TRW Automotive Benefits Equalization Plan

EXHIBIT 10.39 TRW AUTOMOTIVE BENEFITS EQUALIZATION PLAN Effective February 28, 20031. PURPOSE. The TRW Automotive Benefits Equalization Plan (the "Plan"), isestablished effective as of February 28, 2003 (but in no event earlier than the"Closing Date", as hereinafter defined), to provide supplemental retirement anddeath benefits to those management and highly-compensated employees of TRWAutomotive US LLC and certain members of its controlled group ("TRW Automotive")whose benefits under the TRW Automotive Retirement Savings Plan (the "SavingsPlan") are limited by reason of: a. the limitations on compensation under ss.401(a)(17) of the InternalRevenue Code of 1986 ("Code"); b. the dollar limitations on elective deferrals under Codess.402(g)(1); c. the limitations on the amount that TRW Automotive can contribute as"Matching Contributions" as defined under the Savings Plan without exceeding theamount provided by Code ss.415(c)(1)(A); and d. the exclusion of compensation otherwise included as "Compensation"under the Savings Plan due to the fact that (i) such compensation was deferredunder the provisions of the TRW Automotive Deferred Compensation Plan ("DCPlan") rather than received or (ii) a determination was made by TRW Automotivethat such inclusion could violate the regulations under Code ss.401(a)(4). Additionally, the Plan will assume obligations and provide benefits tocertain management and highly-compensated employees of TRW Automotive whoparticipated in, and maintained accounts under, the TRW Benefit EqualizationPlan (the "TRW BEP") as of the "Closing Date" under the Master PurchaseAgreement, dated November 18, 2002, by and between Northrop Grumman Corporationand BCP Acquisition Company LLC (the "Closing Date"), in accordance with theterms of the Employee Matters Agreement attached as an Exhibit thereto.Notwithstanding anything to the contrary herein, in no event shall the Plan beeffective prior to the Closing Date. The Plan is unfunded for tax purposes and for purposes of Title I of theEmployee Retirement Income Security Act ("ERISA") and is designed to providebenefits which mirror the provisions of the Savings Plan but cannot be paid fromthe Savings Plan because of certain Code limitations.2. ELIGIBILITY. An employee of TRW Automotive will be eligible to participatein the Plan for a calendar year, provided he or she is otherwise eligible andhas elected to participate in the Savings Plan and has timely elected toparticipate in the Plan, if (i) his or her base pay and other compensation paidor deferred in the immediately preceding calendar year exceeds the compensationlimitations of Code ss.401(a)(17) for such year; (ii) he or she is a full-timeactive, salary employee of TRW Automotive who participates in the TRW AutomotiveOperational Incentive Plan at Level III or above in the immediately precedingcalendar year; or (iii) he or she participated in, and maintained an accountunder the TRW BEP as of the Closing Date. Once an employee has timely elected toparticipate in the Plan (or, if applicable, the TRW BEP), he or she willcontinue to be eligible to participate in the Plan in subsequent years even ifhis or her base pay and other compensation paid (or deferred) falls below thecompensation limit of Code ss.401(a)(17) or he or she ceases to participate in the TRWAutomotive Operational Incentive Plan at Level III or above, subject to adetermination by the Committee or its delegate that the employee's participationmust cease in order to preserve the Plan's status as a plan maintained primarilyfor the purpose of providing deferred compensation for a select group ofmanagement or highly compensated employees. However, if an employee fails totimely elect to participate in the Plan upon becoming eligible, such employeewill cease to be eligible to participate in the Plan if his or her base pay andbonus paid (or deferred) falls below the compensation limit of Codess.401(a)(17) or he or she otherwise ceases to participate in the TRW AutomotiveOperational Incentive Plan at Level III or above.3. ACCOUNTS. a. An account ("Account") shall be established in the name of eacheligible employee who has timely elected to participate (a "Participant") intowhich shall be credited the following amounts: i. that percentage of the Participant's current compensation which the Participant elected to contribute to the Savings Plan as "Elective Deferrals" and that percentage of the Participant's current compensation which the Company would have contributed to the Savings Plan as "Matching Contributions" (both terms as defined under the Savings Plan) to the extent that such amounts cannot be contributed to the Savings Plan due to any of the reasons identified in Section 1; provided, however, that (A) for a Participant who is eligible to make an additional Elective Deferral to the Savings Plan pursuant to Code Section 414(v) ("catch-up contribution"), in determining the amount that may be contributed to the Savings Plan (for purposes of applying this Section 3.a.i.), the dollar limitation on Elective Deferrals under Code Section 402(g) shall be increased by the "applicable dollar amount" for the year, as defined in Code Section 414(v)(2)(B); (B) the percentage of the Participant's compensation credited to the Account, when combined with the percentage elected under the Savings Plan, may not at any time be greater than that amount of "Elective Deferrals" which the Participant would be permitted to contribute, as a highly-compensated Participant, to the Savings Plan without regard to the above-referenced limitations; and (C) the Matching Contributions credited to the Account shall be reduced by any amounts actually contributed for the Participant by the Company to the Savings Plan as Matching Contributions; plus ii. investment performance on a daily basis on the amounts credited under Section 3.a.i. above in accordance with the Participant's election as provided in Section 4 below; plus iii. in the case of a Participant who was a participant in, and maintained an account under, the TRW BEP, an additiona ...