on such category:

 

 

 

The Performance Measures described in items (4) through (18) may be measured (A) for the Company on a consolidated basis, (B) for any one or more Affiliates or divisions of the Company and/or (C) for any other business unit or units of the Company or an Affiliate as defined by the Administrator at the time of selection. Further, the Performance Measures shall be determined under U.S. generally accepted accounting principles, unless the Administrator sets forth an alternate definition in the Annual Performance Award.

(q) “Performance Period” means a period of one fiscal year or less of the Company or an Affiliate as selected by the Administrator.

(r) “Performance Scale” means, with respect to a Performance Measure, a scale from which the level of achievement may be calculated for any given level of actual performance for such Performance Measure. The Performance Scale may be a linear function, a step function, a combination of the two, or any other manner of measurement as determined by the Administrator.

(s) “Plan” means the arrangement described herein, as from time to time amended and in effect.

(t) “Retirement” means termination of employment from the Company and its Affiliates (without Cause) on or after attainment of age sixty-two (62) with at least five (5) consecutive years of service.

(u) “Total and Permanent Disability” means the Participant's inability to perform the material duties of his or her occupation as a result of a medically-determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a period of at least twelve (12) consecutive months, as determined by the Administrator. The Participant will be required to submit such medical evidence or to undergo a medical examination by a doctor selected by the Administrator as the Administrator determines is necessary in order to make a determination hereunder.

Section 2.2. Gender and Number . Except where otherwise indicated by the context, any masculine term used herein includes the feminine, the plural includes the singular, and the singular the plural.

Section 2.3. Severability . In the event any provision of the Plan is held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the said illegal or invalid provision had not been included.

 

ARTICLE 3.

 

ELIGIBILITY

 

Section 3.1. Eligible Participant . The CEO of the Company is the sole eligible Participant in the Plan. The Administrator may grant to the CEO on an annual basis an Annual Performance Award. The Administrator will determine all terms and conditions of each such Annual Performance Award prior to, or within the first ninety (90) days of, the first day of the applicable Performance Period.

Section 3.2. Termination of Approval . Until the earlier of the end of a Performance Period or the Participant's termination of employment, the Administrator may at any time withdraw its approval for the Participant's participation in the Plan. In the event of the Administrator's withdrawal of approval, the CEO shall cease to be a Participant as of the date selected by the Administrator, the CEO's Annual Performance Awards shall be cancelled, and the CEO shall not be entitled to any payment under those Annual Performance Awards unless the Administrator determines otherwise. If payment is approved by the Administrator notwithstanding the withdrawal of approval, the payment shall be made in accordance with Section 5.2, subject to Section 5.3, after the end of the Performance Period, and the payment amount shall equal the award amount calculated under Section 5.1, reduced in such manner or by such amount (if at all) as determined in the sole discretion of the Administrator. The Participant shall be notified of the Administrator's withdrawal of its approval for the Participant's participation in the Plan as soon as practicable following such action.

Section 3.3. Transfer Out Eligible Position .

If the Participant is demoted or otherwise transfers out of the CEO position during a Performance Period, the Administrator may decrease the potential award amount of any Annual Performance Award the Participant may be eligible to receive, or revise the Performance Goals, Performance Measures or Performance Scale applicable to the Participant (provided that any such revision may result only in a reduction of the amount that would have otherwise been payable absent such revision), as the Administrator determines is necessary to reflect the Participant's change in position, or the Administrator may withdraw its approval for the Participant's participation in the Plan in accordance with Section 3.2.

Section 3.4. Termination of Employment .

(a) The Participant shall not earn an incentive award for a Performance Period unless the Participant is employed by the Company (or is on an approved leave of absence) on the last day of such Performance Period, unless the Participant's

employment was terminated during the year as a result of Retirement, Total and Permanent Disability or death at a time when the Participant could not have been terminated for Cause, or unless payment is approved by the Administrator after considering the cause of the Participant's termination. If payment is approved by the Administrator, the payment shall be made in accordance with Section 5.2, subject to Section 5.3, after the end of the Performance Period, and the payment amount shall equal the award amount calculated under Section 5.1, reduced in such manner or by such amount (if at all) as determined in the sole discretion of the Administrator.

(b) If the Participant's employment is terminated as a result of death, Total and Permanent Disability or Retirement, at a time when the Participant could not have been terminated for Cause, the Participant (or the Participant's Beneficiary or estate in the event of his or her death) shall be entitled to receive an amount equal to the product of (x) the award amount calculated under Section 5.1 and (y) a fraction, the numerator of which is the number of the Participant's calendar months of employment during the Performance Period for such award and the denominator of which is the number of calendar months in the Performance Period for such award. In calculating the Participant's calendar months, any fractional month shall be rounded up to the nearest whole month. Notwithstanding the above, the Administrator may determine not to prorate the award. Payment shall be made in accordance with Section 5.2, subject to Section 5.3.

 

ARTICLE 4.

 

CONTINGENT ANNUAL PERFORMANCE AWARDS

 

The Administrator shall determine, at the time an Annual Performance Award is granted, the Performance Period, the Performance Measure(s), the Performance Goal(s) for such Performance Measure, the Performance Scale (which may vary for different Performance Measures), and the amount payable to the Participant if and to the extent the Performance Goals are met (as measured under the Performance Scale). The amount payable to the Participant for meeting the Performance Goal(s) may be designated as a flat dollar amount or as a percentage of the Participant's Base Salary, or may be determined by any other means specified by the Administrator at the time the Annual Performance Award is granted.

 

ARTICLE 5.

 

PAYMENT

 

Section 5.1. Evaluating Performance and Computing Awards .

(a) As soon as practicable following the close of a Performance Period, the Administrator shall determine and certify whether and to what extent the Performance Goals and other material terms of the Annual Performance Award for that Performance Period were satisfied, and shall determine whether any discretionary adjustments under Subsection (b) shall be made. Based on such certification, the Administrator (or its delegate) shall determine the award amount payable to the Participant under the Annual Performance Award for that Performance Period, provided that the maximum award amount for the Participant shall be, with respect to any and all Annual Performance Awards of the Participant with Performance Periods covering (or ending within) the same fiscal year of the Company, no more than one million seven hundred thousand dollars ($1,700,000), which is two times the CEO's annual base salary as of the effective date of the Plan.

(b) The Administrator may reduce the Participant's potential award amount under any Annual Performance Award by a maximum of thirty percent (30%), based upon overall individual performance and attainment of goals.

Section 5.2. Timing and Form of Payment . When the payment due to the Participant has been determined, unless otherwise deferred pursuant to the Participant's election under the Company's deferred compensation plan, payment shall be made in a cash lump sum by the 74 ^th day following the close of the Performance Period.

Section 5.3. Inimical Conduct . Notwithstanding the foregoing, after the end of the Performance Period for which a payment for an Annual Performance Award has accrued, but before payment or deferral of such amount actually occurs, if the Participant engages in Inimical Conduct, or if the Company determines after the Participant's termination of employment that the Participant could have been terminated for Cause, the Annual Performance Award shall be automatically cancelled and no payment or deferral shall be made. The Administrator may suspend payment or deferral (without liability for interest thereon) pending the Administrator's determination of whether the Participant was or should have been terminated for Cause or whether the Participant has engaged in Inimical Conduct.

Section 5.4. Compliance with Executive Compensation Clawback Laws . Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act), every public company will be required to adopt a policy whereby, in the event of a restatement, the company will recover from current and former executives any incentive-based compensation, for the three years preceding the restatement, that would not have been awarded under the restated financial statements. Notwithstanding anything contained herein to the contrary, when this provision of the Act becomes effective, the CEO of the Company shall be subject to the executive compensation recoupment policy to be adopted by the Committee.

 

 

ARTICLE 6.

 

ADJUSTMENTS

 

In the event of any change in the outstanding shares of Company Common Stock by reason of any stock dividend or split, recapitalization, reclassification, merger, consolidation or exchange of shares or other similar corporate change, then if the Administrator shall determine, in its sole discretion, that such change necessarily or equitably requires an adjustment in the Performance Goals established under an Annual Performance Award, such adjustments shall be made by the Administrator and shall be conclusive and binding for all purposes of this Plan. No adjustment shall be made in connection with the issuance by the Company of any warrants, rights, or options to acquire additional shares of Common Stock or of securities convertible into Common Stock.

 

ARTICLE 7.

 

BENEFICIARY

 

If permitted by the Company, the Participant may designate a Beneficiary by filing a beneficiary designation on the form provided by the Administrator. In such event, if the Participant dies prior to receiving any payment due hereunder, such payment shall be made to the Participant's Beneficiary. The Participant may change his beneficiary designation at any time, provided that each beneficiary designation form filed with the Company shall revoke the most recent form on file, and the last form received by the Company while the Participant was alive shall be given effect. In the event there is no valid beneficiary designation form on file, or in the event the Participant's designated Beneficiary is not alive at the time payment is to be made, or in the event the Participant is not entitled to file a beneficiary designation, the Participant's estate will be deemed the Beneficiary and will be entitled to receive payment. If the Participant designates his spouse as a beneficiary, such beneficiary designation automatically shall become null and void on the date of the Participant's divorce or legal separation from such spouse; provided the Administrator has notice of such divorce or legal separation prior to payment.

 

ARTICLE 8.

 

RIGHTS OF PARTICIPANT

 

Section 8.1. No Funding . The Participant or Beneficiary shall not have any interest in any fund or in any specific asset or assets of the Company (or any Affiliate) by reason of any Annual Performance Award under the Plan. It is intended that the Company has merely a contractual obligation to make payments when due hereunder and it is not intended that the Company (or any Affiliate) hold any funds in reserve or trust to secure payments hereunder.

Section 8.2. No Transfer . The Participant may not assign, pledge, or encumber his interest under the Plan, or any part thereof, except that the Participant may designate a Beneficiary as provided herein.

Section 8.3. No Implied Rights; Employment . Nothing contained in this Plan shall be construed to:

(a) Give the Participant any right to receive any award other than in the sole discretion of the Administrator;

(b) Limit in any way the right of the Company to terminate the Participant's employment at any time; or

(c) Be evidence of any agreement or understanding, express or implied, that the Participant will be retained in any particular position or at any particular rate of remuneration.

 

ARTICLE 9.

 

ADMINISTRATION

 

Section 9.1. General . The Plan shall be administered by the Administrator. If at any time the Committee shall not be in existence, the Board shall assume the Committee's functions and each reference to the Committee herein shall be deemed to include the Board.

Section 9.2. Authority . In addition to the authority specifically provided herein, the Administrator shall have full power and discretionary authority to: (a) administer the Plan, including but not limited to the power and authority to construe and interpret the Plan; (b) correct errors, supply omissions or reconcile inconsistencies in the terms of the Plan or any Annual Performance Award; (c) establish, amend or waive rules and regulations, and appoint such agents, as it deems appropriate for the Plan's administration; and (d) make any other determinations, including factual determinations, and take any other action as it determines is necessary or desirable for the Plan's administration.

Section 9.3. Decision Binding . The Administrator's determinations and decisions made pursuant to the provisions of the Plan and all related orders or resolutions of the Board shall be final, conclusive and binding on all persons who have an interest in the Plan or an Annual Performance Award, and such determinations and decisions shall not be reviewable.

Section 9.4. Procedures of the Committee . The Committee's determinations must be made by not less than a majority of its members present at the meeting (in person or otherwise) at which a quorum is present, or by written majority consent, which sets forth the action, is signed by each member of the Committee and filed with the minutes for proceedings of the Committee. A majority of the entire Committee shall constitute a quorum for the transaction of business. Service on the Committee shall constitute service as a director of the Company so that the Committee members shall be entitled to indemnification, limitation of liability and reimbursement of expenses with respect to their Committee services to the same extent that they are entitled under the Company's Bylaws and California law for their services as directors of the Company.

 

ARTICLE 10.

 

AMENDMENT AND TERMINATION

Section 10.1. Amendment . The Committee may modify or amend, in whole or in part, any or all of the provisions of the Plan, and may suspend the Plan, and the General Counsel of the Company may modify or amend the Plan for ministerial or administrative changes or to conform the terms of the Plan to the requirements of applicable law; provided that, any such amendment or modification shall be approved by the Company's shareholders to the extent required by Code Section 162(m) or other applicable law; provided, however, that no such modification, amendment, or suspension may, without the consent of the Participant or his or her Beneficiary in the case of the Participant's death, reduce the right of the Participant, or his or her Beneficiary, as the case may be, to any payment due under the Plan except as specifically provided herein.

Section 10.2. Termination During Performance Period . The Committee may terminate the Plan during a Performance Period in accordance with the provisions of this Section 10.2. In order for the provisions of this Section 10.2 to apply, the Committee must designate in writing that the Plan is being terminated in accordance with this Section. Upon termination of the Plan, the Committee may provide that all amounts accrued under the Plan to the date of the Plan termination (as determined by the Committee in its sole discretion) be paid in a lump sum no later than the 74 ^th day after such Plan termination, provided that to the extent any amount hereunder is not exempt from Section 409A of the Code, any accelerated distribution of such non-exempt amount shall be made only if and to the extent permissible under Treas. Reg. §1.409A-3(j)(4).

Section 10.3. Termination After Performance Period . After December 30, 2012, the Committee or the CEO may terminate this Plan at anytime that there are no outstanding Annual Performance Awards with Performance Periods that are not completed. In order for the provisions of this Section 10.3 to apply, the Committee and/or the CEO must designate in writing that the Plan is being terminated in accordance with this Section and deliver such notice to the Office of the General Counsel.

 

ARTICLE 11.

 

TAX WITHHOLDING

 

The Company shall have the right to deduct from all cash payments made hereunder (or from any other payments due the Participant) any foreign, federal, state, or local taxes required by law to be withheld with respect to such cash payments.

 

ARTICLE 12.

 

OFFSET

 

The Company shall have the right to offset from any amount payable hereunder any amount that the Participant owes to the Company or to any Affiliate without the consent of the Participant (or his Beneficiary, in the event of the Participant's death).

 

ARTICLE 13.

 

SUCCESSORS

 

All obligations of the Company under the Plan with respect to Annual Performance Awards granted hereunder shall be binding on any successor or assign of the Company, whether the existence of such successor or assign is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company. The Plan shall be binding upon and inure to the benefit of the Participant, Beneficiaries, and their heirs, executors, administrators and legal representatives.

 

 

 

 

 

ARTICLE 14.

 

DISPUTE RESOLUTION

 

Section 14.1. Governing Law . This Plan and the rights and obligations hereunder shall be governed by and construed in accordance with the internal laws of the State of California (excluding any choice of law rules that may direct the application of the laws of another jurisdiction), except as provided in Section 14.2 hereof.

Section 14.2. Arbitration .

(a) Application . Notwithstanding any employee agreement in effect between the Participant and the Company or any Affiliate employer, if the Participant or Beneficiary (the “claimant”) brings a claim that relates to benefits under this Plan, regardless of the basis of the claim (including but not limited to, actions under Title VII, wrongful discharge, breach of employment agreement, etc.), such claim shall be settled by final binding arbitration in accordance with the rules of the American Arbitration Association (“AAA”) and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(b) Initiation of Action . Arbitration must be initiated by serving or mailing a written notice of the complaint to the other party. Normally, such written notice should be provided the other party within one year (365 days) after the day the complaining party first knew or should have known of the events giving rise to the complaint. However, this time frame may be extended if the applicable statute of limitation provides for a longer period of time. If the complaint is not properly submitted within the appropriate time frame, all rights and claims that the complaining party has or may have against the other party shall be waived and void. Any notice sent to the Company shall be delivered to:

 

Office of General Counsel

Superior Industries International, Inc.

7800 Woodley Avenue

Van Nuys, California 91406

 

The notice must identify and describe the nature of all complaints asserted and the facts upon which such complaints are based. Notice will be deemed given according to the date of any postmark or the date of time of any personal delivery.

(c) Compliance with Personnel Policies . Before proceeding to arbitration on a complaint, the claimant must initiate and participate in any complaint resolution procedure identified in the Company's or Affiliate's personnel policies. If the claimant has not initiated the complaint resolution procedure before initiating arbitration on a complaint, the initiation of the arbitration shall be deemed to begin the complaint resolution procedure. No arbitration hearing shall be held on a complaint until any applicable Company or Affiliate complaint resolution procedure has been completed.

(d) Rules of Arbitration . All arbitration will be conducted by a single arbitrator according to the Employment Dispute Arbitration Rules of the AAA. The arbitrator will have authority to award any remedy or relief that a court of competent jurisdiction could order or grant including, without limitation, specific performance of any obligation created under policy, the awarding of punitive damages, the issuance of any injunction, costs and attorney's fees to the extent permitted by law, or the imposition of sanctions for abuse of the arbitration process. The arbitrator's award must be rendered in a writing that sets forth the essential findings and conclusions on which the arbitrator's award is based.

(e) Representation and Costs . Each party may be represented in the arbitration by an attorney or other representative selected by the party. The Company or Affiliate shall be responsible for its own costs, the AAA filing fee and all other fees, costs and expenses of the arbitrator and AAA for administering the arbitration. The claimant shall be responsible for his attorney's or representative's fees, if any. However, if any party prevails on a statutory claim which allows the prevailing party costs and/or attorneys' fees, the arbitrator may award costs and reasonable attorneys' fees as provided by such statute.

(f) Discovery; Location; Rules of Evidence . Discovery will be allowed to the same extent afforded under the Federal Rules of Civil Procedure. Arbitration will be held at a location selected by the Company. AAA rules notwithstanding, the admissibility of evidence offered at the arbitration shall be determined by the arbitrator who shall be the judge of its materiality and relevance. Legal rules of evidence will not be controlling, and the standard for admissibility of evidence will generally be whether it is the type of information that responsible people rely upon in making important decisions.

(g) Confidentiality . The existence, content or results of any arbitration may not be disclosed by a party or arbitrator without the prior written consent of both parties. Witnesses who are not a party to the arbitration shall be excluded from the hearing except to testify.

 

Exhibit 10.3

 

 

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

JANUARY 1, 2005

(amended and restated as of December 31, 2010)

This Executive Employment Agreement (“Agreement”), originally dated January 1, 2005, and amended and restated as of December 31, 2010 (the “Effective Date”), is between Superior Industries International, Inc. (“Company”) and Steven J. Borick (“Employee”).

RECITALS

Company is formed to engage primarily in the automobile parts manufacturing business. Employee has experience in this business and possesses valuable skills and experience that will be used in advancing Company's interests. Employee is willing to be engaged by Company and Company is willing to engage Employee in the capacity of President and Chief Executive Officer of Company (“President and CEO”), upon the terms and conditions set forth in this Agreement. Capitalized terms used herein without definition shall have the meanings ascribed to them in this agreement.

AGREEMENT

Employee and Company, intending to be legally bound, agree as follows:

1      SERVICES

 

1.1      General Services. Reports to Board of Directors

1.1.1    Company shall engage Employee as its President and CEO, reporting to the Board of Directors. As of the Effective Date, Employee shall perform the duties customarily performed by one holding such position in a similar business as that engaged in by Company, as determined by the Board in its sole and absolute discretion, and shall serve as a member of the Board so long as he is elected to the Board by Company's shareholders. Employee's duties may change from time to time on reasonable notice, based on the needs of Company and Employee's skills as determined by Company. (The duties to be performed by Employee to Company and its affiliates shall hereinafter be referred to as the “Services”).

1.1.2    Employee shall devote his entire working time, attention, and energies to the business of Company, and shall not, during the Term (as defined below), be engaged in any other business activity whether or not such business activity is pursued for gain, profit or other pecuniary advantage, without the prior written consent of the Board. The foregoing is not intended to restrict Employee's ability to enter into passive investments that do not compete in any way with Company's business.

1.2      Location . Employee shall be based at Company's corporate headquarters. Employee shall undertake such travel as is necessary or advisable for the effective performance of the duties of the position. Employee's office initially will be based in Los Angeles County, California or such other location as Company may designate.

 

1.3      Best Abilities . Employee shall serve Company faithfully and to the best of his ability and shall use his best abilities to perform the Services. Employee shall act at all times according to what is reasonably believed to be in the best interests of Company.

 

1.4      Company Authority . As an officer of Company, Employee shall, with the assistance of consultants, professionals, and other employees of Company, comply with all laws, rules and regulations applicable to Employee as a result of this Agreement (the “Laws”). In complying with the Laws, Employee may after reasonable investigation and in good faith rely upon advice given to Employee or to the Board by Company's legal counsel and other consultants or employees Company engages in connection with compliance with the Laws; provided, however, that Employee may rely only upon advice that is within the scope of the profession or expertise of the person providing such advice. Prior to the execution of this Agreement, Employee has received and reviewed Company's Policies and Procedures and Company's Employee Handbook. Employee shall comply with Company's Policies and Procedures (as they may be amended from time to time), as well as practices now in effect or as later amended or adopted by Company, as required of similarly situated employees at Company.

 

2      TERM

 

2.1     The term (the “Term”) of this Agreement shall be effective as of the Effective Date and shall govern Employee's

employment from and after such date through and including December 31, 2015. This Agreement shall automatically renew for additional one (1) year periods thereafter unless either party provides written notice at least six (6) months in advance of terminating the Agreement, or until as provided in Section 4 of this Agreement.

 

3      COMPENSATION AND BENEFITS

 

3.1      Compensation . Employee's total compensation consists of base salary, variable compensation (as further identified in this Agreement) and other benefits generally provided to similarly situated employees of Company. Any compensation paid to Employee shall be pursuant to Company's policies and practices for exempt employees and shall be subject to all applicable laws and requirements regarding the withholding of federal, state and/or local taxes. Compensation provided in this Agreement is full payment for the Services and Employee shall receive no additional compensation for extraordinary services unless otherwise authorized in writing by the Board.

3.1.1     Base Compensation . During the Term, Company agrees to pay Employee an annual base salary of $850,000.00, less applicable withholdings, payable in equal installments no less frequently than semi-monthly. In no event shall Employee's base compensation be less than $850,000.00 per year. Commencing on March 31, 2012 and on each anniversary thereafter, the Board may, at its sole discretion, adjust the base compensation to take into account Employee's performance and the performance of Company in general; however, the Board shall have no obligation to do so.

3.1.2     Variable Compensation . Employee shall be eligible for annual variable compensation, subject to applicable withholdings and subject to approval by the Board and Company's Compensation Committee, and shall be set forth in a separate agreement.

3.1.3     Equity Compensation . Employee shall be eligible for equity compensation subject to the terms of the Superior Industries International, Inc. 2008 Equity Incentive Plan, or any successor plan approved by Company's shareholders (the “Equity Incentive Plan”). For each year of this Agreement commencing March 1, 2011, Employee shall receive an annual stock option grant under the Equity Incentive Plan of 120,000 shares per year. Such stock options will be subject to all of the relevant terms and conditions of the Equity Incentive Plan, and will be subject to Employee's continued employment in the capacity of President and CEO of Company. Notwithstanding anything herein to the contrary, if the Compensation Committee approves a long-term incentive plan that includes Employee, this Section 3.1.3, except for the first sentence, shall become null and void and shall have no further effect.

 

3.2      Business Expenses . Company shall reimburse Employee for business expenses reasonably incurred in performing the Services.

 

3.3      Additional Benefits . Company shall provide Employee those additional benefits normally granted by Company to similarly situated employees subject to eligibility requirements applicable to each benefit. Company has no obligation to provide any other benefits unless provided for in this Agreement. As of the Effective Date, Company intends to provide major medical and dental benefits, holidays, and a 401(k) Plan. To the extent that Company offers life or disability insurance to other executive officers of Company and to the extent Employee is otherwise eligible for coverage there under without a material adverse impact on the ability of Company to offer such benefits generally, Company shall make those same benefits available to Employee. Company reserves the right to modify, suspend, or discontinue any and all of the above benefit plans, policies, and practices at any time without notice to or recourse by Employee so long as such action is taken generally with respect to other similarly situated persons and does not single out Employee.

 

3.4      Use of Automobile . Company shall provide Employee with a reasonable car allowance on a monthly basis intended to cover all operating expenses of the automobile and adequate automobile insurance with reasonable policy limits.

 

3.5      Paid Time Off . Employee shall be entitled to six (6) weeks of paid time off per calendar year. The accrual and use of such paid time off shall be governed by Company's vacation policy.

 

4      TERMINATION

 

4.1      Circumstances of Termination . This Agreement and the relationship between Company and Employee may be terminated prior to the expiration of the Term only as follows:

4.1.1     Death . This Agreement shall terminate upon Employee's death, effective as of the date of Employee's death.

4.1.2     Disability . Company may, at its sole discretion, either suspend compensation payments due under Section 4.1 or terminate this Agreement due to Employee's Disability. For purposes of this Agreement,

“Disability” shall mean circumstances in which Employee is incapable of performing the Services, after Company has made or attempted to provide reasonable accommodations to Employee as required by applicable law, because of accident, injury, or physical or mental illness for sixty (60) consecutive days, or is unable or shall have failed to perform the Services for a total period of ninety (90) days, regardless of whether such days are consecutive. If Company suspends compensation payments because of Employee's Disability; Company shall resume compensation payments when Employee resumes performance of the Services. If Company elects to terminate this Agreement due to Employee's Disability; it will give Employee not more than thirty (30) days advance written notice.

4.1.3     Discontinuance of Business . If Company discontinues operating its business in any substantial respect, then this Agreement shall terminate as of the last day of the month on which Company ceases such operations with the same effect as if that last date were originally established as the termination date of this Agreement.

4.1.4     For Cause . Company may terminate this Agreement, without advance notice, for Cause, as determined at the sole discretion of the Board of Directors. For the purpose of this Agreement, “Cause” shall mean, as determined by Company in its sole discretion: any failure by Employee to comply in any material respect with this Agreement or any agreement incorporated herein; personal or professional misconduct by Employee (including, but not limited to, criminal activity or gross or willful neglect of duty); breach of Employee's fiduciary duty to Company and/or any subsidiaries, affiliates or successors of Company; conduct that threatens public health or safety, threatens Company's ability to manufacture automobile parts, or threatens to do immediate or substantial harm to Company's business or reputation; or any other misconduct, deficiency, failure of performance, breach or default. To the extent that a breach pursuant to this Section 4.1.4 is, in Company's sole discretion, reasonably capable of being cured by Employee without harm to Company or its reputation, Company shall, instead of immediately terminating Employee pursuant to this Agreement, provide Employee with notice of such breach, specifying the actions required to cure such breach, and Employee shall have thirty (30) days to cure such breach by performing the actions so specified. If Employee fails to cure such breach to Company's satisfaction within the thirty (30) day period, Company may terminate this Agreement without further notice. Company's exercise of its right to terminate under this Section shall be without prejudice to any other remedy to which Company may be entitled at law, in equity, or under this Agreement.

4.1.5     Without Cause . This Agreement may be terminated without Cause at any time by Company upon thirty (30) days advanced written notice to Employee.

4.1.6     Voluntary Termination . This Agreement may be terminated for any reason at any time by Employee upon thirty (30) days advanced written notice to Company.

4.1.7     Change in Control . For purposes of this Agreement, a “Change in Control” of Company shall be deemed to have occurred if:

4.1.7.1    Any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Company representing 50% or more of the total voting power represented by Company's then outstanding voting securities;

4.1.7.2    Consummation of a sale or disposition by Company of all or substantially all of Company's assets;

4.1.7.3    Consummation of a merger or consolidation of Company with any other corporation, other than a merger or consolidation that would result in the voting securities of Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; or

4.1.7.4    The stockholders of Company approve a plan of complete liquidation of Company.

4.1.8     Good Reason . Employee's employment may be terminated by Employee for Good Reason within a period of one (1) year after a Change in Control. “Good Reason” shall mean any of the following, without Employee's express consent:

4.1.8.1    a material diminution in Employee's duties, authority or responsibilities, relative to Employee's duties, authority or responsibilities as in effect immediately prior to the Change in Control;

4.1.8.2    a material reduction in Employee's base salary and/or target annual incentive compensation opportunity as in effect immediately prior to the Change in Control;

4.1.8.3    the relocation of Employee to a facility or a location more than 50 miles from Employee's work

location as in effect immediately prior to the Change in Control;

4.1.8.4    a requirement that Employee report to a corporate officer or employee instead of reporting directly to the Board;

4.1.8.5    any other action or inaction that constitutes a material breach by Company of this Agreement, including, without limitation, the failure of Company to obtain the assumption of this Agreement by a successor as required by Section 8.1 hereof.

A termination by Employee shall not constitute termination for Good Reason unless Employee shall first have delivered to Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 90 days after the initial occurrence of such event), and there shall have passed a reasonable time (not less than 30 days) within which Company may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by Employee. Good Reason shall not include Employee's death or Disability. The parties intend, believe and take the position that a resignation by Employee for Good Reason as defined above effectively constitutes an involuntary separation from service within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and Treas. Reg §1.409A-1(n)(2).

4.2      Employee's Rights Upon Termination .

4.2.1     Expiration of Term . Upon termination of this Agreement by expiration of the Term set forth in Section 2 above, Company shall have no further obligation to Employee under this Agreement or otherwise, except to pay to Employee the following amounts, if any, owed to Employee prior to the expiration of the Term: (a) any accrued and unpaid base compensation (including accrued vacation) and variable compensation (less applicable withholdings) and (b) reimbursement of any unpaid reimbursable expenses. Any such accrued obligations shall be paid to Employee in a lump sum in cash within 30 days after the date of termination.

4.2.2     Death or Disability . Upon termination of this Agreement because of death or Disability of Employee pursuant to Sections 4.1.1 or 4.1.2 above, Company shall have no further obligation to Employee under this Agreement or otherwise, except to pay to Employee's estate or designated beneficiary the following amounts, if any, owed to Employee prior to the date of Employee's death or termination due to Disability: (a) any accrued and unpaid base compensation and variable compensation pro rated to the date of termination (including accrued vacation, but less applicable withholdings) and (b) reimbursement of any unpaid reimbursable expenses. Any such accrued obligations shall be paid to Employee or Employee's estate or beneficiary, as applicable, in a lump sum in cash within 30 days after the date of termination.

4.2.3     Discontinuance of Business . Upon termination of this Agreement because of discontinuation of Company's business pursuant to Section 4.1.3, Company shall have no further obligation to Employee under this Agreement or otherwise, except to pay to Employee the following amounts, if any, owed to Employee prior to the date of termination of this Agreement: (a) any unpaid base compensation (including accrued vacation, but less applicable withholdings) and (b) reimbursement of any unpaid reimbursable expenses. Any such accrued obligations shall be paid to Employee in a lump sum in cash within 30 days after the date of termination.

4.2.4     Termination for Cause . Upon termination of Employee's employment for Cause pursuant to Section 4.1.4, Company shall have no further obligation to Employee under this Agreement or otherwise except to pay to Employee the following amounts, if any, owed to Employee prior to the date of termination of this Agreement: (a) any unpaid base compensation (including accrued vacation, but less applicable withholdings) and (b) reimbursement of any unpaid reimbursable expenses. Any such accrued obligations shall be paid to Employee in a lump sum in cash within 30 days after the date of termination.

4.2.5     Termination without Cause other than one year after a Change in Control . Upon termination of Employee's employment by Company without Cause, prior to, or more than one year after, a Change in Control, Company shall have no further obligation to Employee under this Agreement or otherwise, except to pay to Employee:

4.2.5.1    Any accrued and unpaid base compensation (including accrued vacation, but less applicable withholdings) and reimbursement of any unpaid reimbursable expenses owed by Company to Employee through the termination date, which amounts shall be paid to Employee in a lump sum in cash within 30 days after the date of termination; and

4.2.5.2    Severance compensation totaling one (1) year's base salary, in the form of monthly payments to Employee in the amount of Employee's monthly base salary as in effect on the date of termination, payable in accordance with customary payroll practices, for twelve (12) months following such

termination. Payment of severance compensation shall be subject to the provisions of Section 10 of this Agreement and shall be conditioned upon (i) Employee executing a Separation Agreement, which shall include among other things the language set forth in Exhibit A, and (ii) Employee's compliance with his obligations under Article 6; provided, however, that Company may in its sole discretion revise the language in Exhibit A at any time prior to the execution of the Separation Agreement. Severance compensation pursuant to this Section 4.2.5 shall be in lieu of any other severance benefit or other right or remedy to which Employee would otherwise be entitled under Company's policies in effect on the Effective Date or thereafter. Employee acknowledges and agrees that in the event Employee breaches any provision of Article 6 or the Separation Agreement, his right to receive severance payments under this Section 4.2.5.2 shall automatically terminate and Employee shall repay all severance payments received.

4.2.5.3    For purposes of clarification, Company's or Employee's election not to renew the employment Term shall not constitute a termination without “Cause” covered by this Section 4.2.5, but shall constitute a termination due to expiration of Term and subject to and covered by Section 4.2.1.

4.2.6     Voluntary Termination . Upon Employee's voluntary termination of his employment, Company shall have no further obligation to Employee under this Agreement or otherwise, except to pay to Employee the following amounts, if any, owed to Employee prior to the date of termination of this Agreement: (a) any unpaid base compensation (including accrued vacation, but less applicable withholdings) and (b) reimbursement of any unpaid reimbursable expenses. Any such accrued obligations shall be paid to Employee in a lump sum in cash within 30 days after the date of termination.

4.2.7     Termination after a Change in Control . If, within one (1) year after a Change in Control (i) Company shall terminate Employee's employment other than for Cause or Disability or (ii) Employee shall terminate employment for Good Reason, Company shall have no further obligation to Employee under this Agreement or otherwise except to pay to Employee:

4.2.7.1    Any accrued and unpaid base compensation (including accrued vacation, but less applicable withholdings) and reimbursement of any unpaid reimbursable expenses owed by Company to Employee through the termination date, which amounts shall be paid to Employee in a lump sum in cash within 30 days after the date of termination; and

4.2.7.2    Severance compensation totaling three (3) years' base salary, based on Employee's annual salary as in effect at the date of termination. Payment of such severance compensation shall be made in one lump sum payable within 70 days after the date of termination, or such later date as may be required by Section 10 of this Agreement, and shall be conditioned upon (i) Employee executing a Separation Agreement, which shall include among other things the language set forth in Exhibit A and (ii) Employee's compliance with his obligations under Article 6; provided, however, that Company may in its sole discretion revise the language in Exhibit A at any time prior to the execution of the Separation Agreement. Severance compensation pursuant to this Section 4.2.7 shall be in lieu of any other severance benefit or other right or remedy to which Employee would otherwise be entitled under Company's policies in effect on the Effective Date or thereafter. Employee acknowledges and agrees that in the event Employee breaches any provision of Article 6 or the Separation Agreement, his right to receive severance payments under this Section 4.2.7 shall automatically terminate and Employee shall repay all severance payments received.

4.2.8     Board Membership . Upon Employee's termination of employment for Cause, Employee shall be deemed to have resigned as a member of the Board effective as of the date of Employee's termination, without any further action by Employee or any other party. Employee shall cooperate with any reasonable documentation requested by Company to effectuate or report such resignation from the Board.

5      REPRESENTATIONS AND WARRANTIES

 

5.1      Representations of Employee . Employee represents and warrants that he has all right, power, authority and capacity, and is free to enter into this Agreement; that by doing so, Employee will not violate or interfere with the rights of any other person or entity; and that Employee is not subject to any contract, understanding or obligation that will or might prevent, interfere with or impair the performance of this Agreement by Employee. Employee shall indemnify and hold Company harmless with respect to any losses, liabilities, demands, claims, fees, expenses, damages and costs (including attorneys' fees and court costs) resulting from or arising out of any third party claim or action based upon Employee's violation of the foregoing representation.

 

 

5.2      Representations of Company . Company represents and warrants that it has all right, power and authority, without the consent of any other person, to execute and deliver, and perform its obligations under, this Agreement. All corporate and other actions required to be taken by Company to authorize the execution; delivery and performance of this Agreement and the consummation of all transactions contemplated hereby have been duly and properly taken.

 

5.3      Materiality of Representations . The representations, warranties and covenants set forth in this Agreement shall be deemed to be material and to have been relied upon by the parties hereto.

 

6      COVENANTS

 

6.1      Nondisclosure and Invention Assignment . Employee shall not disclose or use at any time, either during the Term or thereafter, to any person or entity or use for his own direct or indirect benefit any Confidential Information (as defined below) of which Employer is or becomes aware, whether or not such information is developed by Employee, except to the extent that such disclosure or use is directly related to and required by Employee's Performance of his duties under this Agreement. For purposes of this Agreement, “Confidential Information” shall include Company's products, reports, studies, services, processes, suppliers, customers, customers' account executives, financial, sales and distribution information, price lists, identity and list of actual and potential customers, trade secrets, technical information, business plans and strategies to the extent that such information has not been publicly disseminated by Company or otherwise made available to the public. For purposes of the foregoing, information shall not be deemed to have been “publicly disseminated” or “otherwise made available to the public” if such dissemination or availability arose as a result of a breach of this Agreement.

 

6.2      Covenant to Deliver Records . Upon termination of Employee's employment, Employee will deliver to Company all customer lists, proposals, reports, memoranda, computer software and programming, budgets and other financial information, and other materials or records or writings of any type (including any copies thereof and regardless of the medium in which the information exists) made, used or obtained by Employee in connection with his employment by Company.

 

6.3      Employee Compliance with Company Policies . Employee shall be subject to the provisions of Company's policies, including Company's Employee Non-Disclosure Agreement, Employee Standards of Professional Conduct Statement and Code of Business Conduct and Ethics, all three of which are incorporated herein by this reference.

 

6.4      Non-Solicitation . Employee agrees that, so long as he is employed by Company and for a period of one (1) year after termination of his employment for any reason, he shall not (a) directly or indirectly solicit, induce or attempt to solicit or induce any Company employee to discontinue his or her employment with Company (b) usurp any opportunity of Company that Employee became aware of during his tenure at Company which is made available to him on the basis of the belief that Employee is still employed by Company, or (c) directly or indirectly solicit or induce or attempt to influence any person or business that is an account, customer or client of Company to restrict or cancel the business of any such account, customer or client with Company. (For purposes of this Agreement, an employee, consultant, or agent is defined as any person who has worked for Company within the twelve-month period immediately preceding the termination of Employee's employment.).

 

6.5      Non Disparagement . Employee shall not, directly or indirectly, either for the benefit of Employee or any other Person, from the Effective Date to the first anniversary of the termination of his employment, make any disparaging remarks that are reasonably likely to cause material injury to the relationship between Company or its affiliates and any existing or prospective client, lessor, lessee, contractual counterparty, vendor, supplier, customer, distributor, employee, consultant, regulator or other business associate of Company or its affiliates.

 

7      CERTAIN RIGHTS OF COMPANY

 

7.1      Announcement . Company shall have the right to make public announcements concerning the execution of this Agreement and certain terms thereof.

 

7.2      Right to Insure . Company shall have the right to secure, in its own name or otherwise, and at its own expense, life, health, accident or other insurance covering Employee, and Employee shall have no right, title or interest in and to such insurance. Employee shall assist Company in procuring such insurance by submitting to examinations and by signing such applications and other instruments as may be required by the insurance carriers to which application is made for any such insurance.

 

8      ASSIGNMENT

 

8.1     Neither party may assign or otherwise dispose of its rights or obligations under this Agreement without the prior written consent of the other party except as provided in this Section. Company may assign and transfer this Agreement, or its interest in this Agreement, to any affiliate or subsidiary of Company (providing such assignee assumes Company's obligations under this Agreement) without Employee's consent. Employee shall, if requested by Company, perform the Services, as specified in this Agreement, for the benefit of any subsidiary or other affiliate of Company. Company shall 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 Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Company would be required to perform it if no such succession had taken place, and such assignment shall not require Employee's consent. Upon assignment, acquisition, merger, consolidation or reorganization, the term “Company” as used herein shall be deemed to refer to such assignee or successor entity. Employee shall not have the right to assign his interest in this Agreement, any rights under this Agreement, or any duties imposed under this Agreement, nor shall Employee or his spouse, heirs, beneficiaries, executors or administrators have the right to pledge, hypothecate or otherwise encumber Employee's right to receive compensation hereunder without the express written consent of Company.

 

9      RESOLUTION OF DISPUTES

 

9.1      Venue . In the event of any dispute arising out of or in connection with this Agreement or in any way relating to the employment of Employee that leads to the filing of a lawsuit, the parties agree that venue and jurisdiction shall be in Los Angeles County, California.

 

9.2      Submission to Arbitration . Company and Employee agree that any dispute with any party (including Company's affiliates, successors, predecessors, contractors, employees and agents) that may arise out of this Agreement, or Employee's engagement with Company or the termination thereof, shall be submitted for resolution by mandatory, binding arbitration in accordance with the Employment Dispute Rules of the American Arbitration Association and the Federal Arbitration Act, 9 U.S.C. §1, et. seq . The arbitration requirement applies to all statutory, contractual and/or common law claims including, but not limited to, claims arising under Title VII of the Civil Rights Action of 1964; the Age Discrimination in Employment Act; the Equal Pay Act of 1963; the California Fair Employment and Housing Act; California Labor Code sections 200, et seq., 970, and 1050, et seq.; the Fair Labor Standards Act; and the Americans with Disabilities Act. Both Company and Employee shall be precluded from bringing or raising in court or any other forum any dispute that was or could have been submitted to binding arbitration. This arbitration requirement does not apply to claims for workers' compensation benefits, claims arising under ERISA (29 U.S.C. §§ 1001, et seq.) or provisional remedies under California Code of Civil Procedure section 1281.8. This arbitration requirement does not prohibit Company from exercising its right to pursue injunctive remedies in accordance with Section 12.6.

 

9.3      Payment of Costs and Fees . Where required by law, Company shall pay all additional costs peculiar to the arbitration to the extent such costs would not otherwise be incurred in a court proceeding (for instance, Company will, if required, pay the arbitrator's fees to the extent it exceeds Court filing fees). Each party shall pay its own costs and attorneys' fees in the first instance. However, the arbitrator may award costs and attorneys' fees to the prevailing party to the extent permitted by law.

 

10      CODE SECTION 409A

 

10.1      General . This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder. Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither Company nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Employee as a result of the application of Section 409A of the Code.

 

10.2      Definitional Restrictions . Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable hereunder, or a different form of payment would be effected, by reason of a Change in Control or Employee's Disability or termination of employment, such amount or benefit will not be payable or distributable to Employee, and/or such different form of payment will not be effected, by reason of such circumstance unless (i) the circumstances giving rise to such Change in Control, Disability or termination of employment, as the case may be, meet any description or definition of “change in control

event”, “disability” or “separation from service”, as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). This provision does not prohibit the vesting of any (“Non-Exempt Deferred Compensation”) upon a Change in Control, Disability or termination of employment, however defined. If this provision prevents the payment or distribution of any (“Non-Exempt Deferred Compensation”), such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “change in control event”, “disability” or “separation from service,” as the case may be, or such later date as may be required by Section 10.3 below. If this provision prevents the application of a different form of payment of any amount or benefit, such payment shall be made in the same form as would have applied absent such designated event or circumstance.

 

10.3      Six-Month Delay in Certain Circumstances . Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of Employee's separation from service during a period in which he is a “specified employee” (as defined Code Section 409A and the final regulations thereunder), then, subject to any permissible acceleration of payment by Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):

 

(i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following Employee's separation from service will be accumulated through and paid or provided on the first day of the seventh month following Employee's separation from service (or, if Employee dies during such period, within 30 days after Employee's death) (in either case, the “Required Delay Period”); and

 

(ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.

 

10.4      Treatment of Installment Payments . Each payment of termination benefits under Section 4 of this Agreement, including, without limitation, each installment payment, shall be considered a separate payment, as described in Treas. Reg. Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.

 

10.5      Timing of Release of Claims . Whenever in this Agreement the provision of payment or benefit is conditioned on Employee's execution and non-revocation of a release of claims, such release, must be executed, and all revocation periods shall have expired, within 60 days after the date of termination of Employee's employment; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, and if such 60-day period begins in one calendar year and ends in the next calendar year, the payment or benefit shall not be made or commence before the second such calendar year, even if the release becomes irrevocable in the first such calendar year. In other words, Employee is not permitted to influence the calendar year of payment based on the timing of his signing of the release.

 

10.6      Timing of Reimbursements and In-kind Benefits . If Employee is entitled to be paid or reimbursed for any taxable expenses under this Agreement, and such payments or reimbursements are includible in Employee's federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. Employee's rights to payment or reimbursement of expenses pursuant to Section 3.2 or 4.2 shall expire on the earlier of one year after the termination of this Agreement or 20 years after the Effective Date. No right of Employee to reimbursement of expenses under Sections 3.2 or 4.2 or any other Section of this Agreement shall be subject to liquidation or exchange for another benefit.

 

10.7      Permitted Acceleration . Company shall have the sole authority to make any accelerated distribution to Employee of Non-Exempt Deferred Compensation payable hereunder, provided that such distribution(s) are permissible under and meet the requirements of Treas. Reg. Section 1.409A-3(j)(4).

 

11      CHANGE IN CONTROL TAX PROVISION

 

11.1     Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by Company to or for the benefit of Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then, prior to the making of any Payment to Employee, a calculation

shall be made comparing (i) the net benefit to Employee of the Payment after payment of the Excise Tax, to (ii) the net benefit to Employee if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the "Reduced Amount"). The reduction of the Payments due hereunder, if applicable, shall be made in such a manner as to maximize the economic present value of all Payments actually made to Employee, determined by the Determination Firm (as defined in Section 11.2 below) as of the date of the Change in Control using the discount rate required by Section 280G(d)(4) of the Code.

 

11.2     The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to Section 11.1 (i) and (ii) above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to Company and Employee (the "Determination Firm") which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon Company and Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which Employee was entitled to, but did not receive pursuant to Section 11.1, could have been made without the imposition of the Excise Tax ("Underpayment"). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Company to or for the benefit of Employee, but no later than March 15 of year following the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises.

 

11.3     In the event that the provisions of Code Section 280G and 4999 or any successor provisions are repealed without succession, this Section 11 shall be of no further force or effect.

 

12      GENERAL PROVISIONS

 

12.1      Notices . Notice under this Agreement shall be sufficient only if hand delivered or if personally delivered by a major commercial paid delivery courier service or mailed by certified or registered mail (return receipt requested and postage pre-paid) to the other party at its address set forth in the signature block below or to such other address as may be designated by either party in writing.

 

12.2      Agreement Controls . Unless otherwise provided for in this Agreement, Company's policies, procedures and practices shall govern the relationship between Employee and Company. If, however, any of Company's policies, procedures and/or practices conflict with this Agreement (together with any amendments hereto), this Agreement (and any amendments hereto) shall control.

 

12.3      Amendment and Waiver . Any provision of this Agreement may be amended or modified and the observance of any provision may be waived (either retroactively or prospectively) only by written consent of the parties. Either party's failure to enforce any provision of this Agreement shall not be construed as a waiver of that party's right to enforce such provision.

 

12.4      Governing Law . This Agreement and the performance hereunder shall be interpreted under the substantive laws of the State of California, without giving effect to the conflict of law principles thereof.

 

12.5      Force Majeure . Either party shall be temporarily excused from performing under this Agreement if any force majeure or other occurrence beyond the reasonable control of either party makes such performance impossible, except a Disability as defined in this Agreement, provided that the party subject to the force majeure provides notice of such force majeure at the first reasonable opportunity. Under such circumstances, performance under this Agreement that related to the delay shall be suspended for the duration of the delay provided the delayed party shall resume performance of its obligations with due diligence once the delaying event subsides. In case of any such suspension, the parties shall use their reasonable best efforts to overcome the cause and effect of such suspension.

 

12.6      Remedies . Employee acknowledges that because of the nature of Company's business, and the fact that the services to be performed by Employee pursuant to this Agreement are of a special, unique, unusual, extraordinary, and intellectual character that give them a peculiar value, a breach of this Agreement shall cause substantial injury to Company for which money damages cannot reasonably be ascertained and for which money damages would be inadequate. Employee therefore agrees that Company shall have the right to obtain injunctive relief, including the right to have the provisions of this Agreement specifically enforced by Arbitration having equity jurisdiction, in addition to any other remedies that Company may have.

 

12.7      Severability . If any term, provision, covenant, paragraph, or condition of this Agreement is held to be invalid, illegal, or unenforceable by any court of competent jurisdiction, that provision shall be limited or eliminated to the minimum extent necessary so this Agreement shall otherwise remain enforceable in full force and effect.

 

12.8      Construction . Headings and captions are only for convenience and shall not affect the construction or interpretation of this Agreement. Whenever the context requires, words, used in the singular shall be construed to include the plural and vice versa, and pronouns of any gender shall be deemed to include the masculine, feminine, or neuter gender.

 

12.9      Counterparts . This Agreement may be signed in counterpart copies, each of which shall represent an original document, and all of which shall constitute a single document.

 

12.10      No Adverse Construction . The rule that a contract is to be construed against the party drafting the contract is hereby waived, and shall have no applicability in construing this Agreement or the terms hereof.

 

12.11      Entire Agreement . With respect to its subject matter, namely, the engagement by Company of Employee, this Agreement and all exhibits hereto (including the documents expressly incorporated herein, such as the Code of Business Conduct and Ethics) contain the entire understanding between the parties, and supersedes any prior agreements, understandings, and communications between the parties, whether oral, written, implied or otherwise.

 

12.12      Assistance of Counsel . Employee expressly acknowledges that he was advised he has the right to be represented by counsel of his own choosing in connection with the negotiation and drafting of the terms of this Agreement.

 

12.13      Attorneys' Fees . Company shall reimburse Employee for reasonable attorneys' fees incurred by Employee for advice and negotiation in connection with the execution of this Agreement. Such reimbursement shall be grossed up for income taxes.

 

12.14      Further Assurances . Each party hereto shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions of this Agreement and the transactions contemplated by this Agreement.

 

12.15      Payment of Taxes . To the extent that any taxes become payable by Employee by virtue of any payments made or benefits conferred by Company, Company shall not be liable to pay or obligated to reimburse Employee for any such taxes or to make any adjustment under this Agreement. Any payments otherwise due under this Agreement to Employee shall be reduced by any required withholding for Federal, State and/or local taxes and other appropriate payroll deductions.

The parties execute this Executive Employment Agreement as of the date stated above:

 

 

NOTICE ADDRESS

Superior Industries International, Inc.

7800 Woodley Avenue

Van Nuys, CA 91406

 

 

 

 

 

 

 

 

EXHIBIT A

RELEASE AGREEMENT LANGUAGE

In consideration for this severance compensation, Employee, upon accepting such severance payment, on behalf of himself, his agents, heirs, executors, administrators, and assigns, expressly releases and forever discharges Company and its successors and assigns, and all of its respective agents, Directors, officers, partners, employees, representatives, insurers, attorneys, parent companies, subsidiaries, affiliates, and joint venturers, and each of them, from any and all claims based upon acts or events that occurred on or before the date on which Employee accepts the severance compensation, including any claim arising under any state or federal statute or common law, including, but not limited to, Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq., the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et seq., the Age Discrimination in Employment Act, 29 U.S.C. §§ 623, et seq., the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101, et seq., the Family and Medical Leave Act, 29 U.S.C. §§ 2601, et seq., the California Fair Employment and Housing Act, California Government Code §§ 12940, et seq., California Labor Code, breach of contract, and any other statutory or common law claim.

Employee acknowledges that he is familiar with section 1542 of the California Civil Code, which reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MIGHT HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Employee expressly acknowledges and agrees that he is releasing all known and unknown claims, and that he is waiving all rights he has or may have under Civil Code section 1542 or under any other statute or common law principle of similar effect. Employee acknowledges that the benefits he is receiving in exchange for this Release are more than the benefits to which he otherwise would have been entitled, and that such benefits constitute valid and adequate consideration for this Release. Employee further acknowledges that he has read this Release, understands all of its terms, and has consulted with counsel of his choosing before signing this Agreement.

 

Exhibit 10.4

 

 

 

 

 

     

 

  

 

 

 

 

 

 

  

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

 

EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(As approved by the compensation and benefits Committee of

 

the Board of Directors on March 18, 2011)

 

 

 

 

 

 

 

        

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

 

ARTICLE 1

PURPOSE AND TERM

 

1.1     Purpose . Superior Industries International, Inc. (the “ Company ”) established this Superior Industries International, Inc. Executive Change in Control Severance Plan (the “ Plan ”) in order to provide transitional income to certain executive officers who are involuntarily terminated in connection with a Change in Control (as defined herein). The Company intends that this Plan qualify as and come within the various exceptions and exemptions under the Employee Retirement Income Security Act of 1974 (“ ERISA ”), as amended, for an unfunded plan maintained primarily for a select group of management or highly compensated employees, and any ambiguities in this Plan shall be construed to effect that intent.

 

1.2     Term . The Plan shall be effective as of the Effective Date, subject to amendment from time to time in accordance with Section 7.2. The Plan shall continue until terminated pursuant to Article 7 of the Plan.

 

ARTICLE 2

DEFINITIONS

 

As used herein, the following words and phrases shall have the following meanings:

    

2.1    “ Affiliate ” means any corporation or entity (including, but not limited to, a partnership or a limited liability company) that is affiliated with the Company through stock or equity ownership or otherwise, and is designated as an Affiliate for purposes of this Plan by the Committee.

 

2.2    “ Base Salary ” means the amount a Participant is entitled to receive as wages or salary on an annualized basis as in effect from time to time, without reduction for any pre-tax contributions to benefit plans. Base Salary does not include bonuses, commissions, overtime pay or income from stock options, stock grants or other incentive compensation.

 

2.3    “ Board ” means the Board of Directors of the Company.

 

2.4    “ Cause ” means, as a reason for a Participant's termination of employment, a determination by the Board that the Participant has committed or engaged in any of the following:

(i)    any act that constitutes, on the part of the Participant, fraud, dishonesty, breach of fiduciary duty, misappropriation, embezzlement or gross misfeasance of duty;

 

(ii)    willful disregard of published Company policies and procedures or codes of ethics; or

 

(iii)    conduct by the Participant in his or her office with the Company that is grossly inappropriate and demonstrably likely to lead to material injury to the Company, as determined by the Board acting reasonably and in good faith.

 

 

Notwithstanding the foregoing, in the case of conduct described in clause (ii) or (iii) above, such conduct shall not constitute “Cause” unless the Board shall have delivered to the Participant notice setting forth with specificity (A) the conduct deemed to qualify as “Cause,” (B) reasonable action that would remedy such objection, and (C) a reasonable time (not less than thirty (30) days) within which the Participant may take such remedial action, and the Participant shall not have taken such specified remedial action within the specified time.

 

2.5    “ Change in Control ” means any transaction or series of transactions qualifying as a “change in control” under Section 409A of the Code

 

2.6    “ Change in Control Severance Benefits ” means the benefits payable in accordance with Section 4.2 of the Plan.

 

2.7    “ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and includes a reference to the underlying proposed or final regulations.

 

2.8    “ Committee ” means the Compensation and Benefits Committee of the Board.

 

2.9    “ Company ” means Superior Industries International, Inc., or its successor as provided in Section 9.6.

 

2.10    “ Disability ” shall mean any physical or mental condition which would qualify a Participant for a disability benefit under the long-term disability plan maintained by the Company and applicable to that particular Participant, or if no such disability plan exists, “Disability” means Permanent and Total Disability as defined in Section 22(e)(3) of the Code.

 

2.11    “ Effective Date ” means March 18, 2011.

 

2.12    “ Employee ” means any regular, full-time or part-time employee of the Company or any Affiliate.

 

2.13    “ Good Reason ” means, as a reason for a Participant's resignation from employment, the occurrence of any of the following without the consent of the Participant:

 

(i)    a diminution in the Participant's Base Salary;

 

(ii)    a diminution in the Participant's authority, duties, or responsibilities; or

 

(iii)    a change in the geographic location at which the Participant must perform services (it being agreed that for purposes of this Plan, a required relocation of more than fifty (50) miles shall be material).

 

A termination by the Participant shall not constitute termination for Good Reason unless the Participant shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 90 days after the initial occurrence of such event), and there shall have passed a reasonable time (not less than 30 days) within which the Company may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by the Participant. Good Reason shall not include the Participant's death or Disability. The parties intend, believe and take the position that a resignation by the Participant for Good Reason as defined above effectively constitutes an involuntary separation from service within the meaning of Section 409A of the Code and Treas. Reg. §1.409A-1(n)(2).

    

2.14    “ Participant ” means any Employee designated by the Committee as a participant in the Plan.

 

2.15    “ Plan ” means this Superior Industries International, Inc. Executive Change in Control Severance Plan.

 

2.16    “ Target Annual Bonus ” means, with respect to any Participant, the Participant's target bonus opportunity under the annual corporate incentive plan applicable to the Participant.

 

2.17    “ Termination Date ” means the date of the termination of a Participant's employment with the Company as determined in accordance with Article 6.

 

ARTICLE 3

ELIGIBILITY

 

3.1     Participation . The Committee shall designate from time to time those Employees who are Participants in the Plan. Exhibit A , attached hereto and made a part hereof, sets forth the Participants as of the Effective Date, which may be amended by the Committee at any time prior to a Change in Control to add or remove individual Participants; provided , however , that the removal of individual Participants from the Plan shall not be effective for at least twenty-four (24) months after notification to the Participants of such Committee action. If a Change in Control occurs during such 24-month period, any such action to remove individual Participants shall be null and void.

 

3.2     Duration of Participation . Subject to Article 7, an Employee shall cease to be a Participant in the Plan if (i) his or her employment is terminated under circumstances in which he or she is not entitled to Change in Control Severance Benefits under the terms of this Plan, or (ii) prior to a Change in Control, he or she is removed as a Participant. Notwithstanding the foregoing, a Participant who has terminated employment and is entitled to Change in Control Severance Benefits under Article 4 shall remain a Participant in the Plan until the full amount of the Change in Control Severance Benefits have been paid to such Participant.

 

 

 

 

ARTICLE 4

CHANGE IN CONTROL SEVERANCE BENEFITS

 

4.1     Right to Change in Control Severance Benefits .

 

(a)    A Participant shall be entitled to the Change in Control Severance Benefits in the amount provided in Section 4.2 if, within the two-year period following a Change in Control, (i) the Participant's employment with the Company or any Affiliate is terminated by the Company without Cause (other than by reason of the Participant's death or Disability) or (ii) the Participant's employment is terminated by the Participant for Good Reason within a period of 160 days after the occurrence of the event giving rise to Good Reason.

 

(b)    If a Change in Control occurs and (i) a Participant's employment with the Company or any Affiliate was terminated by the Company without Cause (other than by reason of the Participant's death or Disability) prior to the date of the Change in Control or (ii) an action was taken with respect to the Participant prior to the date of the Change in Control that would have constituted Good Reason if taken after a Change in Control, and the Participant can reasonably demonstrate that such termination or action, as applicable, occurred at the request of a third party who had taken steps reasonably calculated to effect the Change in Control, then the termination or action, as applicable, will be treated for all purposes of this Plan as having occurred immediately following the Change in Control and such former Participant shall be entitled to the benefits of the Plan accordingly.

 

(c)    Notwithstanding anything to the contrary, no Change in Control Severance Benefits shall be provided to a Participant unless the Participant has executed and not revoked a release of claims in a form satisfactory to the Company.

 

4.2     Amount of Change in Control Severance Benefits . If a Participant's employment is terminated in circumstances entitling him or her to Change in Control Severance Benefits as provided in Section 4.1, then the Company shall pay to the Participant in a single lump sum cash payment within sixty (60) days after the Termination Date (or such later date as may be required by Article 8 hereof), a severance payment equal to two (2) times the sum of (x) the Participant's then-current Base Salary (or, if higher, the Participant's Base Salary as in effect immediately prior to the Change in Control) and (y) the higher of the Participant's Target Annual Bonus for the year in which the Change in Control occurs or the Participant's Target Annual Bonus for the year in which the Termination Date occurs.

 

4.3     Equity Awards . All of the Participant's equity awards outstanding on the Termination Date shall be governed by the plans under which they were granted and the agreements evidencing such awards.

 

4.4     Non-Duplication of Benefits . In the event that a Participant becomes entitled to receive benefits under this Plan and any such benefit duplicates a benefit that would otherwise be provided under any other plan, program, arrangement or agreement as a result of the Participant's termination of employment, then the Participant shall be entitled to receive the greater of the benefit available under the Plan, on the one hand, and the benefit available under such other plan, program, arrangement or agreement, on the other.

 

4.5     Full Settlement; No Mitigation . The Company's obligation to make the payments provided for under this Plan and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Participant or others. In no event shall the Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan and such amounts shall not be reduced whether or not the Participant obtains other employment.

    

ARTICLE 5

REDUCTION OF PAYMENTS

    

5.1     Mandatory Reduction of Payments in Certain Events .

 

(a)    Notwithstanding anything in this Plan to the contrary, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Participant (whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise) (a “ Payment ”) would be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then, prior to the making of any Payment to the Participant, a calculation shall be made comparing (i) the net benefit to the Participant of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Participant if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “ Reduced Amount ”). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual

present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined in subsection (b) below). For purposes of this Section 5.1, present value shall be determined in accordance with Section 280G(d)(4) of the Code. For purposes of this Section 5.1, the “ Parachute Value ” of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

 

(b)    The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to Section 5.1(a)(i) and (ii) above shall be made at the expense of the Company by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Participant (the “ Determination Firm ”) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Participant. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Participant was entitled to, but did not receive pursuant to Section 5.1(a), could have been made without the imposition of the Excise Tax (“ Underpayment ”). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Participant but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises.

 

(c)    In the event that the provisions of Code Section 280G and 4999 or any successor provisions are repealed without succession, this Section 5.1 shall be of no further force or effect.

 

ARTICLE 6

NOTICE; TERMINATION DATE

 

6.1     Written Notice Required . Any purported termination of employment, whether by the Company or by the Participant, shall be communicated by written notice to the other (a “ Notice of Termination ”). The failure by the Participant or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Participant or the Company, respectively, hereunder or preclude the Participant or the Company, respectively, from asserting such fact or circumstance in enforcing Executive's or the Company's rights hereunder.

 

6.2     Termination Date . In the case of the Participant's death, the Participant's Termination Date shall be his or her date of death. In all other cases, the Participant's Termination Date shall be the date specified in the Notice of Termination or any later date specified therein within 60 days after receipt of the Notice of Termination.

 

ARTICLE 7

DURATION; AMENDMENT AND TERMINATION

 

7.1     Duration . The Plan shall become effective as of the Effective Date, and shall continue until terminated by the Board. Subject to Section 7.2, the Board may terminate the Plan as of any date that is at least twenty-four (24) months after the date of the Board's action. If any Participants become entitled to any payments or benefits hereunder during such 24-month period, this Plan shall continue in full force and effect and shall not terminate or expire with respect to such Participants until after all such Participants have received such payments and benefits in full.

 

7.2     Amendment and Termination . Subject to the following sentence, the Plan may be amended from time to time in any respect by the Board; provided , however , that any amendment that would adversely affect the rights or potential rights of Participants shall not be effective for at least twenty-four (24) months after the date of the Board's action; and, provided , further , that in the event that a Change in Control occurs within twenty-four (24) months following an amendment to the Plan that would adversely affect the rights or potential rights of Participants, the amendment will not be effective. In anticipation of or on or following a Change in Control, the Plan shall no longer be subject to amendment, change, substitution, deletion, revocation or termination in any respect which adversely affects the rights of Participants without the consent of each Participant so affected. For the avoidance of doubt, removal of a Participant as a Participant (other than as a result of the Participant ceasing to be an Employee) shall be deemed to be an amendment of the Plan which adversely affects the rights of the Participant.

 

ARTICLE 8

CODE SECTION 409A

 

8.1     General . This Plan shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of

the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code). Nevertheless, the tax treatment of the benefits provided under the Plan is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Participant as a result of the application of Section 409A of the Code.

 

8.2     Definitional Restrictions . Notwithstanding anything in this Plan to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“ Non-Exempt Deferred Compensation ”) would otherwise be payable or distributable hereunder by reason of the Participant's termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to the Participant by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). This provision does not prohibit the vesting of any Non-Exempt Deferred Compensation upon a termination of employment, however defined. If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service,” or such later date as may be required by Section 8.3 below.

 

8.3     Six-Month Delay in Certain Circumstances . Notwithstanding anything in this Plan to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Plan by reason of the Participant's separation from service during a period in which he or she is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):

 

(i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following the Participant's separation from service will be accumulated through and paid or provided on the first day of the seventh month following the Participant's separation from service (or, if the Participant dies during such period, within 30 days after the Participant's death) (in either case, the “ Required Delay Period ”); and

 

(ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.

 

For purposes of this Plan, the term “ Specified Employee ” has the meaning given such term in Code Section 409A and the final regulations thereunder; provided , however , that the Company's Specified Employees and its application of the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by the Board or a committee thereof, which shall be applied consistently with respect to all nonqualified deferred compensation arrangements of the Company, including this Plan.

 

8.4     Timing of Release of Claims . Whenever in this Plan a payment or benefit is conditioned on the Participant's execution and non-revocation of a release of claims, such release must be executed and all revocation periods shall have expired within sixty (60) days after the Termination Date; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, and if such 60-day period begins in one calendar year and ends in the next calendar year, the payment or benefit shall not be made or commence before the second such calendar year, even if the release becomes irrevocable in the first such calendar year. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such 60-day period.

 

ARTICLE 9

MISCELLANEOUS

  

9.1     Employment Status . This Plan does not constitute a contract of employment or impose on the Participant or the Company any obligation to retain the Participant as an Employee, to change the status of the Participant's employment, or to change the Company's policies regarding termination of employment.

 

9.2     Nature of Plan and Benefits . Participants and any other person who may have rights hereunder shall be unsecured general creditors of the Company with respect to the Change in Control Severance Benefits due hereunder, and all amounts shall be payable from the general assets of the Company.

 

9.3     Withholding of Taxes . The Company may withhold from any amount payable or benefit provided under this Plan such federal, state, local, foreign and other taxes as are required to be withheld pursuant to any applicable law or regulation.

 

9.4     No Effect on Other Benefits . Change in Control Severance Benefits, if any, shall not be counted as compensation

for purposes of determining benefits under other benefit plans, programs, policies and agreements, except to the extent expressly provided therein or herein.

 

9.5     Validity and Severability . The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

9.6     Successors . This Plan shall bind any successor of or to the Company, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under this Plan if no succession had taken place. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Company shall require such successor expressly and unconditionally to assume and agree to perform the Company's obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The term “ Company ,” as used in this Plan, shall mean the Company as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by this Plan.

 

9.7     Assignment . This Plan shall inure to the benefit of and shall be enforceable by a Participant's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If a Participant should die while any amount is still payable to the Participant under this Plan had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to the Participant's estate. A Participant's rights under this Plan shall not otherwise be transferable or subject to lien or attachment.

 

9.8     Enforcement . This Plan is intended to constitute an enforceable contract between the Company and each Participant subject to the terms hereof.

 

9.9     Governing Law . The validity, interpretation, construction and performance of the Plan shall in all respects be governed by the laws of California, without reference to principles of conflict of law.

 

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The foregoing is hereby acknowledged as being the Superior Industries International, Inc. Executive Change in Control Severance Plan as adopted by the Board on March 18, 2011.

 

 

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

 

 

By: __________________________

Steven J. Borick

Chairman, CEO & President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

 

Participants as of the Effective Date

 

Steven J. Borick

 

Michael J. O'Rourke

 

Parveen Kakar

 

Kerry A. Shiba

 

Robert A. Earnest