What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-28 compared with 2021-02-24 · 59 added, 63 removed, 150 unchanged (45% of the section changed)

42 unchanged sentences

Other Information.

Change in Control Agreements

On February 22, 2021, each of the following executive officers entered into a new Change in Control Agreement (the “CIC Agreement”) with the Company:

Dono Jr, Robert R.

Krakowiak and Laurent Borne.

The CIC Agreement is designed to provide for continuity of management in the event of change in control of the Company.

The Company believes that it is important for the Company’s executive officer to be able to react neutrally to a potential change in control and not be influenced by personal financial concerns.

For these executive officers, the CIC Agreement sets a level of benefits, as described below, to remain competitive with our select peer group.

All payments under the CIC Agreement are conditioned on a customary non-compete, non-solicitation and non-disparagement agreement.

There is no excise tax gross-up payment under the CIC Agreement.

The CIC Agreement is “double trigger” agreement meaning that in order for the executive officers to receive a payment and other benefits both of the following must occur:

(1) a change in control of the Company, and (2) a triggering event within two years of a change in control where (a) the Company separates the executive officer other than in the case of a termination for cause (as defined), or (b) the executive officer separates from service from the Company for good reason (as defined).

Under the CIC Agreement if the events set forth above occur and the executive delivers a release to the Company, the Company will be obligated to pay the applicable executive officers (1) an amount equal to two times the greater of the executive officer’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control, (2) an amount equal to two times the greater of the executives officer’s target annual incentive award at the time of termination or the actual incentive award received for the fiscal year prior to termination, and (3) an amount equal to the pro rata amount of annual incentive compensation the executive officer would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred.

In addition, the executive officer will be provided continued life and health insurance benefits for twenty-four months following termination.

The material amendments to the prior Change in Control agreements are that the new CIC Agreement changes (i) changes the defined term “Executives Annual Bonus” to mean the greater of the target annual incentive award at the time of termination or the actual incentive award received for the year prior to termination, and (ii) the provisions related to payment in connection total compensation in excess of the safe harbor amount of Section 208G of the Internal Revenue Code so that the covered executive will receive the greater of safe harbor amount (as defined) or aggregate parachute value (as defined) of the total payments (as defined) less applicable excise tax.

The prior Change in Control Agreements with Thomas M.

Dono Jr, Robert R.

Krakowiak and Laurent Borne are superseded and replaced by the new CIC Agreement described above.

The above summary of the CIC Agreement is qualified in its entirety by reference to the full text of the CIC Agreement, a copy of which are filed as an exhibit to this Form 10-K and incorporated herein by reference.

Amendment to Jonathan DeGaynor Employment Agreement

On February 23, 2021, the Company and Jonathan B.

DeGaynor (“DeGaynor”) entered into an amendment (the “Amendment”) to DeGaynor’s March 16, 2015 Employment Agreement (the “Employment Agreement”).

The Amendment also amended the Change in Control Agreement, also dated March 16, 2015, by and between DeGaynor and the Company (the, “DeGaynor CIC Agreement”).

The CIC Agreement is attached as Appendix C to the Employment Agreement.

The Amendment was designed to conform the Employment Agreement and the DeGaynor CIC Agreement to other compensation plans and practices applicable to the Company’s other executive officers in terms of the vesting of equity-based awards under the Company’s Long-Term Incentive Plan and the treatment of certain payments in the event of a Company change in control.

The material changes made by the Amendment (i) eliminate automatic (single trigger) vesting of equity-based awards under the Company’s Long-Term Incentive Plan pursuant to the Employment Agreement so that all current and future awards under the Company’s Long-Term Incentive Plan will be subject to “double trigger” vesting in the event of a change in control, and (ii) adjusts the provisions related to payment in connection total compensation in excess of the safe harbor amount of Section 208G of the Internal Revenue Code so that DeGaynor will receive the greater of safe harbor amount (as defined) or aggregate parachute value (as defined) of the total payments (as defined) less applicable excise tax.

The Employment Agreement will be automatically renewed for one year every year unless notice of termination is delivered by either party before the end of the then current term.

The Employment Agreement provides the payment of an annual base salary of $500,000;

participation in the Company’s annual incentive plan (“AIP”) at a target of 100% of base salary (since 2015 both DeGaynor’s base salary and AIP percentage target have been increased by the Board’s Compensation Committee as result of regular, annual merit pay increases – in 2019, DeGaynor’s base salary was $825,000 and his AIP base salary target was 103%);

relocation benefits;

a monthly car allowance;

and participation in the Company’s customary benefit plans for senior executive officers.

Under the Employment Agreement if DeGaynor is terminated by the Company without cause or he terminates the Employment Agreement and his employment for good reason, the Company will be obligated to pay him severance in equal to his annual base salary and target annual incentive.

In addition, upon a termination without cause (or good reason termination) the Company must continue to cover his health and welfare benefits for a period of twelve months following such termination.

In connection with the Employment Agreement, DeGaynor and the Company entered in the DeGaynor CIC Agreement.

Under the DeGaynor CIC Agreement, if within two years after a Change in Control (as defined in the DeGaynor CIC Agreement) DeGaynor is terminated without cause or resigns for good reason then the Company shall be obligated to pay DeGaynor a lump sum cash payment equal to the sum of two times DeGaynor’s annual salary, plus two times his annual bonus, plus his pro rata annual bonus.

The Company shall also be obligated to continue DeGaynor’s health and welfare benefits for twenty-four months.

DeGaynor is entitled to be nominated each year for election to serve on the Company’s Board of Directors under the Employment Agreement.

The Employment Agreement also contains certain other customary provisions for employment agreements, such as covenants by DeGaynor regarding non-competition and non-solicitation and use of confidential information and a release obligation as a condition to severance payments.

The above summaries of the Employment Agreement, the DeGaynor CIC Agreement and the Amendment are qualified in their entirety by references to the full text of such agreements or amendment, copies of which are filed as exhibits to this Form 10-K and incorporated herein by reference.

Credit Facility Amendment

Due to the ongoing impacts of the COVID-19 pandemic and supply chain disruptions on the Company’s end-markets and the resulting financial impacts on the Company, on February 28, 2022, the Company entered into Amendment No.

3 to the Fourth Amended and Restated Credit Agreement by and among the Company and certain of its subsidiaries as Borrowers, certain of its subsidiaries as Guarantors, PNC Bank, National Association, as Administrative Agent, and the financial parties thereto (the, “Lenders”) (“Amendment No.

Amendment No.

3 reduces the total revolving credit commitments from $400.0 million to $300.0 million and the maximum permitted amount of swing loans from $40.0 million to $30.0 million.

Amendment No.

3 provides for certain financial covenant relief and additional covenant restrictions during the “Specified Period” (the period from February 28, 2022 until the date that the Company delivers a compliance certificate for the quarter ending March 31, 2023 in form and substance satisfactory to the administrative agent).

During the Specified Period:

● the maximum net leverage ratio is changed to 4.0x for the year ended December 31, 2021, suspended for the quarters ending March 31, 2022 through September 30, 2022 and cannot exceed 4.75 to 1.00 for the quarter ended December 31, 2022 or 3.50 to 1.00 for the quarter ended March 31, 2023;

● the minimum interest coverage ratio of 3.50 is reduced to 2.50 for the quarter ended March 31, 2022, 2.25 for the quarter ended June 30, 2022 and 3.00 for the quarters ended September 30, 2022 and December 31, 2022;

● an additional condition to drawing on the Credit Facility has been added that restricts borrowings if the Company’s total of 100% of domestic and 65% of foreign cash and cash equivalents exceeds $70.0 million;

● there are certain additional restrictions on Restricted Payments (as defined);

● a Permitted Acquisition (as defined) may not be consummated unless the net leverage ratio is below 3.50x during the Specified Period.

Amendment No.

3 changes the leverage based LIBOR pricing grid through the maturity date and also retains a LIBOR floor of 50 basis points on outstanding borrowings excluding any Specified Hedge Borrowings (as defined) which remain subject to a LIBOR floor of 0 basis points .

Amendment No.

3 also incorporates hardwired mechanics to permit a future replacement of LIBOR as the interest reference rate without lender consent.

The description of Amendment No.

3 to the Credit Agreement does not purport to be complete and is qualified in its entirety to the full text of Amendment No.

3 to the Credit Agreement which is filed as Exhibit 10.23 to this Form 10-K and incorporated herein by reference.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not Applicable.

Directors, Executive Officers and Corporate Governance.

40 unchanged sentences

Common Shares registered under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019).

Form of Directors’ Restricted Shares Plan Grant Agreement under the Directors' Restricted Shares Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2017)*.

Stoneridge, Inc.

2 unchanged sentences

Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on October 26, 2018)*.

Annual Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on May 12, 2016)*.

Stoneridge, Inc.

Long-Term Cash Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009)*.

Amended and Restated Officers’ and Key Employees’ Severance Plan of Stoneridge, Inc., filed herewith .

Stoneridge, Inc.

Amended and Restated Long-Term Incentive Plan – Form of Restricted Shares Grant Agreement (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010)* .

Form of Phantom Share Grant Agreement under the Stoneridge, Inc.

Long-Term Cash Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010)*.

2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on May 12, 2016)*.

First Amendment to the Stoneridge, Inc.

2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed on May 20, 2020)*.

Form of Stoneridge, Inc.

Long-Term Incentive Plan 2021 Performance Shares Grant Agreement (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on 10-Q for the quarter ended March 31, 2021)*.

Form of Stoneridge, Inc.

Long-Term Incentive Plan 2021 Restricted Share Units Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on 10-Q for the quarter ended March 31, 2021)*.

Stoneridge, Inc.

2018 Amended and Restated Directors' Restricted Shares Plan (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed on May 16, 2018)*.

Form of Performance Share Grant Agreement under the Stoneridge, Inc.

Long-Term Incentive Plan (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017)*.

Form of Share Units Grant Agreement under the Stoneridge, Inc.

2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017)*.

Annual Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 12, 2021)*.

Stoneridge, Inc.

2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on May 12, 2016)*.

Form of Change in Control Agreement, filed herewith *.

2018 Amended and Restated Directors' Restricted Shares Plan (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed on May 16, 2018)*.

Form of Stoneridge, Inc.

Directors’ Restricted Shares Plan 2021 Grant Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021)*.

Amended and Restated Officers’ and Key Employees’ Severance Plan of Stoneridge, Inc.

(incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020)*.

Form of Change in Control Agreement (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020)*.

Employment Agreement, dated March 16, 2015, between the Company and Jonathan B.

2 unchanged sentences

1, dated February 23, 2021, to Employment Agreement, dated March 16, 2015 between the Company and Jonathan B.

DeGaynor, filed herewith *.

DeGaynor (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020)*.

Indemnification Agreement between the Company and Jonathan B.

DeGaynor (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on March 19, 2015).

Fourth Amended and Restated Credit Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 7, 2019).

Employment Agreement, dated January 3, 2020, by and between the Company and Kevin Heigel (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020)*.

Separation Agreement and Release of Claim, dated March 31, 2020, by and between the Company and Robert Willig (incorporated by reference to Exhibit 99.1 on the Company's Current Report on Form 8-K filed on April 3, 2020) *.

Employment Agreement, dated January 29, 2021, by and between the Company and James Zizelman ( incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 )* .

Separation Agreement and Release by and between Stoneridge, Inc.

and Thomas M.

Dono, Jr., August 6, 2021 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on August 11, 2021)*.

Separation Agreement and Release by and between Stoneridge, Inc.

and Robert R.

Krakowiak, August 31, 2021 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on September 1, 2021)*.

Fourth Amended and Restated Credit Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 7, 2019).

Waiver and Amendment No.

1 to the Fourth Amended and Restated Credit Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 1, 2020)*.

First Amendment to the Stoneridge, Inc.

2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed on May 20, 2020)*.

Employment Agreement, dated January 29, 2021, by and between the Company and James Zizelman, filed herewith *.

Amendment No.

2 to the Fourth Amended and Restated Credit Agreement, filed herewith.

Amendment No.

3 to the Fourth Amended and Restated Credit Agreement, filed herewith.

Real Estate Purchase and Sale Agreement, entered into on May 7, 2021, by and between Stoneridge, Inc., and Sun Life Assurance Company of Canada (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 12, 2021) .

First Amendment to Real Estate Purchase and Sale Agreement, entered into on May 20, 2021, by and between Stoneridge, Inc., and Sun Life Assurance Company of Canada (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed on May 24, 2021).

Second Amendment to Real Estate Purchase and Sale Agreement, entered into on May 27, 2021, by and between Stoneridge, Inc., and Sun Life Assurance Company of Canada (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on August 4, 2021).

Third Amendment to Real Estate Purchase and Sale Agreement, entered into on June 10, 2021, by and between Stoneridge, Inc., and Sun Life Assurance Company of Canada (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on August 4, 2021).

Share Purchase Agreement, dated November 2, 2021 by and among Stoneridge, Inc., Minda Corporation Limited and Minda Stoneridge Instruments Limited (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 2, 2021).

Principal Subsidiaries and Affiliates of the Company, filed herewith.

16 unchanged sentences

Form 10-K Summary.

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

1 unchanged sentence

February 28, 2022

/s/ ROBERT R.

Executive Vice President, Chief Financial Officer and Treasurer

/s/ MATTHEW R.

Chief Financial Officer and Treasurer

(Principal Financial Officer)

5 unchanged sentences

February 28, 2022

/s/ ROBERT R.

Executive Vice President, Chief Financial Officer and Treasurer

/s/ MATTHEW R.

Chief Financial Officer and Treasurer

(Principal Financial Officer)

17 unchanged sentences

February 28, 2022

Sklarsky was added to the Board of Directors on February 22, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures