Exhibit 10-L
DANA CORPORATION
CHANGE OF CONTROL
SEVERANCE PLAN
DANA CORPORATION CHANGE OF CONTROL SEVERANCE PLAN
INTRODUCTION
This Dana Corporation Change of Control Severance Plan is designed to provide
Change of Control (as defined in Section I(e)) protection through salary
continuation and benefits for certain designated employees (a) who are active
employees of Dana Corporation or any of its subsidiaries or divisions on the
date immediately preceding the date on which a Change of Control occurs and (b)
whose employment is terminated in a Qualifying Termination (as defined in
Section I(l)). Designated Employees (each a "Designated Employee") shall be
those salaried employees of the Company or any subsidiary or division of the
Company who are identified on a list, which may be amended from time to time
prior to an event constituting a Change of Control (subject to the provisions of
Article III), maintained by the Vice President -- Human Resources of the Company
(the "Designated Employee List"), a copy of which is attached hereto a Schedule
I. The Designated Employee List shall define each Designated Employee as a Tier
2 Employee, Tier 3 Employee, Tier 4 Employee, or Corporate Staff Employee (each
as defined in Section II(b)). Schedule II hereto shall set forth a list of
Company executives who are parties to individual change of control agreements
with the Company (the "Tier 1 Employees"). The Tier 1 Employees shall not be
entitled to participate in this Plan or receive benefits or payments hereunder.
A Designated Employee who incurs a Qualifying Termination will be entitled to
receive thirty (30) days written notice prior to the date of termination, and
will be paid through such notice period an amount based on the higher of such
Designated Employee's annual base salary in effect on the date that the Change
of Control occurs or on the date the notice period begins. A Designated Employee
will also be entitled to be paid a severance benefit determined under Section
II(b) below in a lump sum within thirty (30) days following the Designated
Employee's Termination Date (as defined in Section II(c)) and to the benefits
set forth in Section II(c) below. A Designated Employee shall cease to
participate in the Plan upon the earlier of (i) following a Qualifying
Termination, his or her receipt of all of the payments, if any, to which he or
she is or becomes entitled under the terms of this Plan and the terms of any
notice or agreement issued by the Company with respect to his or her
participation hereunder, or (ii) the termination of his or her employment with
the Company under circumstances not requiring payments under the terms of this
Plan.
ARTICLE I
DEFINITIONS
As used herein the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.
(a) "Affiliate" shall mean a corporation or other entity which is not a
subsidiary of the Company and which directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company. For the purpose of this definition, the terms "control", "controls"
and "controlled" mean the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a
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corporation or other entity, whether through the ownership of voting securities,
by contract, or otherwise.
(b) "Beneficial Owner" or "Beneficially Owned" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.
(c) "Board" shall mean the board of directors of the Company.
(d) "Cause" shall mean a Designated Employee's (i) conviction of, or plea
of guilty or nolo contendere to, the charge of having committed a felony or any
other criminal charge involving moral turpitude (whether or not such conviction
is later reversed for any reason), (ii) commission by a Designated Employee of
fraud against, or misappropriation of significant property belonging to, the
Company, unless such action is neither willful nor injurious to the Company or
any of its subsidiaries, (iii) willful misconduct materially injurious to the
Company or any of its subsidiaries or (iv) continuing failure to perform the
Designated Employee's duties to the Company following written notice of such
failure. The Plan Administrator shall make the determination as to whether the
termination is for Cause and such determination shall be binding, final and
conclusive on all concerned.
(e) "Change of Control" shall mean the first to occur of any of
the following events:
(i) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not
including in the securities Beneficially Owned by such
Person any securities acquired directly from the
Company or its Affiliates) representing 20% or more of
the combined voting power of the Company's then
outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with any
acquisition by any corporation pursuant to a
transaction that complies with Sections I(e)(iii)(A),
I(e)(iii)(B) and I(e)(iii)(C); or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on the Effective Date, constitute the Board (the
"Incumbent Board") and any new director whose appointment or
election by the Board or nomination for election by the
Company's stockholders was approved or recommended by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors on the Effective Date or
whose appointment, election or nomination for election was
previously so approved or recommended. For purposes of the
preceding sentence, any director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company, shall
not be treated as a member of the Incumbent Board; or
(iii) there is consummated a merger, reorganization, statutory share
exchange or consolidation or similar corporate transaction
involving the Company
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or any direct or indirect subsidiary of the Company, a sale or
other disposition of all or substantially all of the assets of
the Company, or the acquisition of assets or stock of another
entity by the Company or any of its subsidiaries (each a
"Business Combination"), in each case unless, immediately
following such Business Combination, (A) the voting securities
of the Company outstanding immediately prior to such Business
Combination (the "Prior Voting Securities") continue to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity of
the Business Combination or any parent thereof) at least 50%
of the combined voting power of the securities of the Company
or such surviving entity or parent thereof outstanding
immediately after such Business Combination, (B) no Person is
or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company or the surviving entity of the
Business Combination or any parent thereof (not including in
the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its
Affiliates) representing 20% or more of the combined voting
power of the securities of the Company or surviving entity of
the Business Combination or the parent thereof, except to the
extent that such ownership existed immediately prior to the
Business Combination and (C) at least a majority of the
members of the board of directors of the Company or the
surviving entity of the Business Combination or any parent
thereof were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the
Board providing for such Business Combination; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, any disposition of all or substantially all of
the assets of the Company pursuant to a spinoff, splitup or similar transaction
(a "Spinoff") shall not be treated as a Change of Control if, immediately
following the Spinoff, holders of the Prior Voting Securities immediately prior
to the Spinoff continue to beneficially own, directly or indirectly, more than
50% of the combined voting power of the then outstanding securities of both
entities resulting from such transaction, in substantially the same proportions
as their ownership, immediately prior to such transaction, of the Prior Voting
Securities; provided, that if another Business Combination involving the Company
occurs in connection with or following a Spinoff, such Business Combination
shall be analyzed separately for purposes of determining whether a Change of
Control has occurred;
(f) "Company" shall mean Dana Corporation and any successor of Dana
Corporation.
(g) "Disability" shall mean the absence of a Designated Employee from the
Designated Employee's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and
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permanent by a physician selected by the Company or its insurers and reasonably
acceptable to the Designated Employee or the Designated Employee's legal
representative.
(h) "Effective Date" shall mean December 8, 2003.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(j) "Good Reason" shall mean, with respect to any Designated Employee
(provided, that Section I(j)(i) shall not be applicable to Corporate Staff
Employees), without the express written consent of the Designated Employee,
unless in the case of any act or failure to act described in clauses (i), (ii),
(iii) or (iv) below, such act or failure to act is corrected by the Corporation
within 30 days after receipt by the Corporation of written notice from the
Designated Employee in respect of such event:
(i) a material change or diminution in the position,
duties, responsibilities or status of the Designated
Employee that is adversely inconsistent with the
Designated Employee's positions, duties,
responsibilities or status with the Company as in
effect immediately prior to the Change of Control, or a
substantial diminution in the Designated Employee's
titles or offices as in effect immediately prior to the
Change of Control or the removal of the Designated
Employee from any of such positions; provided, however,
that notwithstanding the foregoing, in no event shall a
termination of employment pursuant to this Section
I(j)(i) be considered to be for "Good Reason" if, (x)
such assignment, action or change results from the
Designated Employee's termination of employment for
Cause, or from the Designated Employee's Disability or
death or (y) at the time of the termination, the
Designated Employee shall have had a position with a
title, level of duties and responsibilities
substantially similar to the Designated Employee's
title, duties and responsibilities immediately prior to
the Change of Control (disregarding any changes as a
result of the Company no longer being publicly traded
or becoming a subsidiary, and any changes to conform
titles to those of equivalent positions in an affiliate
of the Company);
(ii) either the compensation or benefit entitlements of the
Designated Employee as in effect immediately prior to the
Change of Control or as increased following the Change of
Control is substantially reduced;
(iii) any failure by the Company to obtain an express written
assumption of this Plan from any successor to or assign
of the Company; or
(iv) the Company requires the Designated Employee to be based more
than fifty (50) miles from the location where the Designated
Employee is principally employed immediately prior to the
Change of Control, except for required travel on the Company's
business to an extent substantially consistent with the
Designated Employee's business travel obligations in ef-
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fect immediately prior to the Change of Control;
provided, that in any event set forth in this Section 1(j), the Designated
Employee shall have elected to terminate his or her employment upon not less
than ten and not more than ninety days' advance written notice to the Company,
attention of the Secretary, given, except in the case of a continuing breach,
within three calendar months after (A) removal or (B) expiration of the 30-day
cure period with respect to such event, as the case may be. The Designated
Employee's mental or physical incapacity following the occurrence of an event
described above in clauses (i) through (iv) shall not affect the Designated
Employee's ability to terminate employment for Good Reason. The Designated
Employee shall not be deemed to have waived a claim of Good Reason as a result
of the passage of no more than 180 days between the Designated Employee's
knowledge of the occurrence of the event which would constitute Good Reason and
the assertion of such claim.
(k) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
(l) "Qualifying Termination" means, during the term of the Plan, the
termination of a Designated Employee's employment by the Designated Employee for
Good Reason or by the Company other than for Cause or death or Disability during
the period that begins on the date of a Change of Control and ends on the second
anniversary of the Change of Control (the "CIC Protection Period").
ARTICLE II
SEVERANCE FOR DESIGNATED EMPLOYEES
(a) If there is an event constituting a Change of Control of the Company
each Designated Employee will have a contractual right against the Company to
the benefits provided within this Plan under the conditions and according to the
exceptions specified herein. Notwithstanding the foregoing, Tier 2 Employees
shall have no right to benefits under this Plan unless they execute and do not
revoke the Release and Covenant Agreement set forth as Exhibit A hereto, and all
other Designated Employees shall have no right to benefits unless they execute
and do not revoke the Release Agreement set forth as Exhibit B hereto.
(b) The entitled separation payment to a Designated Employee who incurs a
Qualifying Termination (the "Separation Payment") is set forth in the table
below in this Section II(b) and is based on the greater of the annual base
salary of the Designated Employee in effect as of (i) the date that the Change
of Control occurs or (ii) the date of the Designated Employee's Qualifying
Termination (the "Annual Salary") and, if applicable, the target annual bonus in
effect for such Designated Employee under the Company's Additional Compensation
Plan (or
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any successor plan) or such other Company annual bonus plan (the "Company Bonus
Plan") in which such designated employee participates as of the date of the
Designated Employee's Qualifying Termination or, if more beneficial to the
Designated Employee, on the date of the Change of Control (the "Target Bonus"),
as indicated on the following table, based on a Designated Employee's
"Designated Employee Category:"
DESIGNATED EMPLOYEE CATEGORY SEVERANCE FORMULA (SEVERANCE
PERIOD)
- ---------------------------- ----------------------------
Designated Employees who have high level responsibility at the Two times the sum of the Tier 2
Company, generally including members of the Company's World Operating Employee's Annual Salary and Target
Committee (the "Tier 2 Employees") Bonus, but not for a severance period
beyond age 65.
Designated Employees who may generally include General Managers of One and one-half (1.5) times the sum of
the Company or members of the Company's senior corporate staff (the the Tier 3 Employee's Annual Salary and
"Tier 3 Employees") Target Bonus, but not for a severance
period beyond age 65.
Designated Employees whose duties are deemed critical to the One times the sum of the Tier 4
short-term success of the Company (the "Tier 4 Employees") Employee's Annual Salary and Target
Bonus, but not for a severance period
beyond age 65.
Designated Employees who are members of the Company's corporate staff An amount equal to the Corporate Staff
(the "Corporate Staff Employees") Employee's monthly base salary, times the
number of months set forth on Schedule
III hereto, but not for a severance
period beyond age 65.
To the extent that an annual short-term incentive bonus from the Company Bonus
Plan has not been paid to a Designated Employee in respect of the fiscal year of
his or her Qualifying Termination, the Designated Employee shall be entitled to
a lump sum bonus payment in cash equal to the product of (x) the Designated
Employee's Target Bonus and (y) a fraction, the numerator of which is the number
of days in the current fiscal year through the date of the Designated Employee's
Qualifying Termination, and the denominator of which is 365.
Notwithstanding anything to the contrary in this Plan, following a Qualifying
Termination of a Designated Employee, the Designated Employee shall be entitled
to elect to receive either (A) the Separation Payment and the benefits provided
in Article II and any other benefits provided under this Plan or (B) the
payments and benefits to which the Designated Employee would otherwise be
entitled under the severance payment schedule under the Company's Income
Protection Plan, treating such Qualifying Termination as if it entitled the
Designated Employee to severance under the Income Protection Plan. An election
to receive benefits under clause (A)
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above shall constitute a waiver of the Designated Employee's right to receive
benefits under clause (B) above, and an election to receive benefits under
clause (B) above shall constitute a waiver of the Designated Employee's right to
receive benefits under clause (A) above. Except as described above, Designated
Employees shall not be entitled to receive payments and benefits under the
Company's Income Protection Plan following a Qualifying Termination. The
Separation Payments provided for in this Article II shall be reduced (but not
below zero) by the amount of any severance provided for by any other written
employment, change of control, severance, consulting or similar agreement or
plan to which a Designated Employee is a party or in which the Designated
Employee participates (a "Severance Arrangement"), and this Plan shall not be
construed to duplicate any benefits provided to a Designated Employee pursuant
to a Severance Arrangement.
(c) Provisions under Benefit Plans. Designated Employees who incur a
Qualifying Termination (and their qualifying dependents) will continue to be
provided the benefits (at a level consistent with that provided to active
employees) listed below in this Section III(c), subject to the payment of any
required employee contributions consistent with those required of active
employees of the Company and its Affiliates, during the period that begins
immediately following the date of the Designated Employee's Qualifying
Termination (the "Termination Date") and ends (i) on the second anniversary
thereof, in the case of Tier 2 Employees, (ii) on the date that is 18 months
after the Termination Date, in the case of Tier 3 Employees, (iii) on the first
anniversary of the Termination Date, in the case of Tier 4 Employees and (iv) in
the case of Corporate Staff Employees, on the date that is a number of months
after the Termination Date equal to the number of months of salary continuation
to which such Corporate Staff Employee is entitled pursuant to the provisions of
Article II (as set forth on Schedule III); provided, however, that in each case
the coverage of a specific benefit will end when similar coverage is available
to the Designated Employee through other employment:
1. Medical Insurance Plans.
2. Prescription Drug Plan.
3. Dental Insurance Plan.
4. Basic Life Insurance coverage in the amount in effect at the
time of separation rounded to nearest $1,000 multiple.
5. In addition, the Company shall, in the discretion of the Plan
Administrator, (i) reimburse the Designated Employee for or
(ii) pay directly to a third-party service provider selected
by the Plan Administrator, the Designated Employee's
reasonable costs of outplacement services, subject to the
maximum amount set forth in the table below:
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Designated Employee Category Maximum Benefit
---------------------------- ---------------
Tier 2 Employees $25,000
Tier 3 Employees $25,000
Tier 4 Employees $15,000
Corporate Staff Employees Group program
consistent with
the Company's
latest past
practice as of
prior to the
Change of
Control.
6. Employee Assistance Program.
To the extent applicable, the Designated Employee will be entitled to
receive COBRA continuation health coverage benefits after the conclusion of the
coverage set forth above.
(d) Certain Additional Payments by the Company.
(i) Anything in this Plan to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any Payment
by the Company to or for the benefit of any Tier 2 Employee would be
subject to the Excise Tax, then the Tier 2 Employee shall be entitled to
receive an additional payment (the "Gross-Up Payment") in an amount such
that, after payment by the Tier 2 Employee of all taxes (and any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Tier 2 Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section II(d)(i), if it shall be determined that the
Tier 2 Employee is entitled to the Gross-Up Payment, but that the
Parachute Value of all Payments does not exceed 110% of the Safe Harbor
Amount, then no Gross-Up Payment shall be made to the Tier 2 Employee and
the amounts payable under this Agreement shall be reduced so that the
Parachute Value of all Payments, in the aggregate, equals the Safe Harbor
Amount. The reduction of the amounts payable hereunder, if applicable,
shall be made by first reducing the payments under Section II(b), unless
an alternative method of reduction is elected by the Tier 2 Employee, and
in any event shall be made in such a manner as to maximize the Value of
all Payments actually made to the Executive. For purposes of reducing the
Payments to the Safe Harbor Amount, only amounts payable under this Plan
(and no other Payments) shall be reduced. If the reduction of the amount
payable under this Plan would not result in a reduction of the Parachute
Value of all Payments to the Safe Harbor Amount, no amounts payable under
the Plan shall be reduced pursuant to this Section II(d)(i). The Company's
obligation to make Gross-Up Payments under this Section II(d) shall not be
conditioned upon the Tier 2 Employee's termination of employment.
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(ii) Subject to the provisions of subsection (iii) hereof, all
determinations required to be made under this Section II(d), including
whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by PricewaterhouseCoopers (the "Accounting
Firm"). The Accounting Firm shall provide detailed supporting calculations
both to the Company and the Tier 2 Employee within 15 business days of the
receipt of notice from the Tier 2 Employee that there has been a Payment
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control or the appointment of the
Accounting Firm is not permitted by law, the Company shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section II(d), shall be paid by the Company to the Tier 2
Employee within 5 days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Tier 2 Employee. As a result of the uncertainty
in the application of Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (the
"Underpayment"), consistent with the calculations required to be made
hereunder. In the event the Company exhausts its remedies pursuant to
Section II(d)(iii) and the Tier 2 Employee thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Tier 2
Employee.
(iii) The Tier 2 Employee shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business days
after the Tier 2 Employee knows of such claim. The Tier 2 Employee shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Tier 2 Employee shall not pay such
claim prior to the expiration of the thirty day period following the date
on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Tier 2 Employee in writing prior to the
expiration of such period that it desires to contest such claim, the Tier
2 Employee shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim,
(B) take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time including, without limitation,
accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
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(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Tier 2
Employee harmless, on an after-tax basis, for any Excise Tax or income
tax, including interest and penalties with respect thereto, imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this subsection (iii), the
Company shall control all proceedings taken in connection with such
contest, and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
discretion, either pay the tax claimed to the appropriate taxing authority
on behalf of the Tier 2 Employee and direct the Tier 2 Employee to sue for
a refund or contest the claim in any permissible manner, and the Tier 2
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that, if the Company pays such claim and directs the Tier 2 Employee to
sue for a refund, the Company shall indemnify and hold the Tier 2 Employee
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or
with respect to any imputed income in connection with such payment; and
provided, further, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Tier 2 Employee
with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which
the Gross-Up Payment would be payable hereunder, and the Tier 2 Employee
shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
(iv) If, after the receipt by the Tier 2 Employee of a Gross-Up
Payment or payment by the Company of an amount on the Tier 2 Employee's
behalf pursuant to Section II(d)(iii), the Tier 2 Employee becomes
entitled to receive any refund with respect to the Excise Tax to which
such Gross-Up Payment relates or with respect to such claim, the Tier 2
Employee shall (subject to the Company's complying with the requirements
of Section II(d)(iii), if applicable) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after payment by the Company of an
amount on the Tier 2 Employee's behalf pursuant to Section II(d)(iii), a
determination is made that the Tier 2 Employee shall not be entitled to
any refund with respect to such claim and the Company does not notify the
Tier 2 Employee in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then the
amount of such payment shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
(v) Notwithstanding any other provision of this Section II(d), the
Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any
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other applicable taxing authority, for the benefit of the Tier 2 Employee,
all or any portion of any Gross-Up Payment, and the Tier 2 Employee hereby
consents to such withholding.
(e) Reduction of Certain Payments.
(i) With respect to Designated Employees other than Tier II
Employees, anything in this Plan to the contrary notwithstanding, in the
event the Accounting Firm shall determine that receipt of all Payments
would subject the Designated Employee to Excise Tax, the Accounting Firm
shall determine whether to reduce the Plan Payments to the Reduced Amount.
The Plan Payments shall be reduced to the Reduced Amount only if the
Accounting Firm determines that the Designated Employee would have a
greater Net After Tax Receipt of aggregate Payments if the Designated
Employee's Plan Payments were reduced to the Reduced Amount. If such a
determination is not made, the Designated Employee shall receive all Plan
Payments to which he or she is entitled under this Plan.
(ii) If the Accounting Firm determines that aggregate Plan Payments
should be reduced to the Reduced Amount, the Company shall promptly give
the Designated Employee notice to that effect and a copy of the detailed
calculation thereof, and the Designated Employee may then elect, in his or
her sole discretion, which and how much of the Plan Payments shall be
eliminated or reduced (as long as after such election the Present Value of
the aggregate Plan Payments equals the Reduced Amount), and shall advise
the Company in writing of his or her election within ten days of his or
her receipt of notice. If no such election is made by the Designated
Employee within such ten-day period, the Company may elect which of such
Plan Payments shall be eliminated or reduced (as long as after such
election the Present Value of the aggregate Plan Payments equals the
Reduced Amount) and shall notify the Designated Employee promptly of such
election. All determinations made by the Accounting Firm under this
Section II(e) and shall be binding upon the Company and the Designated
Employee and shall be made within 60 days of a termination of employment
of the Designated Employee. As promptly as practicable following such
determination, the Company shall pay to or distribute for the benefit of
the Designated Employee such Plan Payments as are then due to the
Designated Employee under this Plan and shall promptly pay to or
distribute for the benefit of the Designated Employee in the future such
Plan Payments as become due to the Designated Employee under this Plan.
(f) Definitions. The following terms shall have the following
meanings for purposes of Sections II(d) and (e) and this Section II(f):
(A) "Excise Tax" shall mean the excise tax imposed by
Section 4999 of the Code, together with any interest or
penalties imposed with respect to such excise tax.
(B) "Net After-Tax Receipt" shall mean the Present Value of
a Payment net of all taxes imposed on the Designated
Employee with respect thereto under Sections 1 and 4999
of the Code and under applicable state and local laws,
determined by applying the highest
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marginal rate under Section 1 of the Code and under
state and local laws which applied to the Designated
Employee's taxable income for the immediately preceding
taxable year, or such other rate(s) as the Designated
Employee shall certify, in the Designated Employee's
sole discretion, as likely to apply to the Designated
Employee in the relevant tax year(s);
(C) "Parachute Value" of a Payment shall mean the present
value as of the date of the change of control for
purposes of Section 280G of the Code of the portion of
such Payment that constitutes a "parachute payment"
under Section 280G(b)(2), as determined by the
Accounting Firm for purposes of determining whether and
to what extent the Excise Tax will apply to such
Payment.
(D) A "Payment" shall mean any payment or distribution in
the nature of compensation (within the meaning of
Section 280G(b)(2) of the Code) to or for the benefit of
the Designated Employee, whether paid or payable
pursuant to this Plan or otherwise.
(E) "Plan Payment" shall mean a Payment paid or payable
pursuant to this Plan (disregarding this Section).
(F) "Present Value" shall mean such value determined in
accordance with Sections 280G(b)(2)(A)(ii) and
280G(d)(4) of Code;
(G) "Reduced Amount" shall mean the greatest amount of Plan
Payments which can be paid pursuant to Section 2(e)(i)
above that would not result in the imposition of Excise
Tax if the Accounting Firm determines to reduce Plan
Payments pursuant to such Section;
(H) The "Safe Harbor Amount" means 2.99 times the
Executive's "base amount," within the meaning of Section
280G(b)(3) of the Code.
(I) "Value" of a Payment shall mean the economic present
value of a Payment as of the date of the change of
control for purposes of Section 280G of the Code, as
determined by the Accounting Firm using the discount
rate required by Section 280G(d)(4) of the Code.
12
ARTICLE III
AMENDMENT AND TERMINATION; TERM
(a) Amendment and Termination. This Plan shall not be amended in anticipation of
or in conjunction with the occurrence of a Change of Control or at any time
following a Change of Control in any manner that would adversely affect the
rights of Designated Employees under the Plan. Subject to the foregoing
sentence, the Company shall have the right at any time, in its discretion, to
amend the Plan, in whole or in part, or to terminate the Plan, except that no
amendment or termination shall impair or diminish the obligations of the Company
to any Designated Employee or the rights of any Designated Employee under the
Plan under any notices or agreements previously issued pursuant to the Plan. No
Designated Employee shall be entitled to receive any payments hereunder as a
result of any termination of employment following the end of the CIC Protection
Period.
(b) Term of the Plan. (i) This Plan shall remain in effect until the close of
business on December 31, 2004, at which time it will terminate unless (A) the
Plan's term has been extended by the Board or (B) a Change of Control has
occurred on or prior to such date.
(ii) Notwithstanding anything to the contrary herein, the Plan shall not
terminate or be terminated, by action of the Board or otherwise, but shall
remain in effect after a Change of Control until all payments and benefits to
Designated Employees who have incurred Qualifying Terminations have been made.
ARTICLE IV
ADMINISTRATION
(a) Administration of the Plan. The Plan shall be administered by the Company or
its designee as shall be designated from time to time (the "Plan
Administrator"), provided that in the event of an impending Change of Control,
the Plan Administrator shall appoint a person or persons who are (i) independent
of the Company, (ii) independent of persons operating under the Company's
control and (iii) independent of persons operating on the Company's behalf to be
the Plan Administrator effective upon the occurrence of a Change of Control, and
such Plan Administrator shall not be removed following a Change of Control. If
such person determines in his or her discretion to no longer be the Plan
Administrator following a Change of Control, the Company shall appoint a
successor Plan Administrator independent of the Company or persons operating
within its control or on its behalf. The Plan Administrator shall have authority
to delegate responsibility for the operation and administration of the Plan.
Subject to the express provisions of the Plan, including without limitation
Article III above, and the rights of Participants pursuant thereto, the Plan
Administrator shall have discretionary authority to (i) adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as the
Plan Administrator shall, from time to time, deem advisable; (ii) resolve all
questions or ambiguities relating to the interpretation and application of the
Plan (and any notices or agreements relating thereto); (iii) make eligibility
and benefit determinations under the Plan, including any factual determinations
relevant thereto; and (iv) otherwise supervise the administration of the Plan in
13
accordance with the terms hereof. The decision of the Administrator upon all
matters within the scope of its authority shall be conclusive and binding on all
parties.
(b) Indemnification of Plan Administrator. In addition to such other rights of
indemnification applicable to the Plan Administrator, the Plan Administrator
shall be indemnified by the Company against the reasonable expenses, including
attorney's fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which the Plan Administrator may be a party by reason of any action
taken or failure to act under or in connection with the Plan, and against all
amounts paid by the Plan Administrator in settlement thereof (provided such
settlement is approved by the Board of Directors of the Company) or paid by the
Plan Administrator in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be determined in
such action, suit or proceeding that the Plan Administrator has acted in bad
faith; provided, however, that within sixty (60) days after receipt of notice of
institution of any such action, suit or proceeding, the Plan Administrator shall
offer the Company in writing the opportunity, at its own cost, to handle and
defend the same.
ARTICLE V
MISCELLANEOUS
(a) Legal Fees. The Company shall pay all reasonable legal fees and
disbursements (if any) incurred by or on behalf of any Designated Employee in
connection with claims or disputes under this Plan, if the Designated Employee
is the prevailing party on any material issue in any such dispute. The
reimbursement shall be made as soon as practicable following the resolution of
such claim or dispute to the extent that the Company receives reasonable written
evidence of such fees and expenses.
(b) Resolution of Disputes; Choice of Forum. The parties agree that any
dispute, controversy or claim arising out of or relating to this Plan shall be
resolved by final and binding arbitration, enforceable under the Federal
Arbitration Act, administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. All such
disputes, controversies or claims shall be determined by a panel of three
arbitrators selected in accordance with the rules of the American Arbitration
Association and the arbitration shall be conducted in the City of Toledo, State
of Ohio. The provisions of Section V(a) shall apply to disputes submitted to
arbitration, provided that the Company shall be responsible for all expenses of
the arbitration proceeding. This Section V(b) shall, along with Section V(a),
survive the termination of this Plan for any reason.
14
(c) Benefit of Plan. The Plan shall be binding upon and shall inure to the
benefit of the Designated Employees, their heirs and legal representatives, and
the Company and its successors. The term "successor" shall mean any person,
firm, corporation or other business entity that, at any time, whether by merger,
acquisition or otherwise, acquires all or substantially all of the stock, assets
or business of the Company.
In Witness Whereof, Dana Corporation has caused this Plan to be adopted on this
8th day of December, 2003.
DANA CORPORATION
By: /s/ R. B. Priory
-------------------------------------
Chairman of the Compensation
Committee of the Board of Directors
ATTEST
/s/ R. W. Spriggle
- ---------------------
15
SCHEDULE I
(pages 16-21)
TIER 2 EMPLOYEES:
[11 persons named]
TIER 3 EMPLOYEES:
[45 persons named]
TIER 4 EMPLOYEES:
[113 persons named]
CORPORATE STAFF EMPLOYEES:
All Dana Corporation Corporate Services Group employees (not including
temporary employees, interns, college co-ops, leased employees or other
employees not paid by Dana) not listed in Tiers 1 through 4. Such employees
include those employed in the following Corporate Services Departments:
[37 Departments named].
16
SCHEDULE II
TIER 1 EMPLOYEES:
[9 persons named]
22
SCHEDULE III
Years of Maximum Number of
Continuous Service Months Payable
------------------ --------------
0-15 6
15-20 8
20-25 10
Over 25 12
For purposes of this Schedule I, the term "Years of Continuous Service"
shall have the same meaning accorded to such term in the Company's Income
Protection Plan for Management and Certain Other Employees.
23
EXHIBIT A TO PLAN
FOR TIER 2 EMPLOYEES
FORM OF RELEASE/COVENANT AGREEMENT
This Release/Covenant Agreement ("Agreement") is entered into as of this
______day of ________, hereinafter "Execution Date", by and between [Employee
Full Name] (hereinafter "Employee"), and [Employer Full Name] and its successors
and assigns (hereinafter, the "Company"). The Employee and the Company are
sometimes collectively referred to as the "Parties". Capitalized terms that are
not defined herein shall have the meaning set forth in the Company's Change of
Control Severance Plan (the "Plan").
1. The Employee's employment with the Company is terminated effective [Month,
Day, Year] (hereinafter "Termination Date"). The Company agrees to provide
the Employee the severance benefits provided for in the Plan after he/she
executes this Agreement and this Agreement becomes effective pursuant to its
terms [FOR 40+ and does not revoke it as permitted in Section 5 below, the
expiration of such revocation period being the "Effective Date")].
2. Employee represents that he has not filed, and will not file, any complaints,
lawsuits, administrative complaints or charges relating to his employment
with, or resignation from, the Company[FOR 40+; provided, however, that
nothing contained in this Section 2 shall prohibit Employee from bringing a
claim to challenge the validity of the ADEA Release in Section 5 herein]. In
consideration of the benefits described in Section 1, for himself and his
heirs, administrators, representatives, executors, successors and assigns
(collectively, "Releasers"), Employee agrees to release the Company, its
subsidiaries, affiliates, and their respective parents, direct or indirect
subsidiaries, divisions, affiliates and related companies or entities,
regardless of its or their form of business organization, any predecessors,
successors, joint ventures, and parents of any such entity, and any and all
of their respective past or present shareholders, partners, directors,
officers, employees, consultants, independent contractors, trustees,
administrators, insurers, agents, attorneys, representatives and fiduciaries,
including without limitation all persons acting by, through, under or in
concert with any of them (collectively, the "Released Parties"), from any and
all claims, charges, complaints, causes of action or demands relating to his
employment or termination of employment that Employee and his Releasers now
have or have ever had against the Released Parties, whether known or unknown.
This Release specifically excludes claims, charges, complaints, causes of
action or demand that (a) post-date the Termination Date, (b) relate to
unemployment compensation claims, (c) involve rights to benefits in which
Employee is vested as of the Termination Date under any employee benefit
plans and arrangements of the Company, (d) relate to claims for
indemnification by Employee, or (e) involve obligations owed to Employee by
the Company under the Plan.
3. The Company, on its own behalf and on behalf of the Released Parties, hereby
releases Employee from all claims, causes of actions, demands or liabilities
which arose against the Employee on or before the time it signs this
Agreement, whether known or unknown. This
24
Paragraph, however, does not apply to or adversely affect any claims against
Employee which allege or involve obligations owed by him to the Company under
this Agreement. The Company will indemnify Employee for reasonable attorneys'
fees, costs and damages which may arise in connection with any proceeding by
the Company or any Released Party which is inconsistent with this Release by
the Company and the Released Parties.
4. Employee hereby agrees that he will not engage in Competition in the event of
a Qualifying Termination during the twelve (12) months immediately following
the Qualifying Termination. The word "Competition" for the purposes of this
Agreement shall mean:
(1) taking a management position with or control of a business
engaged in the design, development, manufacture, marketing or distribution
of products, which constituted 15% or more of the sales of the Company and
its Subsidiaries and Affiliates during the last fiscal year of the Company
preceding the termination of the Employee's employment, in any
geographical area in which the Company, its Subsidiaries or Affiliates is
at the time engaging in the design, development, manufacture, marketing or
distribution of such products; provided, however, that in no event shall
ownership of less than 5% of the outstanding capital stock entitled to
vote for the election of directors of a corporation with a class of equity
securities held of record by more than 500 persons, standing alone, be
deemed Competition with the Company within the meaning of this Section 4,
(2) soliciting any person who is a customer of the businesses
conducted by the Company, or any business in which Employee has been
engaged on behalf of the Corporation and its Subsidiaries or Affiliates at
any time during the term of the Plan on behalf of a business described in
clause (1) of this Section 4,
(3) inducing or attempting to persuade any employee of the Company
or any of its Subsidiaries or Affiliates to terminate his employment
relationship in order to enter into employment with a business described
in clause (1) of this Section 4, or
(4) making or publishing any statement which is, or may reasonably
be considered to be, disparaging of the Company or any of its Subsidiaries
or Affiliates, or directors, officers, employees or the operations or
products of the Company or any of its Subsidiaries or Affiliates, except
to the extent Employee, during Employee's employment with the Company,
makes the statement to employees or other representatives of the Company
or any of its Subsidiaries or Affiliates in furtherance of the Company's
business and the performance of his services hereunder.
5. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee
hereby voluntarily and knowingly waives all rights or claims that he/she may
have against the Released Parties arising under the Age Discrimination in
Employment Act of 1967, as amended ("ADEA"), other than any such rights or
claims that may arise after the date of execution of this Release. Employee
specifically agrees and acknowledges that: (A) the release in this Section 5
was granted in exchange for the receipt of consideration that exceeds the
amount to which he/she would otherwise be entitled to receive upon
termination of
25
his/her employment; (B) he/she has hereby been advised in writing by the
Company to consult with an attorney prior to executing this Agreement; (C)
the Company has given him/her a period of up to twenty-one (21) days within
which to consider this Agreement, which period shall be waived by the
Employee's voluntary execution prior to the expiration of the twenty-one day
period, and he/she has carefully read and voluntarily signed this Agreement
with the intent of releasing the Released Parties to the extent set forth
herein; and (D) following his/her execution of this Release he/she has seven
(7) days in which to revoke his/her release as set forth in this Section 5
only and that, if he/she chooses not to so revoke, the Agreement in this
Section 5 shall then become effective and enforceable and the payment listed
above shall then be made to his/her in accordance with the terms of this
Agreement and the Plan. To cancel this Agreement, Employee understands that
he/she must give a written revocation to the General Counsel of the Company
at [ ](1), either by hand delivery or certified mail within the seven-day
period. If he/she rescinds the Agreement, it will not become effective or
enforceable and he/she will not be entitled to any benefits from the
Company.]
6. If any provision of this Agreement is held invalid, the invalidity of such
provision shall not affect any other provisions of this Agreement. This
Agreement is governed by, and construed and interpreted in accordance with
the laws of the State of [ ], without regard to principles of conflicts of
law. Employee consents to venue and personal jurisdiction in the State of [ ]
for disputes arising under this Agreement. This Agreement represents the
entire understanding with the Parties with respect to subject matter herein,
and no other inducements or representations have been made or relied upon by
the Parties. This Agreement shall be binding upon and inure to the benefit of
Employee, his heirs and legal representatives, and the Company and its
successors as provided in this Section 6. Any modification of this Agreement
must be made in writing and be signed by Employee and the Company.
ACCEPTED AND AGREED TO:
- --------------------------------- ----------------------------------
[Employer Full Name] [Employee Full Name]
Dated: Dated:
-------------------- --------------------
- --------
(1) Insert address.
26
EXHIBIT B TO PLAN
FOR DESIGNATED EMPLOYEES
OTHER THAN TIER 2 EMPLOYEES
FORM OF RELEASE AGREEMENT
This Release Agreement ("Agreement") is entered into as of this ______day
of ________, hereinafter "Execution Date", by and between [Employee Full Name]
(hereinafter "Employee"), and [Employer Full Name] and its successors and
assigns (hereinafter, the "Company"). The Employee and the Company are sometimes
collectively referred to as the "Parties". Capitalized terms that are not
defined herein shall have the meaning set forth in the Company's Change of
Control Severance Plan (the "Plan").
1. The Employee's employment with the Company is terminated effective [Month,
Day, Year] (hereinafter "Termination Date"). The Company agrees to provide
the Employee the severance benefits provided for in the Plan after he/she
executes this Agreement and this Agreement becomes effective pursuant to its
terms [FOR 40+ and does not revoke it as permitted in Section 5 below, the
expiration of such revocation period being the "Effective Date")].
2. Employee represents that he has not filed, and will not file, any complaints,
lawsuits, administrative complaints or charges relating to his employment
with, or resignation from, the Company[FOR 40+; provided, however, that
nothing contained in this Section 2 shall prohibit Employee from bringing a
claim to challenge the validity of the ADEA Release in Section 4 herein]. In
consideration of the benefits described in Section 1, for himself and his
heirs, administrators, representatives, executors, successors and assigns
(collectively, "Releasers"), Employee agrees to release the Company, its
subsidiaries, affiliates, and their respective parents, direct or indirect
subsidiaries, divisions, affiliates and related companies or entities,
regardless of its or their form of business organization, any predecessors,
successors, joint ventures, and parents of any such entity, and any and all
of their respective past or present shareholders, partners, directors,
officers, employees, consultants, independent contractors, trustees,
administrators, insurers, agents, attorneys, representatives and fiduciaries,
including without limitation all persons acting by, through, under or in
concert with any of them (collectively, the "Released Parties"), from any and
all claims, charges, complaints, causes of action or demands relating to his
employment or termination of employment that Employee and his Releasers now
have or have ever had against the Released Parties, whether known or unknown.
This Release specifically excludes claims, charges, complaints, causes of
action or demand that (a) post-date the Termination Date, (b) relate to
unemployment compensation claims, (c) involve rights to benefits in which
Employee is vested as of the Termination Date under any employee benefit
plans and arrangements of the Company, (d) relate to claims for
indemnification by Employee, or (e) involve obligations owed to Employee by
the Company under the Plan.
3. The Company, on its own behalf and on behalf of the Released Parties, hereby
releases Employee from all claims, causes of actions, demands or liabilities
which arose against the Employee on or before the time it signs this
Agreement, whether known or unknown. This
27
Paragraph, however, does not apply to or adversely affect any claims against
Employee which allege or involve obligations owed by him to the Company under
this Agreement. The Company will indemnify Employee for reasonable attorneys'
fees, costs and damages which may arise in connection with any proceeding by
the Company or any Released Party which is inconsistent with this Release by
the Company and the Released Parties.
4. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee
hereby voluntarily and knowingly waives all rights or claims that he/she may
have against the Released Parties arising under the Age Discrimination in
Employment Act of 1967, as amended ("ADEA"), other than any such rights or
claims that may arise after the date of execution of this Release. Employee
specifically agrees and acknowledges that: (A) the release in this Section 4
was granted in exchange for the receipt of consideration that exceeds the
amount to which he/she would otherwise be entitled to receive upon
termination of his/her employment; (B) he/she has hereby been advised in
writing by the Company to consult with an attorney prior to executing this
Agreement; (C) the Company has given him/her a period of up to twenty-one
(21) days within which to consider this Agreement, which period shall be
waived by the Employee's voluntary execution prior to the expiration of the
twenty-one day period, and he/she has carefully read and voluntarily signed
this Agreement with the intent of releasing the Released Parties to the
extent set forth herein; and (D) following his/her execution of this Release
he/she has seven (7) days in which to revoke his/her release as set forth in
this Section 4 only and that, if he/she chooses not to so revoke, the
Agreement in this Section 4 shall then become effective and enforceable and
the payment listed above shall then be made to his/her in accordance with the
terms of this Agreement and the Plan. To cancel this Agreement, Employee
understands that he/she must give a written revocation to the General Counsel
of the Company at [ ](2), either by hand delivery or certified mail within
the seven-day period. If he/she rescinds the Agreement, it will not become
effective or enforceable and he/she will not be entitled to any benefits from
the Company.]
5. If any provision of this Agreement is held invalid, the invalidity of such
provision shall not affect any other provisions of this Agreement. This
Agreement is governed by, and construed and interpreted in accordance with
the laws of the State of [ ], without regard to principles of conflicts of
law. Employee consents to venue and personal jurisdiction in the State of [ ]
for disputes arising under this Agreement. This Agreement represents the
entire understanding with the Parties with respect to subject matter herein,
and no other inducements or representations have been made or relied upon by
the Parties. This Agreement shall be binding upon and inure to the benefit of
Employee, his heirs and legal representatives, and the Company and its
successors as provided in this Section 5. Any modification of this Agreement
must be made in writing and be signed by Employee and the Company.
- --------
(2) Insert address.
28
ACCEPTED AND AGREED TO:
- --------------------------------- ----------------------------------
[Employer Full Name] [Employee Full Name]
Dated: Dated:
-------------------- --------------------
29